Real Estate Management News - 07/18/2018

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July 18, 2018
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IREM® HEADLINES
Coming Together to Keep the Real Estate Talent Pipeline Flowing
IREM Conducts Inaugural Congressional Briefing
Wrap Up Your July with a Webinar—or Two

INDUSTRY HEADLINES
Cinemas, the Hot New Anchor for Shopping Centers
Apartment Renters Now Expect Sustainable Design Features in Their Units
Disney Pays $650 Million to Develop New Campus in Lower Manhattan
2 Fort Worth Office Towers Ban Jimmy John's Deliveries, Citing 'Reckless Behavior,' 'Vandalism'
St. Paul Aims to Make Public Buildings ‘Carbon Neutral’ by 2030, Private Buildings by 2050
Closing Stores Means Opportunities for New Businesses, Officials Say
What is IoT? How Smart Building Technology is Changing Facilities Management
Retirees Go Back to School to Live Out Golden Years on Campus
9 Building Solutions for Airborne Allergens
Shopping Centers Accused of Spying for ICE
Construction Contractors Embrace New Technologies as Fatalities Rise
Manhattan Rent Deals Help Landlords Hang On to Tenants—and Send New Leases Plummeting


 

IREM Headlines


Coming Together to Keep the Real Estate Talent Pipeline Flowing

As the real estate industry seeks to fill millions of jobs, IREM and 28 other organizations related to the real estate profession have teamed up in a groundbreaking enterprise to demonstrate the many career paths available within the field.

Their collaboration has resulted in Careers Building Communities, a collective focused on raising awareness and attracting diverse talent to the many careers available across the built environment. The group’s first initiative is a website of the same name, where visitors from all perspectives—students, educators, people looking for a career change—can research the many options the real estate sector has to offer, as well as find industry events, education and employment opportunities. Those interested in a real estate career but not as familiar with the variety of careers available can take an interactive quiz to help them find paths that best suit their interests.

IREM’s CEO and Executive Vice President, Denise Froemming, says of the association’s participation, “IREM believes that real estate management is an exciting career choice and is proud to be a champion for both the industry itself, and its individual practitioners. We support property and asset management professionals through every stage of their careers through training, development, mentorship, and collaboration, which is why we are excited to partner with these other real estate industry organizations who play a critical role in shaping the real estate industry of the future.”

To learn more about this exciting new endeavor, click here.
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IREM Conducts Inaugural Congressional Briefing

On July 11, IREM conducted an inaugural congressional briefing in Washington, D.C. IREM decided to initiate this type of event as it is an essential way to discuss priority issues and maintain relationships with federal legislators. The briefing was a great success as Mindy Gronbeck, CPM, chair of IREM’s Legislative and Public Policy Committee and Debbie Prejeant, CPM, vice chair of IREM’s Federal Advocacy Board, presented to over sixty congressional legislative staffers on matters significant to the property management industry, including:

• Emotional Support Animals in Multifamily Housing – Ms. Prejeant communicated how IREM supports and invites guidance from the government on the issue of companion animals. She also made the distinction for the audience between service animals, which require special training, and companion animals, which receive no specialized training and are typically for individuals with mental disabilities or those in need of emotional support.

• “Drive-By” ADA Lawsuits – Ms. Gronbeck informed the attendees that IREM supports the Americans with Disabilities Act (ADA) and is committed to providing and encouraging equal opportunity to all people. Even so, Ms. Gronbeck stated that IREM is trying to prevent onerous “drive by” lawsuits motivated by financial compensation, which delay changes that could provide real access.

• The National Flood Insurance Program (NFIP) – Ms. Prejeant expressed IREM’s support of NFIP, which is set to expire on July 31. She advised the group that IREM wants to ensure the program’s ongoing sustainability, its encouragement of cost-effective private flood insurance options, and its long-term reauthorization of NFIP so that it remains a viable option for property owners.

Before the briefing, Ms. Gronbeck and Ms. Prejeant also met with the legislative counsel for Rep. Maxine Waters (D-CA), and Jeb Hensarling (R-TX) who are, respectively, chairman and ranking member of the House Committee on Financial Services, the group that oversees the Department of Housing and Urban Development (HUD) and NFIP.
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Wrap Up Your July with a Webinar—or Two

The month may be winding down, but there are still July education opportunities to be had, like these two new IREM industry webinars that are happening next week:

Parking Spaces from a Different Perspective

Do you view your parking facilities as a low priority portion of your portfolio? You might want to reconsider: Parking areas are often the basis of the first impression visitors and tenants form of your properties. In Parking Management: Tips for Maximizing Income and Availability, Lee A. Whitman, CPM, will share his 30 years of commercial property management experience to help you identify potential lease pitfalls regarding parking rights and determine when it’s time to engage a parking management firm. He’ll share how to market your facility to non-tenants, increase your parking income and lower expenses to boot. This live webinar will take place on Wednesday, July 25 at 1PM CST. Click here to register.

Employee Termination: Making the Best of a Difficult Situation

Terminating an employee is one of the most unpleasant tasks a leader has to perform. However, it can serve as a great learning experience, perhaps prompting some necessary self-reflection and pointing to places in your hiring and training processes that could benefit from some adjustments. It’s also essential to know how to navigate the legalities of termination so as not to become vulnerable to formal employment disputes. On July 26 at 1PM CST Kathy Harmon, CPM, ARM, will present How to Legally and Effectively Terminate an Employee, where she’ll discuss the associated cost in time, money and psychological stress that comes with the dismissal of employees, and how to protect yourself against litigation. Safeguard your business and register here.
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Industry Headlines


Cinemas, the Hot New Anchor for Shopping Centers
GlobeSt.com (07/13/18) Borland, Kelsi Maree

There are two primary reasons why cinemas are rapidly emerging as a popular anchor tenant for shopping centers. One, they drive evening traffic and longer stay times of two to four hours. Two, they fulfill demand for an experiential retail environment. Consequently, more and more mall developers are including cinema footprints in their new development projects. Mitra Esfandiari, senior principal at Retail Design Collaborative, was interviewed by GlobeSt.com on the growth of cinema and how it is impacting new development. She stated, "Cinema operators have seen extraordinary growth in the last decade in large part to a driving consumer demand for 'experience.'" Movie theaters are changing as a result of this growth. For instance, consumer demand has shifted the concession menu offerings from standard popcorn, candy, and soda drinks to a broader and even healthier menu of freshly prepared food.

Another trend that is helping cinema operators grow their business is the public's desire for control over their seating options. The shift in recent years to reservation-based seating has given moviegoers what they want while enabling cinema operators to have a greater understanding of revenue projections. Technology is also playing a big role. "From audio and video quality to the advent of augmented 4D technologies, cinemas are reinventing themselves," stated Esfandiari. In turn, this demand is helping to drive new retail development. Within a mixed-use project specifically, the objective is extending the space offerings to achieve as much of an 18-hour-day destination as possible. "Cinemas are key anchors for large retail and mixed-use developments," Esfandiari concluded. "Theaters naturally push for customers to stay at retail centers longer, whether they are waiting for their movie or are grabbing a meal before or after the movie."
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Apartment Renters Now Expect Sustainable Design Features in Their Units
National Real Estate Investor (07/10/18) Anderson, Bendix

Today's apartment renters expect such green building features as energy efficiency, making them more of a requirement in most markets. "What used to be exceptional is now everyday," confirms Dave Borsos, vice president of capital markets for the National Multifamily Housing Council (NMHC). Today, new apartment communities almost always include some green features. Meanwhile, the owners of older complexes are increasingly incorporating sustainable design components in their renovation plans of existing properties. For instance, 42 percent of overall multifamily financing provided by Fannie Mae last year qualified for its Green Rewards program, which offers lower interest rates to apartment buildings that have earned green building certifications or pledge to cut their energy use by 25 percent or more through renovations. Furthermore, apartment renters' interest in sustainable design is still strong enough to translate into real money for owners and operators. According to the "2017 NMHC/Kingsley Renter Preferences Report," they are willing to pay an extra $27.21 a month in rent to live in buildings that have green certifications. That amounts to over $300 a year per apartment in extra income.

This comes as the cost of incorporating many green features in apartment communities has dropped to be roughly comparable to conventional construction. Borsos confirms, "There is no cost difference any more. Green has become standard practice." For instance, energy efficient light bulbs used to be considerably more pricey than conventional lights. At the same time, quality of light created by the fixtures was often noticeably different from the warm glow created by incandescent bulbs. Today those differences have vanished almost entirely. Finally, lenders are making programs like Fannie Mae's Green Rewards work for all borrowers, not just the few that have "made green" a mission. "We are looking to be easier for the smaller owner," concludes Chrissa Pagitsas, director of the green financing business for Fannie Mae. "The people that haven't done green yet are going to be the harder ones to reach."
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Disney Pays $650 Million to Develop New Campus in Lower Manhattan
Wall Street Journal (07/09/18) Morris, Keiko

The Walt Disney Co. is selling its Upper West Side Manhattan corporate campus and developing new offices downtown for its New York operations. In a 99-year deal, the entertainment giant acquired the rights to develop nearly 1 million square feet at 4 Hudson Square from Trinity Church Wall Street -- a transaction valued at $650 million. At the same time, Disney is selling its 1-million-square foot Upper West Side campus for $1.155 billion to Silverstein Properties Inc. The deal enables Disney to lease back the space for up to five years while its new offices are being built. "The new building will incorporate the latest technology as well as the ability to adapt to the next generation technological advances," remarks Disney CEO Robert Iger. "The Hudson Square district is rapidly becoming a dynamic innovative hub for media, technology, and other creative businesses."
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2 Fort Worth Office Towers Ban Jimmy John's Deliveries, Citing 'Reckless Behavior,' 'Vandalism'
NBC 5 Dallas-Fort Worth (07/12/18) Gordon, Scott

Two of the biggest office buildings in downtown Fort Worth, Texas, have stopped accepting sandwich deliveries from the Jimmy John's restaurant chain, blaming the local outlet's delivery personnel for "reckless behavior, safety violations, and vandalism." Sundance Square Management, which operates the America Tower and Wells Fargo Tower, sent a letter to tenants this past week regarding Jimmy John's that read: "We have multiple instances of reckless behavior, safety violations, and vandalism to our property. They have been given notice before now and continue to operate in a manner we cannot tolerate. So now they have been banned."

Jimmy John's attributed the incidents to one delivery driver, who has been terminated as a result. The company also has issued an apology and reportedly offered to help clean up any damages. It is unclear what the actions of this former employee were. "The orders that we receive from these two towers are important to our business," concluded Matt Brane, the owner of the Jimmy John's franchise. "We will continue to work towards a positive resolution with Sundance Square Management."
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St. Paul Aims to Make Public Buildings ‘Carbon Neutral’ by 2030, Private Buildings by 2050
St. Paul Pioneer Press (Minnesota) (07/08/18) Melo, Frederick

In Minnesota, St. Paul officials want city buildings operating as carbon neutral by 2030 and all buildings to be so by 2050, states Russ Stark, the city's chief resilience officer. City officials are angling to reduce and offset carbon dioxide emissions so that the amount released into the atmosphere by commercial, residential, and government buildings balances out with the amount of energy derived from sources other than fossil fuels. So, why buildings? Researchers found that 52 percent of the carbon emissions within city limits were related to physical structures. Xcel Energy, the primary provider of electricity and natural gas in St. Paul, is doing its part. Stark comments, "The changes that Xcel are making by expanding wind and solar are going to help us a lot." That effort, though, is not without its share of controversy. Xcel Energy has set a goal of operating 85 percent carbon-free by the year 2030. But that does not necessarily mean switching entirely to such renewable energy sources as solar and wind. Between 20 and 25 percent of St. Paul's energy comes from Xcel's nuclear power plants in suburban Monticello and Prairie Island, which are under contract for the next 12 years.

Xcel Energy program manager Tami Gunderzik says the utility is collaborating with St. Paul and other cities and institutions on two-year energy efficiency plans. Meanwhile, other cities are moving quickly on energy savings. Minneapolis, for instance, has hiked its franchise fees to fund investments in renewable energy sources. St. Paul has been widely hailed as a leader among U.S. municipalities attempting to go greener. The city council recently approved an 86-page resolution related specifically to buildings. The five-year strategy outlines several objectives: one, inspiring a culture of energy stewardship citywide; two, reducing energy burdens so that no household has to spend more than 4 percent of its income on energy costs; three, working with major institutions like hospitals and universities to set energy goals that align with those of the city; and, finally, promoting efficiency in large buildings, whether they be commercial or multifamily. Targeting private building owners, the city has created the "Race to Reduce" competition, which encourages property managers to monitor and compare their buildings' energy use to comparable structures nationwide.
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Closing Stores Means Opportunities for New Businesses, Officials Say
Exponent Telegram (West Virginia) (07/15/18) Genco, Joe

Kmart and Sears are just two of the large retail chains that have closed multiple locations recently. But many mall owners and operators are preferring to remain resilient and flexible in replacing them as anchor tenants. "We've been seeing that in a lot of places the American mall has been evolving," observes Joe Bell, spokesman for Cafaro Co. "It is no longer a place people go to buy merchandise. People today want to have a place to go that deals with all the needs in their lives. They want to be able to work out, do grocery shopping or visit the dentist." Indeed, a trend happening nationwide is that former anchor stores in malls are being renovated to house everything from restaurants to fitness facilities to office space.

While online shopping has definitely taken a bite out of the business of many retailers, people are still interested in coming to their local mall for other types of services, dining, and entertainment, according to Bell. In many areas, Toys "R" Us and Sears stores that were permanently shuttered still had a lot of foot traffic and did a healthy amount of sales. In those cases, the stores were closed due to mismanagement on a corporate level, not any failure to connect with the locals. Looking ahead, malls in places like Harrison County, W.Va., need to add unique, specialized businesses to increase their appeal to people both nearby and who live outside the county.
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What is IoT? How Smart Building Technology is Changing Facilities Management
Buildings (07/12/18) Penny, Janelle

Questions linger about what is holding facility managers back from installing Internet of Things (IoT) devices in their properties. For many, IoT's broad spectrum of possibilities is the problem. It can be tough to ascertain where to begin with smart building technology when there are IoT applications for almost every building system. The Internet of Things is a network of sensors, meters, appliances and other devices that are capable of sending and receiving data. Flexibility and observability are the two main benefits that set IoT devices apart from other smart building technology. For instance, a CO2 meter can estimate the number of people in a room and tell your facility's HVAC system to increase the ventilation rate in response. Or, an occupancy sensor can order a bank of lights to turn on when it senses a presence. Another option is a dashboard that can analyze a building's worth of sensor data and turn it into actionable insights.

Choosing which IoT provider to team up with is one of the most important decisions. Among the questions that should be asked are "What are you trying to solve?" and "Is IoT the answer to solving my problem?" A good deployment and setup strategy is one of the early keys to launching a smart building technology initiative in your facility. Those who try and monitor every piece of equipment for every building system at first usually become overwhelmed. The article's author writes: "Start small -- say, monitoring the performance of one air-handling unit or the energy consumption of the lighting on one floor -- and scale up as you get used to using the system."
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Retirees Go Back to School to Live Out Golden Years on Campus
Financial Advisor (07/10/18) Braun, Martin Z.

A nonprofit organization affiliated with Purchase College will this month sell $14.5 million in unrated tax-exempt notes to initiate development of Broadview, a 385-apartment retirement community on its 500-acre campus. The project will feature a "learning commons" with classrooms, studio, and performance spaces. Broadview is the most recent publicly-funded development to capitalize on demand from retirees to live in communities near universities where they can take courses, attend art exhibits and sports events, and maintain links to their alma mater. Similar senior communities have been developed near the University of Texas, the University of Florida, Cornell University, Dartmouth College, Oberlin College, and Duke University, among others.

About $2.4 billion of tax exempt bonds were sold in 2017 exclusively for new senior living communities, while this year developers have sold about $730 million solely for projects. The typical community needs some $20 million of seed funding to get to the financing stage. Shareholders will obtain a leasehold mortgage on the property that lets them take over the project should the owners default. New York state passed a bill in 2011 authorizing a 75-year ground lease to the Purchase development. Purchase will get $2 million a year in rent, climbing 10 percent every fifth year through the 71st year of the lease, and $8 million yearly for the final five years. The Purchase project's initial stage includes 220 independent living apartments, 18 assisted living suites, and 12 bedrooms for persons with Alzheimer's or dementia.
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9 Building Solutions for Airborne Allergens
Multifamily Executive (07/11/18)

Columnist Mary Salmonsen has compiled a list of products that offer anti-allergen features and innovations for apartment buildings. Many are certified Allergy & Asthma Friendly by Allergy Standards Ltd., indicating that the product meets strict independent testing standards for eliminating allergens or protecting against them. All of them offer features and innovations that aim to reduce or eliminate mold, pollen, dust mites, pet dander, and VOC emissions in a built environment. Among them is Broan's Fresh In supply fan ventilation system, with built-in temperature monitoring systems. Salmonsen also highlighted Johnson Controls' GLAS smart thermostat, which offers a variety of environmental and allergen reports. Meanwhile, Lennox's iComfort S30 Ultra Smart Thermostat features an "Allergen Defender" system, which continually monitors the air quality and pollen levels in the local ZIP code.

Also getting high marks is Owens Corning's Pure Safety High Performance mineral fiber insulation, which boasts R-15 thermal protection, reduces noise passage by up to 50 percent, and contains up to 65 percent less dust than comparable insulation. In addition, Salmonsen touted Benjamin Moore's Natura Premium Interior Paint, which produces zero VOCs or other emissions, as tested four hours after application, and dries quickly enough to return a freshly-painted room to service the same day. Finally, Tarkett Fresh Air's residential flooring products hold the distinction of being the only residential flooring certified asthma and allergy friendly by the Asthma and Allergy Foundation of America, or AAFA.
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Shopping Centers Accused of Spying for ICE
NBC 7 San Diego (07/11/18) Naso, Bridget

According to NBC 7 in San Diego, personal information is being gathered from license plates at several area shopping malls and shared with U.S. Immigration and Customs officials. Automated license plate recognition is a form of mass surveillance in which cameras capture images of license plates; convert the plate into plaintext characters; and append a time, date, and GPS location. This data is usually fed into a database. The Electronic Frontier Foundation (EFF) property management giant reports that The Irvine Company is using Vigilant Solutions, the same technology company contracted by police.

Irvine Company spokesperson Scott Starkey issued a statement that read: "Irvine Company is a customer of Vigilant Solutions. Vigilant employs LPR technology at our three Orange County regional shopping centers. Vigilant is required by contract, and have assured us, that LPR data collected at these locations is only shared with local police departments as part of their efforts to keep the local community safe." The Irvine Police Department also responded with a statement to local media: "The use of legally permissible Automated License Plate Readers is a practice that has helped enhance the safety of our community. We have made numerous arrests thanks to this technology while respecting the privacy rights of the public."
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Construction Contractors Embrace New Technologies as Fatalities Rise
Business Insurance (07/11/18) Lenihan, Rob

According to the most recent data available from the U.S. Bureau of Labor Statistics, there were 991 construction-related deaths reported in 2016 -- an increase from 738 in 2011. The leading causes of deaths were falls, electrocutions, struck by object, and caught in or between equipment. Meanwhile, the industry continues to face such challenges as an aging workforce. Companies increasingly are implementing new technologies to mitigate the injury risk. These include safety apps on mobile devices to communicate with workers and streamline the pre-test hazard assessment. In addition, Building Information Modeling -- a 3D model-based process that allows architects and engineers to plan and manage buildings and infrastructure -- resulted in a positive impact on safety for 69 percent of contractors in 2017, according to a study by CPWR-The Center for Construction Research and Training and Dodge Data & Analytics.
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Manhattan Rent Deals Help Landlords Hang On to Tenants—and Send New Leases Plummeting
National Real Estate Investor (07/12/18) Hill, Jeremy

New York City apartment renters appear to be staying put at the height of leasing season. The number of new leases in Manhattan decreased 17.5 percent last month from a year earlier, according to the latest report released by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The decline is the biggest year-over-year drop for the month since 2009. A decrease in new leases often means building owners and operators are finding ways to retain residents, reports Miller Samuel President Jonathan Miller. They are vying with new apartment buildings, where tenants are often offered one month's free rent or comped broker fees -- concessions that have reached record levels in recent years.

In June, 32.6 percent of new Manhattan apartment leases included some sort of sweetener. "Landlords are being much more flexible and aggressive with their current tenants, knowing that these tenants are concession-hopping," observes Hal Gavzie, executive director of leasing for Douglas Elliman. The median net effective rent in Manhattan, including landlord concessions, dipped 2.8 percent last month from June 2017 to $3,314. Brooklyn saw similar results, with new leases dropping 17.7 percent from a year prior. Meanwhile, in northwest Queens, they decreased 13.7 percent. Net effective rents also declined in the two boroughs.
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