Real Estate Management News - 01/16/2019

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January 16, 2019
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IREM® HEADLINES
Cannabis Legalization Impacting Canadian Property Managers
Technology Panel Among Highlights at Annual Conference
2018 Operating Data Now Being Accepted

INDUSTRY HEADLINES
Most Popular Alternative Workplace Programs
Multifamily: How New York Apartment Communities Handle Package Deliveries
Owners of Chrysler Building to Sell Iconic New York City Skyscraper
The Health and Fitness Amenities Office Tenants Want
Houston Lands Top 5 Spot for Retail Investments Amid High Occupancy Rates
Do You Offer Your Residents These Services?
How to Improve Communication Between People, Smart Buildings
What Color Are Your Office Walls?
Hiring a Property Management Firm Increases ROI
The Shopping Mall's Savior Is Starting to Eat Itself
J.C. Penney Announces More Store Closures
This Chicago Aquarium Saved Millions With an Energy Management Dashboard


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IREM Headlines


Cannabis Legalization Impacting Canadian Property Managers

Three months ago in October, Canada became the largest country in the world to legalize recreational cannabis, more commonly known as marijuana. This legalization has had wide-ranging effects on many aspects of Canadian society, including the way Canadians live. By extension, it is having an impact on those who work in the property management industry, which is positioned at critical points where people’s lives overlap.

As the policy goes into effect, property managers are being called on to play an important role in balancing individual rights with the regulations that help maintain community. Management has had to develop and implement new rules governing living arrangements and then help enforce them. “We’re ensuring that we have tenant educational forums,” according to one IREM Member in Manitoba. “Lots of signage in the building. Lots of tenant meetings. We currently have additional staff to work on a one-on-one basis with tenants to try and ensure ongoing successful tenancy and a continued safe tenancy in the building, and to create a safe work place for staff.”

Based on an article in the most recent issue of Journal of Property Management, it is evident at this early stage that it will take time for the “smoke to clear” to understand the day-to-day impacts of legalization on Canadians. For now, managers throughout the country will have to be proactive to avoid negative consequences, yet at the same time balance the protection of individual rights with reasonable and enforceable rules
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Technology Panel Among Highlights at Annual Conference

Last week in Chicago, REJournals was host to hundreds of industry professionals for its annual Commercial Real Forecast Conference. The conference, considered the largest, longest running commercial real estate forecast event in the Midwest, covered local topics along with broader subjects such as the overall state of the market and predicted trends.

One session, The Future is Now for Tech Innovation & Disruption, enlisted a panel of real estate and technology experts to deliberate about new and impending technology for real estate that will make functions and processes easier and more efficient.

Panelists discussed how real estate is in the early stages of technology innovation and will face the same challenges other industries have confronted when their technology transformations were just starting. The importance of “stickiness” of an innovation program was also examined. Stickiness is anything about a site or an app which encourages a visitor to stay longer. A site is sticky if a visitor tends to stay for a long time and then keeps returning. One measure the panelists used to define a good level of stickiness was if 70 percent of a commercial building adopts a new technology.

The panelists also identified three keys for success with tech innovation:
  • Leadership Commitment—The program will likely fail without a strong buy-in from leadership.
  • Relevant Value—If users don’t find the tool significantly applicable to their circumstances, it will be unsuccessful.
  • Ease of Use—Whatever the innovation is, it will need to be user-friendly, portable and adaptable.

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2018 Operating Data Now Being Accepted

For over 60 years IREM Income/Expense Analysis Reports have been the leading authority for property operations benchmarking data. This has been made possible by those who contribute their operating data to the program.

The site to submit 2018 operating results is now open and ready to accept data on conventional apartments, federally assisted apartments, condominiums, office buildings and shopping centers. IREM accepts data for residential properties of 12 units or more, office properties of 5,000 square feet or more, and retail properties of 20,000 square feet or more.

The larger the sample, the more valuable the reports are. Plus, all contributors receive a free digital copy of the 2019 Income/Expense Analysis Report—valued at over $500—and in addition, a free individualized building report.

You do not have to be an IREM Member to participate, receive a free copy and benefit from the published reports. Submit your data today.
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Industry Headlines


Most Popular Alternative Workplace Programs
Buildings (01/13/19) Kloepple, Sarah

Among today's employers, "alternative" workplaces could mean working from home or activity-based working -- not having an assigned seat in the office -- to increase productivity. Advanced Workplace Associates (AWA) recently released the "Alternative Workplace Strategies Report," which pulled together data from more than 130 organizations worldwide and 2.3 million employees. The study's purpose was to monitor trends and "benchmark" workplace strategies and practices. Researchers found that nearly 50 percent of employees still have an assigned seat, but that's only a 5 percent decrease from data collected a decade ago. Since 2009, the report further found, internal mobility has more than doubled from 9 percent to 21 percent.

Increasing productivity and saving money continue to rank as the primary drivers for implementing alternative workplace programs. According to the research, organizations are increasingly handing more control of alternative workplace programs over to real estate and facilities management. In fact, they gained 10 percent from data last collected in 2013. Finally, employee involvement in the planning and implementation of alternative workplace programs was shown to be on decline, as the programs grow in size. But the study shows that when more people are involved, the more likely the program will gain acceptance. Chris Hood, research lead and director at AWA, concluded, "As an industry, we need to improve our focus on better evaluating the business and employee benefits of these programs, concentrating on the core values these programs deliver, and worrying less about what they look like."
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Multifamily: How New York Apartment Communities Handle Package Deliveries
New York Real Estate Journal (01/13/19) Haughey, Rick

The National Multifamily Housing Council and Kingsley Associates 2018 Package Delivery Survey explores how property managers in New York City and elsewhere are responding to the demands associated with increased package deliveries. The majority -- 60 percent -- of Metro New York respondents receive over 100 packages in an average week. But that total certainly skyrockets in high volume periods like the holiday season, which can have a serious impact on property management and staff. More than 5 percent of area property managers polled reported that their staff spends more than four hours in a typical week managing and sorting package deliveries. That share soars to 73 percent during the holidays.

Meanwhile, as the number of items residents buy online increases, so has the importance of package safety. Camera systems rank as the most popular method used by apartment buildings in the New York market to ensure package safety. In fact, 80 percent of local respondents said they currently have them on site. At the same time, the use of package lockers is the biggest storage trend. Nationwide, the survey found, 30 percent of apartment communities utilize such lockers as their main package storage method. Among major metropolitan areas, San Francisco, Portland, and Boston have the highest proportion of apartment complexes primarily using package lockers.
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Owners of Chrysler Building to Sell Iconic New York City Skyscraper
Associated Press (01/09/19)

The owners of New York City's landmark Chrysler Building, the Abu Dhabi Investment Council and developer Tishman Speyer, are putting the Art Deco skyscraper on the selling block. The owners have hired CBRE Group Inc., a leading commercial property firm, to market the 77-story office tower. The Chrysler Building, which was erected between 1928 and 1930, ranked as the world's tallest building until the Empire State Building took the title in 1931. Originally the headquarters of the Chrysler Corp., the midtown Manhattan tower has long been a favorite with architecture critics and the general public thanks to its distinctive tiered crown. However, it is competing for tenants with new skyscrapers that boast larger floor plates and more modern amenities like sweeping outdoor terraces. The Abu Dhabi Investment Council paid $800 million for a 90 percent stake in the building in 2008.
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The Health and Fitness Amenities Office Tenants Want
Commercial Property Executive (01/10/19)

CPE and Kingsley Associates recently surveyed tenants in multiple U.S. cities to see how they really feel about the health and fitness options in their offices. One of the more intriguing responses was the desire for a covered area for parked bicycles. Without such an amenity, bicycles can get very hot in the sun and be hard to ride at the end of a work day. Others would like to see updates made to their buildings' on-site fitness facilities. To that end, some even floated the idea of employees having access to these gyms during weekends and holidays. "If we were able to badge our access cards during the weekend to workout, that would be great. No staff would have to be present, just access to the gym," said one unnamed office tenant in Emeryville, Calif.

Younger employees, meanwhile, prefer on-site fitness centers that also boast showers and locker rooms available. Another common request is more lockers in the bathroom. Others see nearby buildings offering things like free yoga classes and farmer's markets in their parking lots and would like to have such amenities at their site. Friendly and personable security guards were also mentioned. Finally, one office tenant in Kissimmee, Fla., chimed in, "We would love to have a few more dining options that are unique -- brunch bakery, donut shop, healthy vegan, or vegetarian options."
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Houston Lands Top 5 Spot for Retail Investments Amid High Occupancy Rates
Houston Chronicle (01/11/19) Feser, Katherine

The Houston metropolitan area attracted a record amount of capital last year as shopping centers remained mostly full with the exception of certain troubled retailers. The Houston region closed out 2018 with the addition of 2.7 million square feet of new retail space, roughly matching the year before, according to commercial real estate firm Weitzman. Looking at Texas as a whole, Houston's occupancy rate dipped one percentage point to 94.0 percent in 2018 versus 95.8 percent in Austin, 92.4 percent in Dallas-Fort Worth, and 94.0 percent in San Antonio. Occupancy levels stayed strong even as struggling retailers like Sears and Toys "R" Us vacated big blocks of space.

Weitzman tracks a total inventory of 160.5 million square feet throughout the Houston market. The firm's research team projects new retail space to decline this year after recently peaking at 3.4 million square feet in 2016. On the investment side, final numbers will likely show that Houston hit record retail sales volumes in 2018 and is expected to rank fifth in the country for retail deal volume in 2018. According to Real Capital Analytics, that total would top the previous record of $2.1 billion set in 2007.
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Do You Offer Your Residents These Services?
Multi-Housing News (01/11/19) Cirjakovic, Lela

When considering what amenities to offer residents, apartment owners and operators should remember that top-notch assistance and thoughtful conveniences can unlock great value. Regarding resident priorities, affordability and location continue to rank among the top priorities for renters across the demographic spectrum followed closely by efficient service. Package handling is also becoming more and more important. In luxury apartment settings, concierge-like services such as dry-cleaning pick-up and delivery and dog walking are appealing to renters no matter what the location or whether they are young professionals, part of a recently formed household, or empty nesters. But it takes a well-trained and attentive staff to make those conveniences a tangible selling point to both prospective and existing residents.

Technology, though, often makes the biggest difference. Online portals, for example, improve the resident experience by streamlining such pesky moving tasks as transferring utilities or changing your address. App-based technologies, meanwhile, offer on-demand hotel-style cleaning services at the push of a button. Of course, these services have to be properly sold to prospective residents just like the physical offerings of an apartment building. Lightning-fast Wi-Fi throughout a building now must be standard, not the exception. Finally, SMART home technology is the latest "trendy" technology amenity emerging on the multifamily housing landscape. Currently, though, it is more of a "nice to have" than a "must have."
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How to Improve Communication Between People, Smart Buildings
USC News (01/09/19) Polakovic, Gary

University of Southern California researchers determined dialogue between people and smart building systems can improve with a virtual avatar representing building management, with social banter key to improving those communications. The researchers exposed several hundred participants to an office setting in virtual reality, followed by an actual office environment for a smaller cohort. Participants interacted with a virtual human agent programmed to make pro-environmental requests, to see whether they cooperated.

The research team found that people responded better when the agent was acting on behalf of the building manager rather than when it actually personified the building. Having the requests as part of a social dialogue like small talk, instead of as a monologue, also improved cooperation. The researchers wrote: "Including a social dialogue may have helped to overcome the difference between personas by making the building persona more relatable."
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What Color Are Your Office Walls?
Architect (01/10/19) Guimapang, Katherine

Many people work in office buildings that have not changed much in years, with the common color palette usually a mixture of neutral tones such as beige and subdued grays. However, an office's color palette and lighting has been getting increasing attention. Architects and designers are designing office spaces that interact with the senses to evoke happier, more productive environments. Then there are those companies that have given their offices a facelift in recent years by implementing an assortment of "trending" office interior upgrades. Increasingly common are glass wall dividers, a vibrant color accent wall, even vinyl decals that feature motivational quote like "work smart not hard."

Despite its good intentions, though, office interior upgrades often fail to do what is intended in the long run -- create long-lasting workspaces that provide beneficial interactive elements. Color theory and its application to interiors are effective only if they are executed with intention. Architects and designers must resist the urge to make workspaces too conceptual and abstract. In the end, fostering a sense of comfort or adopting an overtly "youthful and open space" concept isn't quite as important as ensuring the office is a place where people go to get work done.
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Hiring a Property Management Firm Increases ROI
Multifamily Executive (01/08/19) Willis, Debbie

Hiring a quality property management firm is vital to the ongoing success of an apartment community, particularly in the luxury category. From common-area exterior amenities to individual rental units, a top-performing property manager keeps a community in the best condition possible, maximizing value in order to yield higher rents and increase profit during ownership. Such properties will also command a bigger return when it comes time for the investor to sell. It's imperative for property managers and their teams to have an online presence in this day and age along with a definitive plan for how to manage it. "It takes skill and dedication to manage and oversee the online aspects of a community, from the website and resident portal to social media and reputation management," writes the article's author.

Property management firms are also tasked with handling the leasing process, which includes everything from performing renter background, credit, and criminal checks to spotting rental scams. The best property management companies have established and trusted vendor relationships. In turn, those vendors can provide discount or bulk pricing and even discounts from insurance firms to get clients the most for their money. In general, hiring a quality property management firm to oversee one's apartment investment reduces stress and gives the client confidence the investment is being well taken care of.
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The Shopping Mall's Savior Is Starting to Eat Itself
National Real Estate Investor (01/07/19)

Restaurants, among the supposed saviors of regional shopping malls, have been hurt in the last year by too much expansion and a slowdown in consumer spending. This is especially true in England, where an influx of private-equity investment into eateries prompted some chains to open too many locations that simply aren't breaking even. Popular names ranging from Gourmet Burger Kitchen to the Jamie Oliver chain -- often found at big malls around London or Manchester's Trafford Centre -- have been among the hardest hit. Nationwide, the number of restaurants going insolvent climbed 24 percent in 2018 versus the year before. Operators have been hurt by a combination of increased competition, rising food costs due to the pound's weakness after the Brexit vote and a government apprenticeship levy. Analyst James Child adds that many of the brands are also very similar, and the general public can't differentiate between them in any way other than price.

Three years ago, Intu Properties PLC -- owner of 17 U.K. shopping malls -- touted research estimating food and beverage operators would eventually occupy nearly 25 percent of space in malls. Today, Intu's new hope is that salvation lies in building apartments and hotels at its malls. Radius Data Exchange reports that food and beverage operators took 13 percent of newly leased space in malls during 2018, the lowest level in at least six years. It was 20 percent a year prior. One of the big problems has been that malls are competing for diners with downtown areas, which offer many more attractions.
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J.C. Penney Announces More Store Closures
Fox Business (01/09/19) Henney, Megan

J.C. Penney has decided to shutter three more department stores by this spring, on the heels of its announcement that its sales declined during the all-important holiday shopping season. It was unclear as of press time where the targeted store locations are. More details are expected when the company posts its full fourth-quarter results at the end of next month. The closings are part of a broader initiative on J.C. Penney's part to assess its brick-and-mortar store portfolio. That entails determining whether some locations do not meet the required financial target, or if they represent a chance to capitalize on prime real estate.
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This Chicago Aquarium Saved Millions With an Energy Management Dashboard
Energy News Network (01/08/19) Stark, Kevin

When the Shedd Aquarium in downtown Chicago invested in clean energy solutions, the facility could see how much energy it used in real time, but not where it should be making adjustments to enhance overall efficiency. Bob Wengel, Shedd Aquarium’s senior vice president for facilities, sought to track energy usage against a baseline. He reached out to Andrew Barbeau, president of energy consultancy firm Accelerate Group, which helped develop a dashboard to monitor efficiency. The aquarium was "able to respond to peak days, high heat, or where they had large events going on and to be able to make sure they're able to manage and meet their goals for energy reduction but also peak reduction at the building," says Barbeau.

Wengel says a key advantage of the product is that operators still have control — the system "maintains their ability to think." Shedd's operators work on daily shifts, and for each workday, they are given a set of efficiency targets that are measured against a baseline. They monitor progress using the dashboard, and a color-coded chart on the screen shows if they are meeting their target. Barbeau notes that the software is currently used in nine different buildings throughout downtown Chicago, covering 10 million square feet of commercial office space.
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News summaries © copyright 2019 SmithBucklin



©Institute of Real Estate Management. All rights reserved. IREM®, Certified Property Manager®, CPM®, ACCREDITED RESIDENTIAL MANAGER®, ARM®, ACCREDITED MANAGEMENT ORGANIZATION®, AMO®, Income/Expense Analysis®, Expense Analysis®, MPSA®, and JPM® are registered marks of the Institute of Real Estate Management.

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