IREM ® headlines
Property Management Job Growth a Bright Spot in a Down Employment Market
A recent article in Bisnow featuring IREM Secretary/Treasurer Barry Blanton, CPM®, and Jana Turner, CPM®, cites data from indeed.com showing that property managers and assistant property managers are among the most in-demand roles real estate companies wish to fill. This comes at a time when many other industries are experiencing a loss of career opportunities.
"I feel terrible for the hospitality industry and some of the other industries that have been hit hard by this," says Barry. But property managers are in hot demand, he says, as his company, Blanton Turner, AMO®, is preparing for the large number of multifamily developments that will soon hit the market, which will require skilled property managers.
RETS Associates principal Jana Turner, CPM®, believes companies are better prepared to weather the coronavirus crisis than the turmoil of the Great Recession. "In the last recession, hiring was slow," she said. "Here, companies have not canceled searches. Many are just on hold." At the moment, Jana sees the industrial and multi-family sectors driving the hiring.
Read the complete article.
If you’re curious about the real estate management profession, IREM offers online learning options to help you develop and deepen your property management skills including live webinars, on-demand learning, and virtual classroom courses .
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NAR Legislative Meetings Goes Virtual for the First Time
Due to recent restrictions and recommendations implemented by the federal & Washington, D.C. governments stemming from the coronavirus crisis, the National Association of REALTORS® (NAR) conducted its annual legislative meetings virtually for the first time. Consisting of governance committee meetings and informational conference sessions, and concluding last Friday, more than 25,000 participants registered for the event, which more than doubled that of previous May meetings.
Conference sessions kicked off at the beginning of the week with the NAR360 Forum (see the opening video here), where the leadership team addressed the effects of the COVID-19 pandemic on the real estate industry. One of the topics covered was how NAR and its affiliates worked towards inclusion of relief for the real estate industry in the CARES Act. Legislative aid included: the Paycheck Protection Program, expansion of the Emergency Economic Injury Disaster Loan (EIDL) program, and mortgage forbearance.
One of the many highlights of the event was a federal and legislative political forum led by former Chicago Mayor Rahm Emanuel and former New Jersey Governor Chris Christie, who discussed the current political climate during these uncertain times and how it may affect the November elections. Other meetings, such as “Finding Peace in Turbulent Times,” focused on techniques and resources to help members stay calm and focused in today’s environment.
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Keeping Your Properties Covered; Insurance Advice from IREM Canada Members
A lot has changed in the world since international IREM members provided an inside look at their insurance best practices for the May/June issue of Journal of Property Management, in the article “Evolving Protections: insurance strategies adapt around the globe."
Economies have ground to a halt, and real estate companies have been forced to adapt to a new normal of social distancing and demanding sanitation practices.
When it comes to insurance, however, members in Canada note that many things have stayed the same: Property managers still need to be vigilant about monitoring the language of policies and watch trends in the industry at large.
President William McCarthy, Executive CPM®, and president of W.P.J. McCarthy and Company Ltd., AMO, in Barnaby, British Columbia, advises IREM members to re-read policies: “I would caution them to look very hard at what their policies include, but what they also limit.”
The risk management team at Toronto-based Oxford Properties says that volatility in the markets could affect insurance companies. “In the longer term we have to pay attention to the financial viability of the insurers. Investments are being rocked and that will have an impact. Will the customer base be maintained, and will it continue to pay premium?”
In the more immediate term, property managers should monitor developments with business interruption coverage. Typically, these provisions have required “direct physical loss or damage of covered property resulting from a covered cause of loss.” However, a recent court case in Ontario has extended “physical damage” to include “impairment of function or use of tangible property.”
In addition, there have been legal challenges originating in Saskatchewan related to an insurance company’s failure to pay for loss of revenue that resulted from government regulations for the COVID-19 pandemic.
Managers should also follow the development of legislation that could require insurers to pay business interruption claims related to the pandemic.
McCarthy provides the following checklist for property managers to consider as they evaluate their insurance policies:
- Does your policy have a pandemic clause? Pandemics are extremely rare, and previous to this nobody thought there would be a pandemic declared worldwide on March 11th.
- Does your insurance policy have sufficient gross rental income loss coverage?
- Does your policy cover your own business interruption and staff concerns?
- Does your policy provide for extraordinary cleaning and other preventative maintenance which have to be accelerated in these times?
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IREM COVID-19 Update
IREM remains dedicated to providing real estate managers with the tools necessary to ensure continuity of operations, solve ongoing challenges, and support tenants and residents. New COVID-19 resources added to irem.org this week include:
- New From the Front Lines segments on reopening for business and the pulse of multifamily Follow IREM on Spotify and Apple Podcasts to ensure you get all new episodes
- Templates and signs to help you run your business and properties, while keeping tenants, residents and employees safe and supported
- New blog post on social distancing best practices in common areas to aid with business reopening
We also invite you to participate in this brief pulse poll—to check in on how things are going for you as we all navigate this new future. For continued updates from IREM, bookmark the coronavirus updates page for the latest information about COVID-19.
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Industry headlines
The Long-Term Impact of Unpaid Rent
Washington Post (05/11/20) Pinnegar, Robert
With widespread job cuts devastating the population, people's budgets have become tight. In many cases, Americans are struggling to pay for essential bills and expenses, including apartment rent. While some have called for a halt on rent payments nationwide to help Americans get through the pandemic, rent is essential to ensuring that buildings continue operating. In fact, just nine cents out of every dollar of rent goes towards landlords, with the rest going to everything from payroll expenses (27 cents) to property taxes (14 cents) to and capital improvements (10 cents).
Unpaid rent has ripple effects that, over the long term, can have serious negative consequences. Without rent, property managers would be unable to pay their employees, and it would be near-impossible to fund needed renovation or improvement projects. Meanwhile, some investors use money made from the property sector to help fund pensions and 401(K)s for Americans, meaning that renters could unknowingly damage their own prospects by abstaining from paying rent. Renters who are able to pay their rent amid the pandemic should keep doing so, playing their part to keep their buildings humming. Those who are struggling to get by should reach out to property management to explore alternative arrangements or solutions.
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Reopening the Coronavirus-Era Office: One-Person Elevators, No Cafeterias
Wall Street Journal (05/11/20) Cutter, Chip; Vranica, Suzanne
Real estate experts have predicted that office life will look drastically different on the other side of the COVID-19 pandemic. With germs and disease transmission a fresh and likely lingering concern for people, it is expected that building owners and operators will institute new policies to minimize crowds. That could mean elevators will take just one person at a time, and desks once packed together will be separated to allow more personal space for each worker. Popular amenities like beer taps, snack containers, coffee bars, and gyms will likely remain closed until there is a vaccine for the virus. These changes undo the work done in recent years to create tighter collaborative spaces, more intimate conference rooms, and communal gathering areas.
Harris Diamond, chairman and CEO of the advertising firm McCann Worldgroup, said the open-plan layout that once dominated his company's offices "now works against us." Companies like his now face a challenge even tougher than the decision to send workers home at the start of the pandemic: modifying their current office layouts to make them safe for phased returns. Depending on local jurisdictions, employees may be required to wear a mask at work. Some offices will also create foot traffic patterns, designating certain hallways as one-way to create an orderly flow and minimize backups. And some companies will create staggered schedules so that not every worker comes to the office every day.
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Saul Centers Reports 'Many' Tenants Seeking Rent Deferrals. They're Getting Them
Washington Business Journal (05/15/20) Neibauer, Michael
Saul Centers has been inundated with requests from its retail tenants for rent relief amid the pandemic. In its quarterly report published earlier this month, the shopping center owner disclosed that its tenants "have requested rent relief, including rent deferrals and other lease concessions," as widespread business interruptions interfere with their ability to pay rent on time. Saul added that it "has elected to apply such relief." The company collected 68 percent of its contractual base rent, operating expenses, and real estate tax recoveries for the month of April. Saul Centers further affirmed that it is not charging late fees on the missing rent payments. In fact, it has laid out new agreements to help struggling tenants in need of more assistance -- most notably deferrals on 30 to 90 days of rent, with the repayment to occur over a 12-month period starting in 2021. Saul Centers expects to continue falling short on rent collection for as long as jurisdictions in its core markets of Maryland, Virginia, and the District of Columbia enforce nonessential business shutdowns.
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Apartment Rentals Showing Signs of Life, Says Equity Residential
Real Estate Weekly (05/13/20)
Equity Residential notes that its first-quarter earnings report showed promising signs for the multifamily housing market. The Chicago-based apartment giant said 97 percent of its residents continued paying rent through the COVID-19 crisis as of March 31. Equity Residential President and CEO Mark Parrell said the company's "business continues to be durable" thanks to "a financially resilient resident base." Parrell added that leasing activity is still slower than normal, but has picked up since March.
Equity Residential's rent collection from apartment residents has remained strong, but the company said it has been more difficult to collect rent from non-residential tenants. Most of these non-residential tenants are ground-floor retailers or public garages. Equity Residential collected just 58 percent of retail cash collections in April compared to one month prior. The situation improved slightly for public garage rent activity, with Equity Residential receiving 67 percent of rent last month versus March. In total, retail tenants in Equity Residential's portfolio currently owe some $7 million in either deferred or delinquent rent.
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J.C. Penney, Pinched by Coronavirus, Files for Bankruptcy
Wall Street Journal (05/15/20) Kapner, Suzanne; Scurria, Andrew
Late last week, J.C. Penney Co. filed for Chapter 11 bankruptcy protection in Texas, becoming the latest and largest in a parade of retailers to seek a court restructuring during the COVID-19 crisis. J.Crew Group Inc., Neiman Marcus Group Inc., and Stage Stores Inc. have all previously filed for bankruptcy. Penney's plan is to use the bankruptcy process to close an undisclosed number of its roughly 850 department stores and place itself on the selling block. "Store shutdowns since March have choked off Penney's revenue," notes the article's author, "putting more pressure on the company's lopsided balance sheet." The pandemic hastened a reckoning with creditors following years of declining sales, red ink, and botched turnaround efforts. The company has been in talks with some of its biggest lenders, including Sixth Street Partners.
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Welcome to the Post-Coronavirus Office Space
Realty Biz News (05/11/2020) Wheatley, Mike
Marx Realty is planning a $24 million renovation of its New York City headquarters. The company will install a touchless hand sanitizer dispenser in the main lobby, along with anti-microbial materials throughout the building. Visitors will be checked using a thermal screening machine. Marx Realty is also eliminating physical touch points by allowing employees to control elevators with their smartphones. A doorperson at the building entrance will remove the need to touch the door. Couches and chairs in the lobby will be covered with velvet cloth that can be cleaned more easily.
"You may see companies begin to use more furniture that was intended for health care spaces because those products were designed to be more easily and reliably sanitized," says James Keenoy, president of Farrell Flynne. Nabil Sabet, an architect and group director at global design firm M Moser, expects that offices will turn to ventilation strategies that combine extraction, air changes, filtering, and sterilization; hospital-grade sanitizing; and self-cleaning surfaces. In addition, laptops and secure virtual private networks that enable mobility are likely to become standard, Sabet forecasts.
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Coronavirus Brings Rent Decreases, Reduced Leasing Activity to Houston-Area Apartment Market
Community Impact Newspaper (05/05/20) Dulin, Matt
The pandemic has significantly altered Houston's apartment housing sector, new statistics from Apartmentdata.com show. In April, average rents dropped and there was a sharp decline in leasing activity. Bruce McClenny, president of ApartmentData.com, said early indications suggest the decreases will accelerate in May. "We're giving back rent gains that we might have had," he lamented. Average rent for all classes of apartments in metro Houston averaged $8 less last month compared to the same time a year prior. Concessions likely played into the rent decrease, with building owners offering more free months to attract renters during these uncertain times. Meanwhile, net absorption fell by 74 percent, indicating that renters are hunkering down in their current units and putting off searches for new apartments. McClenny said more apartment communities are turning to virtual tours and online leasing to tempt potential renters.
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Don't Stand So Close to Me: AI Cameras Police Social Distancing at Work
Wall Street Journal (05/14/20) Olson, Parmy
Companies are turning to technological solutions to help police social distancing in the age of COVID-19. People-counting cameras that make use of artificial intelligence (AI) sensors were originally implemented in offices to track the movements of workers, helping management maximize use of office space and even trim down on square footage, if needed. They are now being repurposed to help companies track how well their workers are abiding by social distancing mandates while at work. San Francisco-based VergeSense has received so many physical distance tracking requests that it updated its software to track and score social distancing in office environments.
AI-based social distancing tracking tools typically do not allow employers to actually view the footage or images taken of workers. Instead, employers are given numbers and charts based on the data. But privacy advocates have still raised concerns about the implementation of AI tracking tools in the workplace, worrying that mission creep will take over when the pandemic winds down. Albert Gidari, director of privacy at the Stanford Center for Internet and Society, voiced such concerns. "It's not a stretch to see this as a productivity-measurement tool," Gidari remarked.
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URG Surveys 500 Tenants About Reopening Plans
Connect Seattle (05/12/20)
Seattle-based Urban Renaissance Group (URG) has published the results of its survey on the reopening process for commercial office and retail tenants. The survey questioned more than 500 tenants representing 50,000 employees, with roughly 80 percent of them located in metro Seattle. URG's Patrick Callahan said the survey shows Seattle-area tenants are making plans for a return to their commercial office or retail space. "As we all continue to deal with the impacts of COVID-19, it is clear that our tenants are already planning on a phased-in approach with an emphasis that is safe and healthy for their employees," he said, adding that "good planning and coordination between landlord and tenant" will facilitate a smooth transition back to the office.
The URG survey found that 75 percent of tenants have concerns about immediately bringing all employees back to the office when stay-at-home orders are lifted. Just 13 percent of respondents said they would immediately bring all employees back, and a significant majority said it expects no more than 50 percent of staff to return in the near future. Nearly two-thirds of respondents indicated they would implement staggered schedules to prevent too many employees from congregating at the office at one time. Meanwhile, more tenants than ever before are considering a permanent work-from-home option for employees, and a majority either will provide personal protective equipment (PPE) for employees or are currently considering offering PPE.
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Rent Ready Evolves Services to Include Sanitization With Electrostatic Spraying
Watauga Democrat (NC) (05/15/20)
Rent Ready has expanded its offerings amid the COVID-19 pandemic. With public health now a top priority, the managed services platform is offering Electrostatic spraying technology to thoroughly clean and sanitize public surfaces in apartment communities. Communal spaces and shared amenities, once a boon for apartment buildings, have become potential hotspots for contamination, forcing property management to find new systems for cleaning them in a bid to minimize the spread of germs and disease.
Electrostatic spraying technology uses hospital-grade, EPA-approved disinfecting chemicals. With this technology, the cleaning chemicals are dispersed evenly across surfaces, providing a more thorough disinfecting than conventional spray and wipe processes. Electrostatic spray has already been incorporated into other industries sensitive to the spread of disease, most notably education and healthcare. "We moved quickly to put a national network of providers in place to be able to help apartment communities mitigate the risk of COVID-19 spreading onsite," remarked Rent Ready CEO Jonathan Kite. "We are uniquely positioned to help apartment owners and managers streamline, standardize, and quickly roll out these services nationwide."
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St. John Properties Achieves 70 LEED-Certified Buildings
NottinghamMD.com (04/22/20) Montcalmo, Chris
The U.S. Green Building Council (USGBC) recently gave St. John Properties a certification for the 70th building in its national portfolio. With the green certification, the Council recognized St. John Properties for meeting and exceeding Leadership in Energy and Environmental Design (LEED) standards. The company first ventured into the LEED arena in 2009. In the years since, it has developed more than 4.4 million square feet of LEED Gold, Silver, or Certified space, including 19 buildings in 2019 alone. The Maryland chapter of the USGBC presented the development firm with an award for its commitment to environmentally sustainable design.
Maryland ranks sixth in the nation for LEED-certified square feet per person. Across the state, there were 96 LEED-certified projects last year, accounting for more than 15 million square feet of space. St. John Properties contributed to that tally, including with its latest LEED gold-certified building in Anne Arundel County. 811 Pinacle Drive is a single-story, 48,120-square foot research and development building located within the BWI Tech Park. St. John Properties' senior vice president of construction, Jeffrey Gish, expects sustainable, healthy design will be even more important once the country emerges from pandemic-inspired lockdowns.
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Macerich Maps Out Plans to Reopen Shopping Centers
WWD.com (05/12/20) Ell, Kellie
Macerich is starting to reopen certain shopping malls in its portfolio as regions of the country slowly emerge from lockdowns. The real estate investment trust, which owns 47 shopping centers in the United States, has started to reopen some locations in Texas, Colorado, Missouri, Iowa, Indiana, and Arizona. Macerich said its goal is to have 35 malls opened by the end of this month and all 47 up and running by mid-June. Douglas Healey, senior executive vice president of leasing at Macerich, said in a call with analysts that the COVID-19 pandemic has reinforced belief that consumers will always want a brick-and-mortar option. "Bottom line is retailers want to get their store open," Healey concluded.
Macerich will facilitate its reopening by adding hand sanitizers to malls and requiring face masks for entry. There will be limits on the numbers of shoppers permitted in each store. Additionally, fitting rooms will be steam cleaned after each use. Macerich's malls will continue to allow contactless payment and curbside pickups. Even with those precautions, management concedes that the transition back to full operations will not be easy. Macerich said only about 26 percent or 27 percent of its tenants paid April rent, and while the numbers were slightly higher for May, the situation is still uncertain.
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