Real Estate Management News - 07/10/2019

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July 10, 2019
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IREM® HEADLINES
Being Prepared for Cyberattacks—on Your Property
Up-and-Coming Industry Leaders Celebrated as This Year’s 30 Under 30

INDUSTRY HEADLINES
Apartment Demands Hits Five-Year High
With Spate of Workplace Shootings, Offices Devote More Resources to Security, Experts Say
Malls Are Catering to a New Type Of Customer: Gamers
Dallas is Nation's Second Most Active Medical Office Building Construction Market
Spurred by Amazon, Supermarkets Try Swapping Cashiers for Cameras
Apartment Developers Are Using Art to Entice Renters
Connectivity, Flexibility and Sustainability in the Office of Tomorrow
Ford SmartLabs Experiment With Car Retailing in Shopping Malls on Two Continents
Is DNA Testing Dogs Starting to Be the Norm for Nashville Apartment Buildings?
AI Robots Can Service Physical Security Workforces
Shopping Centers Exploring Facial Recognition in Brave New World of Retail
Snacking Goes Green with Enel, Mondelez International Solar PPA


 
 

IREM Headlines


Being Prepared for Cyberattacks—on Your Property

Commercial real estate is no longer under the radar when it comes to cyberattacks. It’s now front and center, and the risk is growing. In this ever-changing tech environment, property managers are wise to get educated and be prepared, assuming that a potential hack is on the horizon.

Speaking to the Journal of Property Management (JPM) for an article in the July/August issue, David Peterson, the director of smart properties at the Maryland-based Blackpoint Cyber and a 25-year commercial real estate veteran, explained that adding automation like climate controls, security systems or timed lights comes with additional potential “attack surfaces.” According to Peters, “These devices typically rely on an IP-based communication system—much like on a PC—and these can be vulnerable to malicious hackers. It could be a building automation system, an unsecured maintenance portal, a CCTV or a security system, or even an individual laptop, and if there’s a weak point, they can get in.”

The most common scenario, Peterson says, is what is called a “lateral spread,” and it’s one that you probably have already seen attempted. “It starts with a well-worded email to the right individual, and it gets them to inadvertently give up their credentials or click on a link and then something like malware or ransomware can spread automatically,” Peterson says, adding that once a hacker is in the system, they try to gain access to higher value targets and privileged accounts.

Questions for property managers to consider, according to the JPM article, include: Does your insurance cover a hack? Who would pay for the damage? What about the damage to your reputation? Whether a smart system is in place or in the plans, these concerns must be addressed.

See the full article,” Hack-Proof: Cybersecurity and Smart Buildings,” in the current issue of JPM.
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Up-and-Coming Industry Leaders Celebrated as This Year’s 30 Under 30

Exceptional next generation leaders in the real estate industry can be found worldwide in a broad spectrum of professional environments, as is demonstrated by IREM’s 2019 30 Under 30. The list includes talented young professionals from 30 different companies that represent properties from student housing to mixed-use developments in 15 states and three countries, and they are making a difference in property management and in their communities.

In selecting this year’s winners, IREM considered candidates who have demonstrated creativity, innovation and leadership in their careers. They share a common passion for the real estate business, and their enthusiasm is sure to inspire those who come after them to explore the many career possibilities in this field. Recipients will be recognized at the 2019 IREM Global Summit in San Francisco.

Click here to learn more about the outstanding individuals selected to be in this group of up-and-coming leaders.
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Industry Headlines


Apartment Demands Hits Five-Year High
Wall Street Journal (06/30/19) Parker, Will

New household formation and a shortage in available homes has led to a five-year high in demand for rental apartments this spring, according to a study conducted by real-estate analytics firm RealPage. Second quarter apartment move-ins increased 11 percent from the same three-month period in 2018. This increase drove the national occupancy rate up to 95.8 percent versus 95.4 percent year over year. Apartment demand was particularly intense in such major markets as Chicago and Houston, where move-ins outpaced construction by almost 3 to 1 in the April-through-June period. Meanwhile, rent prices continued to increase across the country, though small metropolitan areas tended to see bigger increases than elsewhere. Wilmington, N.C., and Huntsville, Ala., saw second-quarter rent increases of 7.4 percent and 6.4 percent, respectively.

The surge in rental apartment demand may indeed be attributed to the slowing home-sales market. The volume of existing-home sales on an annualized basis has now dropped for 15 consecutive months, but home prices are still growing faster than income. With a shortage of affordable options, more people are turning to rental apartments for their housing needs. But there is an emerging affordability problem with apartments, too. Much of the new supply of rental units targets high-income earners, and the apartment stock "doesn't really help the consumer in [lower-end] housing where it's already full," observes RealPage chief economist Greg Willett.
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With Spate of Workplace Shootings, Offices Devote More Resources to Security, Experts Say
North Jersey Record (07/01/19) Shkolnikova, Svetlana

A U.S. Bureau of Labor Statistics report found that almost 300 people are killed at work every year. With mass shootings posing a very real and dangerous risk for the modern workplace, security is being beefed up across the board for everyone from employees to interviewees to visiting clients. Companies have favored security measures like requiring electronic badges and installing video surveillance cameras instead of contracting armed guards to protect workplaces. As technology becomes more advanced, buildings may have more options to restrict access to suspicious figures.

Security expert Robert McCrie believes that buildings may take a page from casinos' security playbooks and use video analytics to identify people who have been banned from the property. In the meantime, companies have invested in barriers that can be pushed against doors in case of emergency. Also, some buildings have been staging active-shooter drills to prepare employees for the possibility of a real attack. When it comes to attacks perpetuated by disgruntled or fired employees, the most effective line of defense is carefully observing erratic or aggressive behavior when it first appears. Mass shooters typically show several warning signs before staging their attacks.
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Malls Are Catering to a New Type Of Customer: Gamers
CNN Wire (07/01/19)

Simon Property Group has announced it will invest $5 million in the entertainment company Allied Esports, which will create lounges for competitive video game events at Simon's shopping malls. The nation's largest mall owner is also working with Niantic -- the company behind the new augmented reality game "Harry Potter: Wizards Unite" -- to turn 200 of its shopping centers into in-game locations that players can visit while they role-play as wizards. Simon is wagering that when players come into one of its malls to cast spells, they will also go shopping or get a meal.

Simon and other mall operators are scrambling to find new tenants to replace struggling department stores and apparel chains. U.S. retailers announced 6,000 store closures in just the first half of this year, with Charlotte Russe, Gymboree, Payless, and Shopko all filing for bankruptcy. "Malls are having to reinvent themselves," stated Joel Stephen, senior vice president at the property consultancy CBRE. Owners and operators want tenants who can "create a community," he added. Among the replacements: so-called "beercades," which combine arcade games with craft beers on tap; competitive activities like axe throwing; and escape rooms, which call on players to work together to solve riddles and puzzles.
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Dallas is Nation's Second Most Active Medical Office Building Construction Market
D CEO Healthcare (07/01/19) Maddox, Will

The Dallas-Ft. Worth area currently boasts the second-most medical office building construction nationwide, accounting for almost 1.5 million square feet of land. Only the greater New York City area has a more active medical office building construction market. Revista data suggests that medical office buildings are moving farther away from hospitals, but are growing bigger and are well-occupied. Prior to 2005, most individual projects were roughly 40,000 square feet. But over the past decade, that number has jumped to 60,000 square feet. Even individual healthcare practices are growing in size, with a median increase of 4,000 square feet since about 2007.

Within the Texas market, Dallas outranks rivals San Antonio, Austin, and Houston in occupancy and rent price per square foot. There are currently 14 medical office building properties under construction in Dallas, proof of the high demand within the market. According to Revista, private equity has played a major role in the continued growth of the market.
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Spurred by Amazon, Supermarkets Try Swapping Cashiers for Cameras
Wall Street Journal (07/07/19) Olson, Parmy

Tesco PLC, among the world's largest supermarket operators, is one of several grocers testing cashierless stores with cameras that track what shoppers pick. So, they pay by simply walking out the door. French retail giant Carrefour SA is also running tests in two stores where cameras track what is taken off shelves and shoppers are charged automatically when they exit. "The retailers are hopeful the technology will allow them to cut costs, alleviate lines, and compete better with online retail.

American grocers have typically been slower to adopt new technology because the U.S. market is less competitive, states Bernstein Research analyst Bruno Monteyne. Additionally, U.S. retailers have faced concerns about excluding low-income shoppers who tend to pay with cash. Nevertheless, Walmart is testing artificial intelligence-enabled cameras in one of its New York stores that can recognize hundreds of products, but only to manage inventory levels. Kroger, meanwhile, launched a system that allows customers to scan and bag products as they shop, then pay by scanning a final bar code.
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Apartment Developers Are Using Art to Entice Renters
Houston Chronicle (07/02/19) Glentzer, Molly

Houston apartment developers have been supplementing typical amenities like swimming pools and yoga studios with an unusual amenity they hope will draw in prospective renters -- visual art. One complex, Zócalo Apartments, is selecting three artists per year to live there rent-free. One artist will be awarded a year-long lease, while the other two will be given two back-to-back residencies. Zócalo's aim is to use their art to transform the property into a more vibrant, lively community. Artists will be welcome to publicly display murals, paintings, sculptures, and more on the Zócalo complex.

Meanwhile, the new Drewery Place apartment building incorporates murals, hanging sculptures, and artwork on every residential floor. Drewery Place developer Caydon USA teamed up with the Houston Arts Alliance to review artist applications and select the final works to be displayed. The goal is to create a cheerful ambiance throughout the building in communal and residential spaces. One artist, Patricia Barrera, said she tried to bring a sense of comfort into her mural. "I was thinking of sanctuary, that refuge we call 'home' -- more of a feeling than a place," she remarked.
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Connectivity, Flexibility and Sustainability in the Office of Tomorrow
Commercial Property Executive (07/07/19) Eichenseer, Brian

Brian Eichenseer of Hines writes that most employees will spend more than one third of their lifetime at work. This revelation is resulting in today's employees demanding more from their business environments than ever before. Tenants are increasingly overlooking ornate lobbies, outdated fitness centers, and segmented office layouts that discourage collaboration in favor of "next-generation workspaces" that seek to create a harmonious blend of open and private spaces that encourage interaction and provide places for solitary retreat. Such offices are also touting their sustainable features in order to be reflective of the environmentally conscious generation joining the workforce. According to Eichenseer, "tenants today require authentic human experiences in their office environments to support a continuously thriving corporate culture as well as the retention and recruitment of their employees."

In addition, today's employees are searching for improved digital connection -- chiefly, the ability to stay plugged in no matter where they are located. As such, creating a space that allows for easy connection is imperative to attracting and retaining such digital-minded office workers. Hines' T3 new West Midtown office project in Atlanta touts its shared social spaces and alternative working environments for its occupants, along with its first-rate connectivity. Eichenseer states, "We focused on providing an improved technology infrastructure that allowed employees to access Wi-Fi from every corner of the project, earning the project the prestige of being a Wired Certified Platinum development."
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Ford SmartLabs Experiment With Car Retailing in Shopping Malls on Two Continents
Forbes (06/28/19) Buss, Dale

Ford Motor Co. has been testing pop-up dealerships called SmartLabs in three different shopping malls in Europe and North America, and it is seeing promising results. The three SmartLabs are located in Turin, Italy; Brussels, Belgium; and Quebec City, Canada. Each provides a display of several current Ford vehicles, a seating area, and screens showing technology and amenities available in the various vehicles. Ford introduced the SmartLabs to try and overcome changing trends in automobile ownership. Today's prospective car owners are more likely to use the Internet for research and even purchase than ever before. Accordingly, average visits to dealerships during the car-buying process have dropped from four to 1.2.

Ford's SmartLabs test whether potential customers would feel more comfortable away from dealerships and on neutral territory, like malls. SmartLabs staff wait for customers to ask questions, eschewing a proactive-engagement approach to sales for a more comfortable and authentic conversation. "We interact with the customer on their terms," said Robert De Filippo, Ford's global director of retail experience. According to Ford data, the SmartLabs have led to spikes in test drives and vehicle purchases. For example, the Brussels SmartLab has generated peak traffic and interest seven times greater than a nearby Skoda dealership. Ford's SmartLabs surveys show that 85 percent of respondents are willing to recommend the site to others. This, in turn, has made mall owners "see SmartLabs as a strong pull for them," according to De Filippo. Ford plans to install additional SmartLabs in Australia, Germany, Norway, and the United States by the end of the year.
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Is DNA Testing Dogs Starting to Be the Norm for Nashville Apartment Buildings?
Fox 17 (Nashville) (07/01/19) Johnson, Nicole

More and more Nashville apartment owners and operators are turning to an unorthodox method to ensure renters clean up after their pets. Over 100 Nashville-area apartment communities are asking new renters for a DNA swab from their dog upon move-in. The DNA is later used to determine which residents should be fined for not cleaning up after their animal. BioPet Laboratories is a Tennessee-based company that has been assisting buildings with the DNA testing operation.

The process is simple and easy. Q-tip swabs containing a dog's DNA are sent to a laboratory, where they sit unused and untested until and unless an apartment landlord sends a sample of dog waste to be tested. BioPet Laboratories tests the waste, identifies the corresponding canine, and passes the information back to the apartment complex. The process has led to buildings issuing fines of several hundred dollars or more to negligent dog owners. To be sure, some renters have criticized the new policy, labeling it "very big brotherly" and "invasive."
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AI Robots Can Service Physical Security Workforces
Campus Safety Magazine (06/14/2019) Harrington, Erin

Indoor robots can help provide building security personnel with "another set of eyes and ears" in many locations and notify them of an event so they can respond. Cobalt Robotics is one company that builds indoor robots that work alongside human guards to provide security. Dr. Travis Deyle, Cobalt co-founder and CEO, said that robots have the ability to learn which areas in a location need the most coverage. Stacy Dean Stephens, executive vice president and chief client officer of Knightscope, a leader in developing autonomous security, added that "a robot does the boring, monotonous routine work extremely well. By adding robots to an existing program, a user can change the dynamic and allow humans to do the things they do best." Stephens also noted that robots have been able to help security personnel make arrests in property damage cases and even stop robberies.
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Shopping Centers Exploring Facial Recognition in Brave New World of Retail
Wall Street Journal (07/02/19) Fung, Esther

Some U.S. shopping mall owners are increasing their use of facial recognition technology, but limiting its scope. Such technology has advanced to the point where mall operators could know shoppers' names when they enter and monitor what they purchase. Most industry executives say they are not ready to go that far. But some U.S. shopping malls have begun to use technology that detects facial features and individuals' paths of travel anonymously. Artificial intelligence is then utilized to mine that data to determine everything from traffic patterns to consumers' reactions to displays and marketing.

Mall operators are hopeful they can mine insights on consumer behavior from aggregate data to increase the value of bricks-and-mortar retail. There is presently no federal law in place regarding how transparent companies have to be about their deployment of facial recognition technology. Illinois, Texas, and Washington have all passed bills to safeguard biometric information such as faces and other physical attributes, and other states are considering similar measures. Technology providers, meanwhile, insist the potential benefits of the technologies outweigh the problems. "The world will get better if people can put this technology to work," assures Microsoft Corp. President Brad Smith.
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Snacking Goes Green with Enel, Mondelez International Solar PPA
Commercial Property Executive (06/28/19) Gagiuc, Anca

Mondelez International, the food and beverage parent company of brands like Oreo, Cadbury Dairy Milk, Milka, and Toblerone, recently signed a 12-year power purchase agreement with Enel Green Power North America, pledging to buy energy delivered to the grid from Enel's Roadrunner solar photovoltaic plant in Texas. Mondelez International has acquired a 65-megawatt portion of the solar energy project and is projected to cut annual carbon dioxide emissions by 80,000 metric tons. The energy will produce more than 10 billion cookies each year, accounting for half of all the Oreos consumed in the United States. Enel has started two new energy projects in Texas this year -- the 497-megawatt Roadrunner solar project and the 450-megawatt High Lonesome wind project. The Roadrunner project will be completed in two phases. The first phase, offering a capacity of 252 megawatts, will be operational by the end of 2019. The second phase, providing an additional 245 megawatts, will be completed in 2020.
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