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What Real Estate Asset Managers Do
Asset management is critically important to the success of many large real estate investors, yet it is often poorly understood because organizations approach asset management in many different ways. Asset management comes in a variety of forms and involves a host of parties who are all linked by a property-level focus on improving the financial performance of real estate investments from acquisition to disposition.
As Dustin C. Read, PhD/JD, explores in his latest publication, What Real Estate Asset Managers Do, there is a substantial competitive advantage to firms that adopt a comprehensive approach to asset management as opposed to one that is more analytical, operational or transactional in orientation. In order to more towards comprehensive asset management, Read offers the following recommendations:
- Conduct an internal audit
- Make it a priority
- Encourage collaboration
- Refine channels of communication
- Invest in needed infrastructure
- Diversify the team
- Leverage property managers
- Get out in the market
- Continually develop talent
- Focus on the long game
What Real Estate Asset Managers Do is a compilation of previously published individual reports on the following key topics:
- Acquisitions & Dispositions
- Business Planning & Budgeting
- Leadership & Operational Efficiency
- Analyzing Leases, Capital Improvements & Financial Performance
- Market Analysis & Monitoring and Reporting
Click here to learn more about the role of asset management outlined in this comprehensive publication.
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Advance Your Legislative Agenda at IREM’s Capitol Hill Fly-in
Real estate managers need to comply with legislation that impacts the built environment. But your district’s legislators may not always be well-informed on the issues that affect the real estate management industry. You can fill that gap by participating in IREM’s Capitol Hill Fly-in, March 10 – 11, 2020, in Washington, D.C.
This two day event gives you the chance to influence public policy by meeting with the legislators representing your district. It’s your opportunity to position IREM as the expert in our field and educate them about the importance of the real estate management industry as a driver of our economy. You’ll build relationships with lawmakers that can grow over time, giving you more opportunities to turn them into advocates for your cause by sharing your knowledge.
IREM will prepare you for the Fly-in beginning with a webinar the first quarter of 2020, outlining details on the legislation scheduled to be addressed during the event, our position on those issues, and how to schedule meetings with legislators. IREM will provide fact sheets you can email your legislators before you arrive. And participants can pave the way for meeting follow-up with leave-behinds that describe our organization and expertise, document the issues on the table, and outline IREM priorities.
Meeting with lawmakers in Washington to provide trusted guidance is critical for the future health and growth of our industry. Register for the event, find a hotel and transportation and review the schedule for these two days at Capitol Hill Fly-in.
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Submissions are Open for IREM’s 30 Under 30 Program
Are you a property manager under the age of 30? Do you know any innovative property managers under the age of 30? Open new doors and present new opportunities for yourself or someone else with IREM’s 30 under 30 program.
Joining the elite group of IREM’s 30 under 30 honors the contributions of young professionals to the real estate management industry. We’re looking for property managers with the ability to tackle major challenges, develop innovative solutions, overcome career obstacles, and who display exceptional leadership skills.
Those chosen to receive this recognition will be featured in IREM publications, on social media and on irem.org. They’ll also be honored at the 2020 IREM Global Summit in Toronto, Canada, October 13 – 16, an event that drew more than 900 attendees this year.
You can nominate yourself or someone else. IREM members under the age of 30 are eligible. Beyond the contact information, you’ll need to provide:
- One professional reference
- One employer reference
- A resume
- A headshot
- A statement on what distinguishes you or your nominee from other young professionals in the real estate management industry
- A statement on what it would mean to you or your nominee to be selected
- An optional video
Application submissions are open now through February 15, with recipients notified in March. Go to the Career Development Program page to submit a nomination for yourself, or a deserving young real estate management professional.
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Reduce Insurance Costs for Multifamily Residential Properties
According to the U.S. Fire Administration, cooking accounted for 51.6 percent of residential building fires in 2017. Most of these fires are caused by the ignition of household items like rags, curtains or wallpaper, which is easy to avoid.
Real estate managers do everything they can to protect buildings and tenants, but some things are out of their control. Most insurance policies protect property owners from losses due to fires, but there are other costs, including deductibles, and consequential and special damages. Insurance is already expensive, and a fire can lead to dramatic rate increases.
However, there are solutions to help reduce the probability of a cooking fire turning into a conflagration. Devices like Auto-Out® work upon flame activation to help extinguish cooking fires by releasing fire-suppressants onto the stovetop when excessive flames are detected, which can minimize damage and keep insurance costs from spiraling.
Learn more about fire suppression products and see if they can work for your property.
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Industry headlines
Atlanta Malls Offer Quiet Holiday Shopping Hour for Kids Who Need It
Atlanta Journal-Constitution (12/06/19) Kempner, Matt
A handful of Atlanta-area shopping malls are embracing holiday-season shopping programs tailored for children with autism or other sensory-processing disorders. The Town Center at Cobb first tried the program out last year, and its success led to Lenox Square, the Mall of Georgia, Phipps Plaza, and Sugarloaf Mills following suit this year. All five malls participating in the program are run by Simon Property Group. Earlier this month, each mall set aside a quiet hour in the late morning or early afternoon, dimming lights and playing soft music to accommodate children with autism and other sensory-processing disorders. For those children, bright lights and loud noise can be excruciating, even with sunglasses or noise-canceling headphones. Shelly Weidner, Town Center’s business development director, said parents last year were grateful for the program. Town Center has long been accommodating to children with autism and sensory-processing disorders. In 2011, for instance, the mall began offering a special Santa holiday service designed for children with autism and "other exceptionalities."
More public places are recognizing the difficulties faced by parents who want to bring their children with autism and other sensory-processing disorders out to a special event. As such, movie theaters, museums, aquariums, and restaurants are taking steps to be more accommodating. The Atlanta Braves baseball team has also instituted policies making it easier for children with autism and other exceptionalities to attend games. One Atlanta-area mother, Ashley Mahoney, described how the Braves allowed her son Connor to enter the stadium through a separate entrance and sit in a shaded area near an exit in case being there got too overwhelming. Mahoney praised the Braves, the malls, and other areas for being more welcoming. "There’s not the stigma [around autism] that there use to be. You want them to go out to experience the world, and the world is letting them experience it at their own pace," she remarked.
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One US City Might Do Away With Apartment Security Deposits
CBS News (12/06/19) Brooks, Khristopher J.
Apartment rents continue to increase across the country, dragging the price of security deposits up, too. Cincinnati has proposed a new bill that would require apartment owners to accept a security deposit insurance policy rather than asking residents to pay cash up-front. If the bill becomes law, it would make Cincinnati the first city in the United States to mandate a new option for renters to pay security deposits. Cincinnati Mayor John Cranley said the bill would allow his constituents to hold onto the significant sums of cash that they would otherwise have to give their landlords, highlighting that it would help citizens "provide for their families." Roughly two-thirds of the population of Cincinnati rents their living space. While some local apartment owners are troubled by the bill, government officials said the traditional security deposit system needs to be overhauled. Cranley and his surrogates have pointed out that without security deposits, thousands of additional dollars could be circulating throughout Cincinnati's economy.
Councilman P.G. Sittenfeld, who introduced the bill, pointed out that high security deposits can literally make or break a person's ability to pay for a given apartment. "If it takes an extra $900 to get into a one-bedroom in Cincinnati and you just flat out don't have it, well, you are then going to a suboptimal outcome," he remarked. The bill would specifically require that any company providing security deposit insurance be licensed in the state of Ohio. Moreover, the insurance policy coverage amount must be at least the same dollar amount as a would-be security deposit. And owners and operators can select a list of pre-approved security deposit insurance providers that they will accept from their tenants.
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6 Open Office Design Tips That Increase Productivity
Buildings (11/25/19) Penny, Janelle
Open office design naturally depends on furnishings and space layout for success, but just creating a crafty or aesthetically appealing space does not mean workers in the space will be productive. The best open office plans consider all factors important to productivity, including comfort, noise, and ease, thereby maximizing productivity from workers. There are many ways to take these factors into account and create a well-designed space. One such way is to consider thermal comfort. Though interior designers rarely have a say in choosing the HVAC system, they can study the zoning of the office space and group people and furniture accordingly to guarantee thermal comfort. Designers can also consider environmental exposure, putting communal spaces along the edges of the office by the windows and putting private offices in the center of the space. Employees will appreciate having views outside and natural light, and the space will feel lighter than if they were all huddled together without a view of the outside world.
A third way to craft a well-designed space is to make smart surface choices. Walls, ceilings, and floors can vary throughout the office depending on each space's intended purpose. Quiet spaces can have muted walls and indirect light, while collaborative zones can be brightly lit and incorporate interesting art. Designers should also consider adding distinctive interior landmarks to help orient people. Wall art, sculptures, or even sightlines can help point workers and visitors in the correct decision if they are unsure of how to reach their destination. Meanwhile, designers should consider acoustics, maximizing privacy and minimizing extraneous noise to help workers feel productive and get in a rhythm. This can be done by installing phone booths and so-called privacy pods, but it can also be accomplished with acoustic retrofits or by using acoustic materials in light fixtures. Finally, designers can make a space that maximizes productivity for a particular company by polling a representative group from that company to discern what the workers prioritize.
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Malls Are Yielding to Office Space. SF's Westfield Is the Latest Example
San Francisco Chronicle (12/07/19) Narayan, Shwanika
Malls and shopping centers continue to look for innovative ways to fill unused space as the market remains grim for retailers. One solution that has become increasingly popular is repurposing retail space for office use. In San Francisco, the 6x6 Mall has received approval to convert nearly 50,000 square feet to offices, while four other malls have sought approval to follow suit. Most recently, the San Francisco Planning Commission endorsed the trend by unanimously approving the conversion into office space of two upper floors at the Westfield San Francisco Centre. The Westfield mall plans to convert almost 50,000 square feet on its seventh and eighth floors to office space as part of a larger renovation. The addition of the office space will essentially take away the top two floors of the mall's Nordstrom department store, repurposing space that is currently used for such things as storage and meetings.
Chris Kitchen, Westfield's vice president for development, said the addition of the office space will be a benefit for Nordstrom and the other tenants in the mall. "In this case, offices on the upper floors will benefit Nordstrom and the other retail tenants by increasing the community of consumers around and directly within the center," Kitchen said. But repurposing the two floors into office space will also benefit the companies that end up renting the space. According to Colliers International, the San Francisco Bay Area is one of the most competitive office real estate markets in the country. In the third quarter, San Francisco's vacancy rate hovered at 5.4 percent, while its average asking rent of $86.22 per square foot outranked rivals Seattle and Manhattan.
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USGBC Unveils Vision for LEED Positive
Building Design + Construction (12/05/19) Fabris, Peter
The U.S. Green Building Council (USGBC) has introduced a plan the organization says will “lay the foundation for a future of LEED that is regenerative.” The USGBC says the LEED Positive program will encourage construction of buildings that can become vehicles for environmental restoration and repair. The USGBC LEED Positive vision statement includes several factors that will guide the development of the LEED rating system. These factors include: proposed LEED Positive targets for energy and carbon reduction that will require new construction to increase their efficiency efforts; define LEED Positive targets for other LEED credit categories that make up the holistic LEED rating system; continue investment in LEED v4.1 to accelerate the implementation and adoption of LEED for both new and existing buildings; and support category level performance certificates through the Arc platform to provide existing buildings with a pathway to LEED certification.
Mahesh Ramanujam, president and CEO of the USGBC, says the changes are necessary because LEED must evolve qualitatively and quantitatively. He adds, "Qualitatively, it must transition from strategies that reduce the harm done by buildings to strategies that cause no harm and are regenerative by design, ensuring our buildings are actually giving back more than they take. And quantitatively it will need to accelerate and increase its impact ten to a hundred-fold by leveraging our Arc performance platform."
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Healthy Buildings: Q&A With Clark Construction's Fernando Arias
Commercial Observer (12/02/19) Loria, Keith
Fernando Arias, the director of sustainability for Clark Construction, recently spoke about sustainability in construction and renovation projects. Many of Clark's construction projects are concentrated in the mid-Atlantic region, especially the Washington, D.C. area. In the nation's capital, Arias faces a city-specific challenge: Retrofitting buildings with energy-saving measures to comply with D.C.'s new Building Energy Performance Standards, which require all buildings in the District to reduce their energy usage by 20 percent between 2023 and 2026. According to Arias, Clark is involved in promoting sustainability in hundreds of D.C.-area buildings, ranging from airports to mixed-use developments. Some of the projects require renovations, while others require construction of entirely new buildings.
Arias touched on sustainable building efforts in commercial real estate as a whole, saying that he believes "developers and owners are eager to meet the value proposition of sustainable building with attractive, portfolio-wide solutions." He advised industry members to develop strong relationships and trust with their clients by sharing relevant, informative data to help clients make decisions that can improve their bottom lines. In addition, Arias said, Clark takes a holistic approach to planning sustainable renovations. "We also determine how these building methods will impact our clients, communities, and the surrounding environment -- both in the short and long term," he explained. He concluded by calling on commercial building owners and operators to prioritize healthy measures that improve the productivity and health of workers and visitors.
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Properly Prepping Exteriors for Winter
Multifamily Executive (12/02/19) Sowers, Scott
With the winter months upon us, it is time yet again for apartment building managers to secure outdoor amenities in case of snow. Some, like fire pits and grills, require little maintenance or attention over the winter. But others become trouble spots for water damage, mold, and mildew if not properly secured. Jim Angelo, maintenance director at Pennsylvania-based Morgan Properties, and Holly McQueen, vice president at Pennsylvania-based GMH Capital Partners, offer some advice on completing the outdoor winter checklist. According to Angelo, "Any amenities with areas where water collects and or freezes are the most vulnerable during harsh winter weather." This includes pools, which Angelo urged building managers to properly drain and cover, and outdoor furniture, which he said "should be covered or stored indoors." Angelo also advised managers to actively monitor the winter breakdown process to ensure that maintenance staff are following the correct procedures. He further said that it is acceptable to call in a third-party vendor for big jobs that only happen once or twice a year, like shutting the pool down.
Meanwhile, McQueen said that apartment management can still find use in outdoor amenities in the winter months, assuming the amenities have been properly prepped. McQueen revealed that GMH Capital's outdoor lounges and outdoor fitness circuit centers are available for use year-round. "These amenities were designed with durable materials like steel and plastic to withstand harsh weather conditions," she explained. She highlighted outdoor lounge areas with fire pits as a popular outdoor amenity for residents, who are willing to gather even on chilly nights to sit around the fire. Nevertheless, Angelo urged building managers to take a proactive approach to the winter checklist: "The biggest advantage of prepping exterior amenities before the seasonal change is it streamlines the process to effectively and efficiently address all factors."
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Menstrual Products Now Available in Wis. State Buildings
Associated Press (12/03/19)
State office buildings across Wisconsin are now providing free female hygiene products in their bathrooms. Melissa Baldauff, a spokeswoman for Wisconsin Gov. Tony Evers, has confirmed that the state government installed or converted menstrual product dispensers in bathrooms in state buildings, including the state Capitol. Baldauff did not immediately provide details on how many dispensers were installed or how much it cost. State Rep. Melissa Sargent (D-Madison) lauded the move. Sargent has previously introduced legislation that would make menstrual products free at women's bathrooms in state office buildings and schools, but her bills met dead ends in the state Legislature.
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Luxury Malls Expanding in Pursuit of Younger and Less Well-Heeled Customers
Wall Street Journal (11/26/19) Fung, Esther; Campo-Flores, Arian
Luxury shopping centers have learned to break the mold in an attempt to build connections with younger shoppers who may not be as well-heeled as the high-end malls' usual customers. According to Richard Johnson, a partner in Odyssey Retail Advisors, "brands are going to people who don’t traditionally fit their target demographic profile or to people who will eventually be a customer." Miami, in particular, has seen extensive expansion of luxury malls, thanks in part to a growing population and huge number of visitors. One luxury shopping center in Miami, Bal Harbour Shops, is currently in the midst of a serious expansion. The open-air mall with views of the Atlantic Ocean combines lush foliage and koi ponds with high-end retailers and restaurants. The backdrop is perfect for luxury retailers, who hope that Instagram posts will spread the message about their stores. In addition to Miami, luxury shopping centers are expanding in southern California and the New York City area.
Upscale retailers like Gucci, Hermès, and Brioni are fueling the expansion by building boutique stores that they believe will boost their brand identity and allow them to showcase more products. Gucci, for example, is planning on expanding its store at Bal Harbour Shops in Miami. Hermès is set to open a store at the Miami-area Aventura Mall in 2021. The new Hermès location will be just 12 miles away from its flagship store in the Miami Design District. Robert Chavez, chief executive of Hermès Americas, said that bigger locations allow the retailer to showcase more products. On the other hand, some mall landlords cautioned against expanding too aggressively, too quickly. William Taubman, COO of Taubman Centers, warned that "you’ve got to think of the consumer experience" when planning expansions.
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Nashville High, Mid-Rise Apartment Buildings Outshine Low Rises for the First Time in Decades
WKRN.com (12/03/19) Francis, Erica
As demand for new apartments in Nashville continues to rise, developers are grappling with the fact that there is limited space left to expand apartment communities. Their solution has been to look skyward, bringing in tall apartment buildings to meet demand. That represents a changing trend in the city, which has traditionally been dominated by low-rise apartment buildings. Statistics show that in the 2000s, fully 89 percent of Nashville apartments were low-rise, with the remaining 11 percent qualifying as mid-rise. But from 2010 to 2018, the trend began to change. By the end of that span, 42 percent of Nashville apartments were low-rise, 49 percent were mid-rise, and 9 percent were high-rise. Meanwhile, Nashville rent is up 2.9 percent over the past year, the seventh-fastest growth rate of all large US cities. Since 2014, rent in Nashville has increased by 18.6 percent, far higher than the national average of 11.3 percent. According to the Greater Nashville Apartment Association, more than 13,000 apartment units are being built right now.
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4 Trends from the Show Floor at Greenbuild 2019
Buildings (11/22/19) Kloepple, Sarah
The Greenbuild International Conference and Expo 2019 highlighted trends of interest in the sustainable building industry, with speakers and exhibitors showcasing the idea of implementing social equity within sustainable design—so that buildings are not only environmentally conscious, but also benefit occupants and surrounding communities. The LEED Positive initiative, the green building certification's new development roadmap, is promoted as one tool for achieving this goal. Another key trend is growing emphasis on reducing embodied carbon emissions from construction. "We have to think about [carbon] across all three scopes—not just energy in our factories, offices, or warehouses, but our sales fleet, our automobiles, our upstream and downstream transportation of our supply chain," noted Legrand's Susan Rochford.
A third trend concerns air quality monitoring, especially beyond surface-level observations. Kaiterra CEO Liam Bates said this has been the focus of much discussion in the U.S. and Europe, adding that "a lot of these places are putting in regulations at a national level that buildings must monitor air." The concept of using building data effectively for improved performance efficiency also is gaining ground. DPR Construction's Jay Weisberger pointed to a dearth of quality data, in both building performance and operations, in the industry. He suggested more meaningful analysis and tracking of benchmarking data could be a solution.
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Medical Office Buildings Draw Stronger Interest from Institutional Investors in US
World Property Journal (12/06/19)
A new report from CBRE found that institutional investors, drawn by strong fundamentals, are increasingly turning to U.S. medical office real estate. As a result, such space has had higher investment volume and lower capitalization rates this year compared to conventional offices. The CBRE report suggested that a steady vacancy rate of 10.3 percent, a sustained increase in average asking rent, and strong demand for healthcare services all contributed to the popularity of medical office space. Because of the increased interest, transaction volume for medical office buildings is 50 percent higher now than it was before the recession, though it has dropped somewhat from its early 2018 peak. Meanwhile, medical office buildings' cap rates have drawn even with conventional office buildings after years of the latter trending higher. Ian Anderson, CBRE Head of Americas Office Research, implied that there is no immediate sign the trend will stop. "The median age of the American population is gradually increasing, and health care as an industry is moving more toward treatment at outpatient centers and medical offices than at hospitals," he concluded.
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