11272019-newsletter - 11/27/2019

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November 27, 2019
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IREM® HEADLINES
IREM Recognizes Diversity in Real Estate Management with DISI
National Flood Insurance Program Extended Through December 20
Open Shopping Center Data Reveals Income and Occupancy Trends

INDUSTRY HEADLINES
Security and the Open Office Environment
Macy’s Blames Sluggish Sales on Weak Shopping Malls
Galleria-Area Building Owner Leverages the Lobby in Renovation
Preparing for Safe Snow Removal From Rooftops and Other Elevated Structures
Milford Mall Puts New, High-Tech Spin on Visit to Santa to Draw Customers
Creating Excitement for Indoor Amenities During the Winter
In Cambridge, Efficiency 'Concierge' Will Help Large Buildings Cut Energy Use
Colorado Springs Churches Turning Commercial Spaces Into Sacred Places
Could Dogs Be Retail's Best Friend?
The Trees and the Forest of New Towers
California and New York Cities Top the List for Largest Apartments
New Retrofit Design Guide for Metal Roofing Published


 
 

IREM Headlines


IREM Recognizes Diversity in Real Estate Management with DISI

There’s no shortage of studies that present the many benefits of an inclusive workplace. Companies that promote diversity simply perform better. They’ve been proven to have better financial results, they offer more creative solutions, a broader range of products and services, and they’re better at attracting and retaining top talent. Today’s workforce demands employee diversity.

We all have unique talents and skills. And we all want to feel comfortable at work, to be our authentic selves and feel safe offering different points of view, suggestions and ideas. We all want to be recognized, challenged and rewarded.

IREM recognizes and rewards members from underrepresented groups who have made a significant impact on the real estate management industry, and in their communities, through DISI (Diversity & Inclusion Succession Initiative).These individuals are proven leaders who have demonstrated leadership skills, embraced diversity, and advanced their careers through IREM education and resources.

In 2020, IREM will select ten DISI leaders, made possible by a generous grant from the IREM Foundation. Each selected DISI leader will be connected to a professional mentor, recognized by IREM in publications and social media, and receive a complimentary registration to the 2020 IREM Global Summit in Toronto, along with $1,000 for travel expenses. Applications for 2020 DISI leaders are being accepted through February 15, 2020. To learn more about diversity in the workplace, visit the IREM blog.
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National Flood Insurance Program Extended Through December 20

Congress passed another short-term extension of the National Flood Insurance Program (NFIP) on November 21, marking the 13th temporary renewal since June 2017. The NFIP, which provides flood insurance to more than 5 million households, was extended through December 20 as part of a continuing resolution to fund the government. The program is a partnership among federal, state and local governments that helps mitigate flood risk and provide affordable flood insurance to those who need it most. If the program lapses, flood insurance will become more costly or even unavailable.

IREM will continue to advocate for legislation that includes long-term reauthorization and reform of the program, and that encourages growth in the private flood insurance market. Some of the reforms IREM supports are:
  • For flood mapping to be done at higher resolutions, with a streamlined and less expensive appeal process
  • For premiums to be more accurately priced to the property-specific risk, but any rate increases to be gradual and phased in over many years, and
  • For private flood insurance options to be encouraged where cost effective, provided that NFIP remains a viable option for property owners
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Open Shopping Center Data Reveals Income and Occupancy Trends

IREM’s Income and Expense Analysis Reports provide the information real estate managers need to excel at budgeting and forecasting, essential to maximizing a property’s performance. Meeting these challenges for open shopping centers requires knowledge of the trends shaping modern malls.

Earlier this year, IREM performed an analysis of 308 open shopping centers with an average of 96,365 square feet in gross leasable area, or GLA. In addition to GLA, results in the shopping center report are presented based on geography and average actual occupancy, or AAO. IREM’s analysis also studied expenses compared to total operating costs and management fees per square foot. National highlights from the 2019 report include:
  • Average Median Income per Square Foot of GLA was $13.68, up $.09 from 2017.
  • Average Median Income per Square Foot of AAO was $15.67, down $.34 from 2017.
  • Insurance and taxes accounted for 41.8 percent of total costs.
  • Occupancy levels were down 1percent to 93 percent.
These reports are created every year to help real estate managers with the important job of benchmarking the properties they manage against comparable properties. In addition to open shopping centers, IREM also provides income and expense analysis reports on the following property types:
  • Conventional apartments
  • Federally assisted apartments
  • Condominiums, cooperatives & PUDS
  • Office buildings
To see the breakdown of IREM’s analyses, and to purchase these reports, visit 2019 Income/Expense Analysis Reports.
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Industry Headlines


Security and the Open Office Environment
Security Boulevard (11/20/19) Matthews, Kayla

Seventy percent of all offices have an open-style floor plan, which can facilitate collaboration but can also create security challenges. Open office workplaces can improve security by implementing clear-desk policies to ensure that confidential documents are not left in unprotected areas. A clear-desk policy requires staffers to put everything away at the end of each workday. Workers should also have lockable filing cabinets to store essential filing papers, and computers should always be password-protected. Legacy hard drives can pose a risk because they are vulnerable to hacking, so they should be destroyed adequately.

Open office spaces can employ a number of means to create an air of privacy. Measures include a white noise machine, a private messaging system to redirect sensitive conversations, and enclosing at least one corner of the office for small meetings. To deter in-office theft, organizations should remind staffers not to leave their belongings unattended and provide them with at least one locked desk drawer. Finally, consider an overhead camera system to discourage theft and track missing items.
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Macy’s Blames Sluggish Sales on Weak Shopping Malls
CNBC News (11/21/19) Thomas, Lauren

Macy’s on Thursday announced that its department stores at weaker U.S. shopping malls were negatively impacted by slower customer foot traffic during the latest quarter. The trouble is indeed at the so-called Class C and D shopping malls, which generally bring in less sales per square foot than A-rated malls. U.S. mall operators have been having a tough time finding new ways to lure shoppers, with customer traffic dipping as it becomes more convenient to purchase merchandise online. The strongest owners, including Simon Property Group, have had more capital to invest in adding experiential tenants such as game rooms, restaurants, and even apartments. But the weaker mall owners, like CBL, have more encumbered balance sheets.

Most of Macy's stores are located in Class A malls, which have strong tenant rosters and have seen more enhancements. Macy's CEO Jeff Gennette remarks, "Where we're investing and our mall developers are investing, we're getting great outcomes." But Jefferies analyst Randy Konik is more pessimistic. He remarks, "The mall is getting more toxic. . . . Value-oriented and off-mall retailers continue to outpace industry trends and take share while on-mall and less value-oriented retailers like Macy's are losing share."
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Galleria-Area Building Owner Leverages the Lobby in Renovation
Houston Chronicle (11/15/19) Feser, Katherine

Sage Plaza, a Houston-area building owned by BlackRock and managed by CBRE, is finishing up a $5 million renovation project that began in April. Several years ago, anticipating the departures of several key tenants, the building's owners and property manager began touring renovated properties in and around Houston to get a feel for the changing trends in design. Jason Presley, a senior vice president with CBRE who handles office leasing, said they found that new buildings in Houston were increasingly making use of the lobby. "New buildings downtown have brought in a change of use of the lobby and activated the lobby," Presley reported. In the end, CBRE and BlackRock decided to totally reshape the lobby of Sage Plaza, making it a more inviting and social space than before. Now, Sage Plaza's lobby is the place to go to chat with co-workers, get coffee, or enjoy a change of scenery.

The layout of the lobby was reconfigured in the renovation. Now, visitors entering through the front and back doors see similar design elements. Because the parking lot is in the back of the building, more workers enter Sage Plaza through the back door. Accordingly, the back area has a new security desk and other various elements, while the front area hosts the coffee bar and seating areas. The seating areas provide hard surfaces for laptops, and there are charging stations throughout. The lobby makes use of warm, neutral colors to foster a friendly tone, while neutral limestone flooring gives it a modern edge. CBRE and BlackRock also incorporated some office space into communal amenities on the first floor, including a building conference center, dining area, and tenant lounge.
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Preparing for Safe Snow Removal From Rooftops and Other Elevated Structures
Lexology (11/11/19) O'Connor, Kelly C.

Now is a good time for building owners and operators to review safe snow removal practices. The U.S. Occupational Safety and Health Administration's (OSHA's) General Duty Clause imposes a duty on employers to protect workers from recognized serious hazards in the workplace, including snow removal from roofs and other elevated structures. Building professionals can meet the duty of care by planning ahead for safe snow removal from rooftops. Chiefly, the site can and should be checked soon for any hazards to inform those workers who will be tasked to work on the roof to remove snow.

Whenever possible, building owners and operators should use engineering controls to clear ice and snow without requiring workers to work on the roof. Staff, meanwhile, should be trained to identify fall and electrical hazards. Fall protection equipment must be provided and kept in good working order. Finally, scheduling a safety meeting could be a good idea to address the topic of safe snow removal where copies of the "OSHA Guide to Safe Snow Removal" can be provided.
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Milford Mall Puts New, High-Tech Spin on Visit to Santa to Draw Customers
New Haven Register (11/18/19) Turmelle, Luther

As the holiday season approaches, shopping malls across the country are setting up for the time-honored tradition of hosting Santa Claus displays with photo opportunities for young families. But four malls in Connecticut are shaking up their displays in a bid to attract new shoppers. The four malls are owned by Dallas-based Centennial and will each have a themed theater-quality set that enhances the traditional Santa set-up. One of the malls, the Connecticut Post Mall in Milford, will base its Santa set around the 2003 Will Ferrell holiday classic "Elf." The set will also feature augmented reality experiences and a selfie museum. Centennial CEO Steve Levin said the idea to revolutionize the Santa display evolved out of discussions on how to enhance the mall experience year-round. "Just like all things in retail real estate, we’re re-imagining how consumers experience our centers. We’re delivering unique multi-generational experiences that will delight our guests for many years to come," Levin said in a statement.
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Creating Excitement for Indoor Amenities During the Winter
Multifamily Executive (11/15/19) Sowers, Scott

Apartment communities should consider upping their indoor amenities game as colder temperatures and wintry conditions settle in across North America. A number of indoor amenities can either be livened up or added anew to apartment properties for the fall and winter months. For instance, owners and operators can utilize such common spaces as clubhouses and fitness centers to host resident events depending on your community size. "If you have it in your budget, some new and popular indoor amenities to consider include dog wash stations, yoga rooms, and game centers," states Ann Kanz, regional marketing manager at Morgan Properties.

Movie theater rooms are also proving to be an increasingly popular indoor amenity at apartment buildings. "This is the perfect amenity to bring residents together for indoor fun," states Holly McQueen, vice president of GMH Capital Partners. "Going the extra mile to get residents involved with choosing different movie options as well as offering complimentary snacks is a good way to keep residents entertained when the weather is too chilly to bear." Residents also like to gather in such spaces to watch college and professional football. Other amenities to consider include a spa for relaxation and a library as more apartment communities are putting together monthly book clubs. McQueen concludes, "The best way to promote an indoor amenity is to host a resident event in the space."
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In Cambridge, Efficiency 'Concierge' Will Help Large Buildings Cut Energy Use
Energy News Network (11/12/19) Shemkus, Sarah

Cambridge, Mass., has entered into a partnership with the utility company Eversource to help the owners of the city's largest buildings usher in energy-efficient changes, helping them save money and reduce greenhouse gas emissions. Tilak Subrahmanian, Eversource’s vice president of energy efficiency, said the aim of the partnership is to help customers optimize their energy use. The partnership is the latest example of Cambridge's commitment to reduce its emissions. In 2015, the city adopted a plan that would make it carbon-neutral by 2050. The plan incentivized net-zero construction, required solar-ready rooftops on all new buildings, and created a local fund to purchase carbon offsets. Also that year, Cambridge's Building Energy Use Disclosure Ordinance came into effect, requiring owners of properties 25,000 square feet or larger to make annual reports of their energy and water usage. City officials hoped that the reports would provide transparent and accurate data that would encourage property owners to make energy-efficient changes.

The new partnership with Eversource is an extension of that goal, and aims to make it easier for building owners and tenants to measure their energy use and coordinate the logistical, technical, and financial aspects of reducing their consumption. Cambridge and Eversource are describing the partnership as a sort of concierge system, whereby building owners can call a designated number at Eversource and receive assistance collecting and understanding their energy consumption data. Eversource employees will identify useful technologies and advise building owners on the best ways to finance their retrofits. It is more difficult to strive for energy efficiency in large buildings than small buildings. Large buildings require more investment and attention than simply installing tripled-glazed windows or switching to LED light bulbs. Complicating matters is the fact that Cambridge is full of laboratories and high-tech offices, which present further problems in reaching energy efficiency. But Subrahmanian said there are still ways to make large buildings more energy-efficient, including installing venting fans in labs that only turn on when they sense particulates in the air or using variable speed pumps to save energy when heating the building.
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Colorado Springs Churches Turning Commercial Spaces Into Sacred Places
Colorado Springs Gazette (11/10/19) Rabey, Steve

Dozens of faith communities in the Colorado Springs area have found unique homes in repurposed commercial and retail spaces. Vanguard Church, for example, bounced between a middle school and a retail center in the late 1990s before settling at its permanent home, a former movie theater, in 2000. According to John Egan, a principal specializing in retail sites for NAI Highland, the trend began as the retail makeup of Colorado Springs changed. New stores began to open in a concentrated area, putting older shopping centers at risk. Eventually, the anchor stores in those older centers failed, leaving vacant space that was ideal for faith communities. "Churches need the space and the parking," Egan explained. The trend is not unique to Colorado Springs. Across the country, churches and houses of worship are finding homes in old shopping centers, giving the adjacent retail space a second life.

Vanguard's pastor, Kelly Williams, said it took some adjusting to settle into the old movie theater. "Our feet would stick to the floor thanks to the accumulation of spilled Cokes and popcorn oil," he cracked. But now, the large space -- Vanguard added 20,000 square feet after moving in -- is perfect to house the church's growing congregation and host events for the community. Moreover, Vanguard rents out its space to a coffee shop and an Alcoholics Anonymous group that regularly meets there. In the summer, the parking lot is home to a Sunday farmer's market. According to Williams, the pros of locating in a commercial space far outweigh the cons. "We have accessibility, plenty of foot traffic and car traffic, and proximity to other businesses. Our proximity gives us opportunities to build relationships with our neighbors and people who don't see life in the same way we do," he explained. He added that the lack of traditional religious architecture has proven to be a draw for those who feel intimidated by grand churches.
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Could Dogs Be Retail's Best Friend?
Bisnow (11/11/19) Rothstein, Matthew

Retail has changed significantly and rapidly with the rise of online shopping, compelling brick-and-mortar shopping centers to take unconventional routes to lure shoppers. One such route is to rely heavily on pet-related retailers. Such retailers have been among the most reliable tenants in the past 10 years, driving traffic to the rest of the shopping centers where they are located. Statistics show that spending on pets has increased by roughly 4 percent a year for the past decade. Paragon Commercial Group co-founder and principal Jim Dillavou suggested that the increased interest in pet spending can be tied to millennials' decision to delay or forgo having children. "If people live at home longer and/or delay having children, then that translates to more people 'filling that void,' so to speak, with pet ownership," Dillavou said. Whatever the reason, spending on pets hit an all-time high in 2018 with $73 billion spent nationwide.

As a result, pet-related retailers have become more common even while other brick-and-mortar stores struggle to survive in the e-commerce age. A report from Pet Business suggested that Petco and PetSmart, the two biggest pet-related chains in the United States, have each opened more than 500 stores in the last decade. Dillavou said most pet stores have been particular about where they expand, preferring to test new markets rather than oversaturate a market where they already have a foothold. Tracking firm Placer.ai Vice President Ethan Chernofsky said niche pet retailers have done well in affluent areas, specifically highlighting dog-groomers and high-end pet food makers. Additionally, stores like pet groomers or so-called "doggy day care" centers have proven to be strong complements to dry cleaners and drugstores because all support customer patterns like running errands. But even while pet-related retailers thrive in retail centers, landlords must contend with the unique challenges they pose, including ensuring that communal spaces in the retail centers are clean.
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The Trees and the Forest of New Towers
New York Times (11/20/19) Wallis, Stephen

Mass timber is emerging as major building material for a variety of construction projects. Also known as prefabricated structural wood, the material is becoming especially popular for large-scale buildings used as offices. Advocates of mass timber say it is ideal because it results in faster build times for less money. Building with mass timber also does not add to a warming climate because less greenhouse gas emissions are used compared to construction projects involving steel and concrete. Supporters also believe wood can be harvested sustainably from managed forests.

Architects, developers, governments, corporations and others are beginning to recognize the benefits. Microsoft and Google, for example, are planning major projects that will involve buildings made of wood. Meanwhile, the International Building Code was changed to allow wood buildings of up to 270 feet tall. However, there remain concerns about wood buildings and sustainable forestry among environmental groups. Firefighting experts have also expressed fears regarding fire safety in tall wood structures. Still, developers observe that enthusiasm for wood structures is high and has brought a new energy to the construction sector.
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California and New York Cities Top the List for Largest Apartments
HousingWire (11/11/19) Smith, Maleesa

California and New York boast the real estate markets with the highest average space per unit in studio and one-bedroom apartments, respectively, according to recent statistics from Apartmentguide.com. For studio apartments, the cities of Hollywood, Irvine, Long Beach, and San Jose in California ranked first, second, fourth, and fifth for unit size. Hollywood, which saw the largest studio apartments, has units averaging 723 square feet. Houston was the only non-California market to crack the top five, coming in third on the list. The Texas city was also the only market with prices below $2,000 monthly.

Meanwhile, cities in New York featured in the top five ranking for largest one-bedroom apartments. Lancaster, N.Y., has an average one-bedroom apartment size of 981 square feet, while Schenectady came in No. 3 with 919 square feet. Rounding out the top five were Playa Vista, Calif., in second; Hollywood, Calif., in fourth; and Pikeville, Md., in fifth. Finally, Apartmentguide.com found a significant price jump between one-bedroom apartments in Lancaster ($1,219 monthly) and Playa Vista ($4,232 monthly).
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New Retrofit Design Guide for Metal Roofing Published
Building Design + Construction (11/11/19) Fabris, Peter

The Metal Construction Association (MCA) has released a new design guide concerning metal retrofit roofing work. The guide provides code-compliant and market-ready materials, methods, and best practices to re-roof buildings using metal roofing and light-gauge steel framing systems. There are chapters devoted to market history, framing systems, assembly details, applications, and energy savings. Illustrations are also included that explain where renewable energy equipment is being built into new metal roof systems. "As metal roof systems are being increasingly used to replace or re-roof over the top of conventional roofing systems, it's more important than ever for building owners, managers, design professionals, and contractors to understand how these systems work and their advantages over other re-roofing methods," said Mark James, chairman of MCA's Retrofit Council.
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