Real Estate Management News - 09/19/2018

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September 19, 2018
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IREM® HEADLINES
Managers Brace for Hurricane Flooding
Artificial Intelligence, Diversity, Cybersecurity Being Addressed at Global Summit

INDUSTRY HEADLINES
Mall Rents Fell 4.6 Percent In Q2
Step Up Your Fitness Facility Game
Optimizing Buildings Via Intelligent Building Asset Management
Take Your Carpet Care Further
The Government May Want to Buy Your Dying Mall
Smart Building Project Launched to Bring New Concepts for Office Buildings
Costs Keep Apartment Development Slow in St. Augustine as it Booms in Jacksonville
3 Tips to Building Retail Success With Bricks and Mortar
5 Ways Artificial Intelligence Will Transform the Apartment Industry
Aging Population Fueling Squeeze in Medical Office Space
This Technology Is Trying to Bring High-Speed Internet to Underserved Areas
America's Malls Are Dying. Owners Are Hoping Virtual Reality and Fitness Centers Will Save Them


 

IREM Headlines


Managers Brace for Hurricane Flooding

With the wrath of Hurricane Florence still being felt throughout the Carolinas, tremendous flooding is putting property owners and managers to the test as attention shifts toward what to do after a hurricane and the floods that it brings. Although businesses and residents will be eager to return once the rains stop and the flooding subsides, it is important for management to verify the safety of a building before anyone re-enters it.

If there is standing water next to the outside walls of a property, do not go in. The building may not be safe or structurally sound. Walk around the building before entering it and check for downed or loosened power lines and gas leaks. The appropriate utility company should be contacted if either of these conditions is observed. If necessary, secure the site to prevent unauthorized entry.

In inspecting a building for structural soundness after a flood:

• Check the foundation for cracks and examine overhangs for missing structural supports. If obvious damage is observed, ask the city building inspector or fire chief if the building is safe to enter.

• Inside, check ceilings for signs of sagging. If a ceiling is holding water, the wet plaster or drywall will be very heavy and could be dangerous if it falls. Carefully poke or drill a hole in the ceiling at the edge of the sagging area and away from electrical fixtures so any water trapped there can begin to drain. Walls made of drywall or other water-absorbent materials should also be checked for signs of sagging and treated appropriately.

• Inspect building mechanical systems prior to restoring power to components.

• Determine whether flood damage requires full removal or if cleaning or other treatment will suffice. For example, once drywall has been saturated, it generally needs to be replaced.

This information comes from the fourth edition of Before and After Disaster Strikes: Developing An Emergency Procedures Manual, which offers more guidance on dealing with the aftermath of floods as well as other emergency situations.
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Artificial Intelligence, Diversity, Cybersecurity Being Addressed at Global Summit

How can artificial intelligence reduce your properties’ energy consumption, cut maintenance costs and improve tenant satisfaction? How are companies aligning their diversity efforts with business goals to achieve winning results? What do you need to know to put a strong cybersecurity strategy in place in your office?

These are just a few of the questions that will be answered by speakers during the IREM Global Summit, taking place September 26-29 in Hollywood, Fla. Other highlights of the Summit include:

• Keynote speakers Ryan Estis, known for his innovative ideas on leading change, improving sales effectiveness and preparing for the future of work, and Vinh Giang, who has spent the last 15 years mastering the art of performance-enhanced communication and helped thousands of professionals worldwide to learn these skills.

• The announcement of the IREM REME Award winners, IREM Foundation award recipients, and outstanding IREM Chapters for 2018.

• An opportunity to give back by taking part in the IREM Foundation’s Party with a Purpose or by helping to clean up the nearby beach in collaboration with VolunteerCleanup.org, which is committed to removing trash from the ocean coastline one pound at a time.

Registration for the IREM Global Summit is still open—or you can register on site at The Diplomat Hotel.
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Industry Headlines


Mall Rents Fell 4.6 Percent In Q2
Pymnts.com (09/14/18)

New JLL research shows that shopping mall rents in this year's second quarter fell 4.6 percent from the January-through-March period and 7.1 percent year over year. However, some malls fared better than others in terms of bringing in tenants. "[Malls] with strong locations were able to nab high-productivity tenants like Whole Foods, Wegmans, and Nordstrom," JLL's Q2 Retail Outlook report read. "Those in fairly good locations were leased by tenants like Dick's, Belk, and At Home." Regarding tenants leaving malls, move-outs totaled 7.8 million square feet in the three-month period that ended June 30. Of those move-outs, approximately 4.8 million square feet were in "low- to mid-rated malls." Malls with CoStar 5-star ratings represented less than 100,000 square feet of total move-outs. Finally, the vacancy rate at U.S. malls rose from 8.4 percent in the first quarter to 8.6 percent in the second quarter -- the highest level since 2012 when the U.S. was emerging from the last recession.
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Step Up Your Fitness Facility Game
Buildings (09/12/18) Kloepple, Sarah

If designed properly, fitness facilities can become an important part of a commercial or multi-tenant building. However, it requires more than just adding a few treadmills and some barbells. Fitness facilities should be designed purposefully, according to Advanced Exercise consultant Vaughn Marxhausen. He notes that at least 10 to 12 years ago, an office or apartment building gym was considered a popular amenity. Now, to even be considered Class A, a structure must have an on-site fitness facility. "Twelve years ago, it was, 'Wow, you have a fitness center! That must be a neat place to go,'" Marxhausen recalls. "Now people are saying, 'What do you mean you don't have a fitness center?' Times have changed."

A fitness facility can also promote connectivity between tenants, create a sense of community, and demonstrate your building's commitment to health and wellness. Meanwhile, Marxhausen says that building owners and operators are starting to look at trends in the fitness industry itself as a way to glean inspiration for what fits the goals and personality of their occupants. This could include workouts that are projected onto a screen or a TV, allowing occupants to follow along together. "There's a whole technology side that's starting to come out, but it has to be purposeful to match the demographics, space, and budget," Marxhausen concludes.
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Optimizing Buildings Via Intelligent Building Asset Management
Sensors (09/18) Davis, Troy

Intelligent building asset management has emerged as an important new tool with which firms are establishing the requirements for the optimum management of cost-intensive resources in terms of space, personnel and objects. Over the course of a typical business day, an average of 50 percent of the available space in a typical office building remains unoccupied. Energy harvesting wireless sensors can supply detailed data on how rooms and building areas are actually being used. This, in turn, can permit optimum room planning and assignment of employees to available spaces.

Meanwhile, services centered around human resource and inventory management can be significantly optimized with the assistance of such sensors, which can be programmed to supply information on usage patterns during normal operation as well as events. In addition, they can be programmed to consider differences in times of day and seasonal effects. Consequently, usage patterns of the building, personnel, and inventory can be prepared to determine the best use of resources and security requirements. The monitoring of parking space is another important application in buildings. Installed in the ground, pressure sensors can detect the direction of vehicle travel and thus also the occupancy of parking spaces.
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Take Your Carpet Care Further
CleanLink News (09/07/18) Kania, Kassandra

Maintaining and restoring carpets can be costly and time-consuming for many commercial buildings, prompting more building service contractors to incorporate encapsulation into their carpet care programs as an interim method to prolong deep cleanings with extractors. According to Charles "Mickey" Crowe of the CLEEnTech Consulting Group, encapsulation generally is a faster, easier process than hot water extraction, helping to boost productivity and lower labor costs. "Encapsulation chemicals encapsulate and crystallize the soils that are attached to the carpet fibers, causing them to release from the fibers and clump together," says Crowe. "When the product dries, you vacuum up the crystals, and in the process, you vacuum up the soil."

Lonnie McDonald, president of the Low Moisture Carpet Cleaners Association in Grandview, Mich., estimates production rates of 2,000 square feet or more per hour with encapsulation versus about 600 sq. ft. an hour with hot water extraction. Bill Yeadon, senior instructor at Jon-Don in Roselle, Ill., adds, "In a really busy building, you may do encapsulation on a bi-monthly or quarterly basis, and then do hot water extraction toward the end of the year."
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The Government May Want to Buy Your Dying Mall
Wall Street Journal (09/11/18) Fung, Esther

Local governments throughout the United States are taking over dying shopping malls. In most cases, the municipalities are concerned that vacated retail centers will blight the landscape and drag down surrounding property values. Their plan has been to buy up malls they fear are being starved of capital by the private sector. Governments often rely on land banks to fund these acquisitions. To be sure, property analysts acknowledge that tabulating the number of takeovers is difficult, partly due to the fact that government buyers are not always easily identifiable. A number of analysts believe this is a small, but growing trend in cities with failing malls. This past spring, for instance, the Clark County Land Reutilization Corp. bought Upper Valley Mall in Springfield, Ohio, for $3 million. Thomas Hale, executive director at the Clark County land bank, says he is now in talks with potential investors to redevelop the property into a mixed-use site that could include a smaller retail presence, housing, and possibly a soccer field.

In other cases, governments are opting to get rid of retail altogether. The City of Memphis, for instance, acquired Raleigh Springs Mall and demolished it in 2017 to build a new community center. The $28 million Raleigh Town Center will boast a library, a police precinct, an 11-acre lake, and a skate park when it is completed next June. Growing government involvement with shopping centers in less affluent areas is further proof that private investors may be losing interest in the worst performing shopping centers, even those that can be had at cheap prices. Nevertheless, government takeovers face a number of challenges. For one, malls and department stores often have large, unwieldy footprints, making it especially hard to propose another use for them.
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Smart Building Project Launched to Bring New Concepts for Office Buildings
Shine News (09/14/18) Wei, Xu

CR Land launched its new MixC project in Shanghai this past week. The goal of the "Office-easy" smart office building is to bring new architectural concepts and designs for commercial buildings to China. Construction is on pace to be completed in 2020. The building will be equipped with a facial recognition system. In addition, tenants can be involved in space design via an interactive digital installment. Finally, a wide range of sports, arts, and cultural activities will be regularly organized for the building's occupants and their workers.
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Costs Keep Apartment Development Slow in St. Augustine as it Booms in Jacksonville
St. Augustine Record (09/11/18) Korfhage, Stuart

Despite massive growth in the residential building sector in Florida's St. Johns County the last few years, as well as a major buildup in demand for affordable housing, there is still scant building activity in the apartment sector. Most of the rentals available in the county are single-family homes and condominiums/townhomes that are owned individually or by corporations. The city of St. Augustine has seen two multifamily projects permitted in the last five years: Antigua Apartments (249 rental units) and The Landing at St. Augustine (273 units). There are plans for The Landing to build another 312 apartments in the second phase of development, but those have not yet been submitted for permitting.

Meanwhile, Jacksonville has plenty of options. In fiscal year 2017, there were 3,730 apartments permitted in Duval County, or $660 million worth of development. In that same time period, it permitted 2,675 single-family homes. However, Jacksonville is not considered a viable option for many working near St. Augustine, which has a robust service economy but limited housing options for those working in that industry.
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3 Tips to Building Retail Success With Bricks and Mortar
Chicago Daily Herald (09/12/18) Bond, Rob

Many property professionals believe that success is still very achievable in brick-and-mortar retail. Not only do limited pockets of opportunity remain in various U.S. suburban areas, it can be realized in the redevelopment of existing retail properties where reworking the tenant mix and repurposing the space can create a center more oriented to the preferences and needs of today's shoppers. The first and perhaps most important tip is to start by identifying the problems to solve. With regards to retail, it may be as simple as providing types of retail that are currently missing from a given area.

A second tip is to focus on experiential opportunities. After all, shopping is just one of the drivers of big retail developments. Some shopping centers have added such attractions as skating rinks and indoor amusement parks. Of course, this kind of highly visible experiential approach isn't necessary or even a proper fit for many projects. For instance, consider a shopping center that draws most of its foot traffic during regular shopping hours. By adding a health club to the tenant mix, people have a reason to come earlier in the day for a morning workout. That is an opportunity for places like a coffee shop, a bakery, or a supermarket to sell to those people. A third and final tip is to "re-imagine existing centers." Some centers just need a fresh approach, which may come in the form of replacing retailers who have vacated the space or reworking the tenant mix to better serve the area.
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5 Ways Artificial Intelligence Will Transform the Apartment Industry
Multifamily Executive (09/01/18)

Artificial intelligence (AI) has the potential to make a big impact on the apartment leasing industry in the years to come. There are five ways AI could transform multifamily housing properties. One is maintenance. Artificial intelligence can read environmental cues to suggest preventive maintenance and predict equipment failures. "This means you won't have to keep excess parts on hand in order to fix problems quickly or inconvenience tenants while waiting for parts to be delivered," the article's author writes. Two is energy efficiency. AI systems will be able to track and analyze human presence and movement. Currently in use in a number of commercial buildings, such systems can take into account occupancy, people's locations in a building, time of day, and even weather to make the most efficient use of energy resources.

Three is property management. Indeed, with AI systems in place, apartment residents may never have to fill out a Web form, make a phone call, or come into a leasing office again to report issues, manage energy billing, or pay rent. Residents will be able to do such things from the comfort of their rental units using chatbots and such devices as Amazon Alexa and Google Home. A fourth way AI will transform the apartment sector is advertising and marketing. "Artificial intelligence can capture and analyze the demographics and IP addresses of people who click on real estate ads and then serve up those same ads to individuals most like them," according to the author. Finally, AI will be able to better answer calls and set appointments. Google, for instance, recently demonstrated an "experiment" in AI technology dubbed Duplex, a computerized phone assistant that sounds eerily human.
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Aging Population Fueling Squeeze in Medical Office Space
Healthcare Dive (09/05/18) Bryant, Meg

According to a new study by commercial real estate firm Transwestern, growing demand for healthcare services could spur a shortage of medical office space in some U.S. markets. Indeed, the share of Americans age 65 and older is expected to hit 17 percent by the end of this decade, growing at an annual rate of 3.5 percent or 14 percent faster than those younger than 65. Current projections forecast an additional 150,000 new healthcare employees over the next couple of years, with a subsequent need for additional office space. Transwestern puts that need at somewhere between 150.5 million and 225.8 million square feet nationwide by the end of 2019.

Markets with the tightest projected margins for medical office space include Atlanta, the Dallas-Fort Worth area, Denver, Miami-Fort Lauderdale, New York City, and the District of Columbia. To alleviate the crunch in these other metros, healthcare practitioners could lease space in conventional office buildings. Others may look to re-purpose vacated retail space for medical use, according to the Transwestern report. Finally, virtual care, digital health, and shared service centers could also ease demand if adopted more widely.
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This Technology Is Trying to Bring High-Speed Internet to Underserved Areas
CNN Tech (09/11/18) Garcia, Ahiza

Sckipio, an Israeli company, has developed technology that could make it easier to get fiber-optic cables inside apartment buildings. The company uses a technology called Gfast, which is a high-speed version of DSL. Sckipio says modems can be placed outside a building, and tenants can install and use their own Wi-Fi receivers. However, experts point out the technology is only effective when there are a dense number of subscribers. In addition, a fiber-optic line needs to be within 250 meters of users.
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America's Malls Are Dying. Owners Are Hoping Virtual Reality and Fitness Centers Will Save Them
Los Angeles Times (09/11/18) White, Ronald D.

Shopping malls nationwide are definitely getting more creative in adding amenities, attractions, and new tenants to maintain and even boost customer traffic. At Southern California's Irvine Spectrum Center, a former Red Robin restaurant was transformed into "Terminator Salvation: Fight for the Future," a virtual reality attraction based on the hit "Terminator" movie franchise. Since its August debut, it has attracted many visitors who said they hadn't been to a mall in months. Mall owners and operators are trying out other non-retail concepts, most notably luxury health and fitness offerings and haute cuisine, to combat rising vacancy rates brought about by the success of e-commerce. The effect has been compounded by Generation Y's well-documented purchasing habits, which lean more toward spending on restaurants and activities than in retail stores.

Southern California has sprouted several prime examples of this new type of mall, notably in developer Rick Caruso's upscale Grove and Americana at Brand ventures. Additionally, Westfield Century City recently took the wraps off its $1 billion overhaul that last year turned an aging outdoor mall into a Westside hot spot with nearly 50 percent of its offerings devoted to eating, drinking, and other leisure pursuits. Technology, though, seems to be garnering the biggest buzz. Back in March, Glendale Galleria became home to the "Star Wars: Secrets of the Empire" virtual reality attraction, where visitors wearing computer-filled backpacks and VR goggles move through a course to complete a mission. But it's the aforementioned "Terminator" attraction that really has people talking. The attraction is operated by Burbank-based Spaces, whose CEO, Shiraz Akmal, remarks: "We have been overwhelmed by the interest. At 11 p.m. at night, on a weeknight, this place is still busy with people shooting Terminators."
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