Real Estate Management News - 11/21/2018

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November 21, 2018
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IREM® HEADLINES
REME Award Winners Propel Industry Through Innovative Projects
Research Shows Impact of Green Certifications
Managers Face Off Against Nature’s Worst

INDUSTRY HEADLINES
Dallas to Implement New Certification System for Office Buildings
The Secret to Attracting Millennial Renters
Inside Nike's Store of the Future
Walmart Promises Steadier Schedules for Workers
6 Easy Ways to Stand Out in a Search
Half of Industry Expects Majority of Projects to Be 'Green' in 3 Years
Landlords Look to Curate Tenant Mix So Companies Can Financially Benefit One Another
Apartment Developers Are Slowing Construction. That Could Mean Higher Rents.
To Reduce Fires, Proposed New Jersey Law Targets Building Construction With Cheap Wood
Which Emerging Technologies Are Likely to Have the Greatest Impact on the Commercial Real Estate Industry?
Workers Ignore Security Concerns by Bringing Own Devices to the Office
Northwestern Mutual to Invest in 20 Shopping Centers in Joint Venture With Phillips Edison


 
 

IREM Headlines


REME Award Winners Propel Industry Through Innovative Projects

Ingenuity. Passion. Innovation. These words encapsulate the admirable qualities that proved to be the common bond between the 2018 REME (Real Estate Management Excellence) Award winners. The REME Awards champion the companies and individuals who are establishing exceptional practices and initiatives that are propelling the real estate management industry forward.

Corporate Innovation: Driven by the belief that better equipped associates deliver better service, Cortland Management, AMO, of Atlanta, won for their 64-foot, custom-branded mobile facilities training unit (MTU), which allows for a hands-on training experience for their service team members. The MTU has now helped Cortland provide over 3,000 training hours to over 550 facilities team members across the country.

Corporate and Social Responsibility: ResProp Management of Tampa, Fla., was awarded this for their role in creating Cristo Rey Tampa High School, which serves underprivileged communities in the Tampa area. The Corporate Work Study Program lets students gain valuable work experience without taking away from their first-class college preparatory education. By supporting this program, ResProp is helping develop solid candidates with the social and technical skills to thrive in the real estate management industry.

Employee and Leadership Development: Phillips Edison & Company of Cincinnati won this REME Award for their all-encompassing revamp of their college recruiting and internship program. A comprehensive internship program like theirs not only helps attract new talent for the company, but also serves as a pipeline for the industry’s next generation of leaders and innovators.

Sustainability Programs: The best sustainability programs are the ones that start with sustainable relationships, and this was proven by Phillips Edison & Company and Blue Sky Utility. Their partnership enhanced the efficiency of Phillips Edison’s California properties with the installation of new roof membranes and solar panels, and allowed them to purchase energy from Blue Sky at a discounted rate and pass that savings along to tenants.

“The 2018 REME winners have demonstrated excellence in what they do. They share a commitment to adding value to their teams, their clients, and their properties,” said Don Wilkerson, CPM, 2018 IREM President, Gaston & Wilkerson Management, AMO, Reno, Nev. “We are so proud that they are truly making a difference in our industry—and fostering advancement for all of us!”
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Research Shows Impact of Green Certifications

A summary of research done to date assessing the impact of green certifications on market value indicates that green certified buildings carry rent and price premiums, although energy performance in the absence of certification may not carry a premium. There also is some evidence that firms with more green buildings enjoy better firm-level financial outcomes.

This was reported last week during a session held in Chicago during Greenbuild, which brought together industry leaders and frontline professionals dedicated to sustainable building. The panel-led session focused on research conducted within in the business and academic communities around sustainability’s impact on building financial performance. Deb Cloutier, president of RE Tech Advisors in Falls Church, Va., and a member of IREM’s sustainability advisory board, served as moderator.

One of the panelists was Abigail Dean, global head of sustainability at TH Realty, who pointed out that sustainability is about protecting the value of the real estate investment. She shared how TH Realty takes sustainability into account throughout the investment cycle, starting with investment sourcing and including acquisition, leasing, property management, capital works and disposition.

Information from the 2018 CBRE Global Investor Intentions Survey was shared, which showed that, for the first time in the four-year history of the survey, more investors than not view sustainability as critical in asset selection decisions. Just over 20 percent of investors view sustainability as one of their most important selection criteria and will not invest in assets that don’t meet desirable targets. At the same time, a sharp decline has been seen among those investors who do not view sustainability as an important asset selection criterion, with this number dropping from 24 percent in 2017 to 15 percent in 2018.

IREM advances building sustainability efforts through its Certified Sustainable Property certification, an attainable, affordable and meaningful recognition program for existing office properties, multifamily communities, shopping centers and other retail properties. This certification is a way to gain recognition for sustainability initiatives at individual properties, extend sustainability across a portfolio, or start a sustainability initiative from scratch.
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Managers Face Off Against Nature’s Worst

In a recent column for NREI, IREM President Don Wilkerson, CPM, tackles nature itself. Despite the advances we’ve made in technology and industry, we’re still at the whim of nature, he says, and he points to three prime examples:
  • The May 3 eruption of the Kilauea Volcano that destroyed hundreds of Hawaiian homes. According to Forbes, the total volume of lava exceeded that from three of the largest eruptive events in the area over the past two centuries.
  • Back on the continental U.S., California this year sustained what’s considered to be the worst series of wildfires—more than 5,000 by some sources—in the state’s history.
  • Hurricane Harvey, a Category 4 storm that struck Texas in August of last year, came packing 180-mile-an-hour winds and pushing a storm surge of up to 13 feet.
No matter the crisis, property managers are the first line of defense, he says. But they cannot stare down Nature by themselves. And our legislators can do so much to help. In the column, Wilkerson updates membership on the strides being made toward a permanent National Flood Insurance Program.

No, says Wilkerson, we cannot do it by ourselves. And yes, we need the cooperation of our legislators.

And we need each other. “As a community of professionals, we learn and we grow from one another,” he writes. “From our individual hardships, the community finds its collective strength.”

Please click here to read the complete article.
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Industry Headlines


Dallas to Implement New Certification System for Office Buildings
Dallas Business Journal (11/13/18) Ballor, Claire

The city of Dallas is now in the process of incorporating a new connectivity rating system for office buildings that will measure which locations provide the best connectivity infrastructure and technological capacity. Dallas holds the distinction of being the first city in the southwest to implement Wired Certification, an international system from WiredScore. "Dallas is already a top location for corporate headquarters, but we believe WiredScore will further position us as a global city of growth and innovation," wrote Mayor Mike Rawlings in an official statement. “By advancing greater transparency in digital infrastructure in commercial properties, WiredScore's mission will strengthen Dallas' ability to attract and retain business."

So far, at least 15 companies have made the decision to implement the rating system for their Dallas office buildings, including Hillwood Urban, Stream Realty Partners, Transwestern Development Co., and Van Trust Real Estate. WiredScore founder and CEO Arie Barendrecht described Dallas as a "hotbed for global business innovation" that is "an optimal fit for Wired Certification." Buildings that are certified through the rating system are independently reviewed based on their infrastructure, technology, and connectivity capacity. To date, over 1,700 buildings worldwide have received the certification.
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The Secret to Attracting Millennial Renters
Buildings (11/16/18) Caldwell, Wood

The article's author details five key factors apartment landlords should consider for attracting millennials to their buildings. Number one is location. Millennials now rank as the biggest segment of the labor force. As such, they are looking for places to live that are close to employment centers. Parking is also important, especially in car-centric cities. A second factor to take into account is communal spaces. The social trend in Generation Y is to gather in public places instead of the home. Places to gather on-site with friends, particularly spaces that can accommodate a variety of different activities like courtyards and game rooms, are a must. Three, there is the matter of "amenities with services." Standard amenities like gyms are no longer enough. Make it a service by bringing in personal trainers, as well as providing ways to enhance their solo workouts with options like Fitness on Demand.

A fourth factor to take into account when looking to appeal to millennials is aesthetic. New apartment developments are taking notes from the hospitality industry to stay on the cutting-edge, as younger renters want a high-end feel at an affordable price. So, luxury finishes such as hardwood floors and granite countertops can make the space feel to them like a high-end indulgence. Quite possibly the biggest factor of them all, of course, is price. "If the price doesn't make sense for the value the potential renter is receiving, they won't sign a lease," the author concludes. "That's why you need to pack in as many amenities and services as you can to make it worth their while."
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Inside Nike's Store of the Future
Bloomberg (11/15/18) Novy-Williams, Eben

Nike has opened a new flagship store in New York City that focuses on personalized, experiential shopping as a model for similar stores worldwide. The venue is designed to work seamlessly with the Nike app, allowing shoppers to check out items via phone, request deliveries to dressing rooms, and schedule appointments with a Nike stylist. Shoppers are automatically designated NikePlus members after downloading the app, entitling them to various perks. The app employs geo-fencing technology, becoming aware of when shoppers enter the store and instantly changing the home page to showcase new offers and content.

Nike's Adam Sussman remarks, "We want to create a seamless connection between the physical and digital experience." Both the phone integration and additional in-store benefits for members aim to improve the customer experience and generate data about customers and their preferences, which is fed into product design and inventory decisions.
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Walmart Promises Steadier Schedules for Workers
Wall Street Journal (11/13/18) Nassauer, Sarah

Retailers are battling for workers as U.S. unemployment is at its lowest level in decades and wages are rising. After four years of testing, Walmart is introducing a new system for employee scheduling to all its U.S. stores. Walmart executives said this software better predicts staffing needs and allows some of its stores to give workers schedules that remain the same for 13 weeks. In the past, employees of the Arkansas-based retail giant have complained that it was difficult to make plans outside of work because of their constantly changing schedules that did not give them enough advance notice.
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6 Easy Ways to Stand Out in a Search
Multifamily Executive (11/14/18) Lawson, Jeremy

With Google updating its algorithm hundreds of times a year, it's becoming more challenging for apartment communities to stand out amidst the competition. The article's author details a half-dozen ways to do so. One, make sure your company listing is 100 percent accurate. Such information can change in a matter of moments, so ensure your marketing team checks listings regularly and corrects any and all misinformation. Two, pay close attention to Google reviews. With 90 percent of customers sourcing reviews as having an impact on their renting/buying decisions, Google looks at reviews as an endorsement of trust from users and rewards those businesses with the best visibility. Three, also pay attention to website reviews, which can also give credibility to your listing. Fresh content is king when it comes to search engine optimization (or SEO), and reviews are the No. 1 source for a boost.

Four, make your presence known on social media. A recent Hootsuite study shows there is a positive correlation between social engagements and change in rank. Five, never stop improving. To this end, nothing can take the place of a well-trained, highly responsive on-site team, which knows both the community and the residents better than anyone else. Finally, the article's author advises "get up to speed" by regularly analyzing and testing your website page loading speeds, which can greatly affect search engine rankings and placement.
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Half of Industry Expects Majority of Projects to Be 'Green' in 3 Years
Construction Dive (11/16/18) Slowey, Kim

A Dodge Data & Analytics survey of 2,000 industry professionals in 86 countries found that environmentally friendly buildings are growing in popularity. Forty-seven percent of respondents say 60 percent of their projects will be green by 2021. The main reasons for the increase in green projects were to meet client demand, comply with government regulations, and social reasons. Among the social factors driving developers is improving the health of building occupants.

Despite the rising popularity, not all developers plan to obtain certification from a third-party program. The survey also reported on the obstacles to erecting environmentally friends projects. Respondents noted that costs, lack of political support, lack of market demand, and lack of public awareness were four of the biggest challenges to green building projects.
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Landlords Look to Curate Tenant Mix So Companies Can Financially Benefit One Another
Bisnow (11/16/18) Schenke, Jarred

During Bisnow's recent Atlanta State of the Market event, Transwestern Senior Managing Director Clark Dean urged office landlords to begin viewing their buildings as "business ecosystems" that can be curated to "create specific value" for tenants. He remarked, "Now [landlords] can start thinking about what businesses want to be part of that business ecosystem to drive value for them to where the value and business starts to transcend the rent." Dean was part of a lineup of Atlanta commercial property professionals who'd gathered to discuss the fate of Atlanta's commercial real estate environment in the year ahead. Transwestern is specifically engaging in this curation at Georgia-Pacific Center, the 1.2-million-square-foot office tower in Atlanta's downtown sector that is home to the pulp and paper giant's corporate headquarters. The company restructured its headquarters at the site, freeing up offices for new tenants. Rather than filling the space with just any employer needing offices, Dean and his colleagues are seeking and recruiting firms involved in supply chain logistics, a critical factor for Georgia-Pacific.

Dean added that Transwestern is also seeking technology companies involved in blockchain, automation, robotics, and even augmented reality. If owners can populate a building with tenants that relate to one another, that can ultimately affect those occupants' profit margins. This, in turn, is ratcheting up pressure on office property owners to improve the amenity base of their buildings. Bridge Investment Group Managing Director Tina Renee McCall states. "Today, with the war on talent, your space needs to be a space where your employees want to come into work." This means more tenant lounges, food options, wellness spaces.
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Apartment Developers Are Slowing Construction. That Could Mean Higher Rents.
Wall Street Journal (11/13/18) Maidenberg, Micah

Construction of new apartment buildings is beginning to slow in the United States as rising costs and a tight labor market are becoming a drag on the industry. Federal data shows that permits for multifamily housing have declined every month since March of this year. Experts say this signals there will be less construction of new rental apartments for two years. That is usually how long it takes to build an apartment building of any scale. At the same time, analysts say less development of apartments will help assuage concerns of an oversupplied market.
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To Reduce Fires, Proposed New Jersey Law Targets Building Construction With Cheap Wood
New Jersey 101.5 (11/14/18) Matthau, David

New Jersey lawmakers could amend state construction codes for larger apartment buildings and structures so that they require more steel, concrete, and fire-resistant wood instead of lightweight wood and other combustible materials. Experts say the change could slow the spread of fire and give firefighters a better chance to save more structures. Kevin Lawlor from the Build with Strength Coalition, which includes insurance groups, construction unions, fire services personnel, community groups, and elected officials, says buildings made with combustible materials may look deceptively sturdy on the exterior but pose a huge threat.
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Which Emerging Technologies Are Likely to Have the Greatest Impact on the Commercial Real Estate Industry?
National Real Estate Investor (11/16/18) Kirk, Patricia

The pace of technology innovations in real estate is accelerating, states Dr. Andrea Chegut, director with the Massachusetts Institute of Technology's (MIT's) Real Estate Innovation Lab and head of research with the MIT Center for Real Estate. The MIT lab is currently exploring the future of the built environment and how design and technology will affect the way human beings live, work, and play. The lab has a couple of research projects underway. The first involves the development of a geometric, geospatial relational database of Manhattan that includes everything from rents and building mortgages to co-working spaces and cell towers. The team is also developing Real Estate Innovation Life Cycle, a visualization of real estate product innovations and how they change over time. This product will be used as an industry framework for tracking and harnessing innovation impacts to help prepare buildings for a physical transition every five to 10 years as new technology emerges and is adopted.

Benjamin Breslau, managing director of Americas research at JLL, which is a founding partner of the MIT lab, says that investors should consider technology that: one, automates and helps them run their business more efficiently; two, impacts the size of tenant spaces and future-proofs buildings throughout their lifecycle; and, three, collects data for analytics useful in running buildings efficiently. The article's author goes on to summarize various technologies on the horizon that are likely to have a significant impact on real estate investment. Blockchain, for instance, is relevant for processing real estate transactions and should be quickly adopted by the commercial real estate industry, states Brandon Nunnink, JLL's managing director for valuation and advisory services in the Midwest. Artificial intelligence (AI), meanwhile, will help investors make better decisions by providing access to specific data, such as building energy consumption and how tenants utilize workspace and common areas, contends Breslau. Finally, autonomous cars will result in the need for less parking and provide investors with opportunities for new development and redevelopment on sites currently occupied by parking lots and parking structures.
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Workers Ignore Security Concerns by Bringing Own Devices to the Office
Workplace Insight (11/08/18) Bean, Sara

A new report from NextPlane concludes that employees are increasingly introducing technology devices, software, and other tools into the office workplace without their employer's approval. Almost half (46 percent) of professionals said they or their team have introduced new technology into their place of business, while 53 percent report they or another team have pushed back on management's efforts to dictate the technology they use. The result is growing tension between IT departments who want to remain in control of building security and computer systems, and employees who want the freedom to choose the technologies they use to do their jobs.

Business professionals are increasingly seeking out new tools and technology to not just do their own jobs better, but to help their teams collaborate more effectively. "IT and business professionals are struggling to find common ground when it comes to the technology used at work," says Farzin Shahidi, chief executive officer of NextPlane. "Legions of teams and workers are introducing their preferred tools, such as team collaboration tools like Slack and Workplace, despite corporate IT policy. This increasing lack of compliance threatens not only the productivity of employees that may be working across different platforms, but the control that IT requires to manage all of a company's technology securely and efficiently."
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Northwestern Mutual to Invest in 20 Shopping Centers in Joint Venture With Phillips Edison
BizTimes.com (11/13/18) Anderson, Lauren

Northwestern Mutual last week entered into a joint venture with Cincinnati-based retail REIT Phillips Edison & Company Inc. (PECO) to invest in 17 grocery-anchored shopping centers. Under terms of the deal, the Milwaukee-based life insurance company will acquire an 85 percent ownership stake in the 17-center portfolio that is valued at $368 million. For its part, Phillips Edison & Company will maintain a 15 percent interest while providing asset management and property management services. The 17 shopping centers are spread throughout eight states.

The venture with PECO creates an opportunity to invest in a portfolio of necessity-based retail properties presently managed by one of the sector's top operators. Rob Francour, portfolio director of commercial real estate acquisitions at Northwestern Mutual, remarks, "We're confident these assets will produce consistent cash flow that complements our current commercial real estate portfolio." In a separate joint venture, Phillips Edison Grocery Center REIT III Inc. has entered into a partnership with Northwestern Mutual on a portfolio of three grocery-anchored shopping centers in three states in which Northwestern Mutual will own a 90 percent stake.
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News summaries © copyright 2018 SmithBucklin



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