Real Estate Management News - 05/15/2019

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May 15, 2019
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IREM® HEADLINES
Putting Property Management Careers on High Schoolers’ Radar
Reviewing the Performance of Performance Reviews

INDUSTRY HEADLINES
Tips for Indoor Painting Projects in Occupied Buildings
Planet Fitness Is Moving Into Old Toys 'R' Us and Sears Stores
How Self-Driving Will Impact Office Real Estate
San Francisco Plan Would Require Largest Commercial Buildings to Use 100 Percent Renewable Electricity
Pilates. Spinning. Furnished Office Space? Equinox Adds Co-Working
Drones in Aisle 5? Grocery Stores Becoming Unusual Hotbeds of Innovation
Seven-Tower Downtown Office Collection for Sale
Unilever North America Headquarters Receives LEED Platinum Certification for Sustainability
DOE Announces $33.5 Million for Energy Efficient, Advanced Building Construction Technologies and Practices
Seeking an Edge, Developers, Investors Turn to 'Proptech'
Big Boxes Becoming a Big Headache for Shopping Center Landlords
Microsoft Teams Up with Starbucks on Predictive Drive-Thru Ordering and Bean-to-Cup Blockchain


 
 

IREM Headlines


Putting Property Management Careers on High Schoolers’ Radar

A study conducted last year by the Student Research Foundation found that 70 percent of high school freshmen have thought about their career paths, and that figure rises to 81 percent by the time they are seniors. In other words, for many high school students, their post-academic careers are top of mind not long after their time in high school has begun. And it presents an opportunity to teach them about vocational options they may not otherwise realize are available to them. This is why IREM’s student and academic advisory board places significant focus on engaging with high schoolers to make them aware of the many career opportunities available in the world of real estate management.

DECA is an international organization whose mission runs parallel to the goals of IREM’s student and academic advisory board: It prepares emerging leaders and entrepreneurs for careers in marketing, finance, hospitality and management in high schools and colleges around the globe.

So it was a natural fit for IREM to be an exhibitor last month at the DECA High School International Career Development Conference in Orlando, which brought together some 19,000 career-focused high school students. Cody Kirkpatrick, ARM, of Austin, Texas, vice chair of the advisory board, was on hand to engage in conversations with many of these students and provide practical insights into property management as a career option. Some already had firm visions for their career paths but were given food for thought when shown how those same paths could be applied to work in the real estate management field. Many were interested in learning more by shadowing management professionals throughout a normal day of business.

High school advisors and teachers, eager to support their students in preparing for college and beyond, were also made aware of career opportunities in the industry, so they too could encourage career seekers to consider property management. Also at the DECA conference was Ball State University, whose representatives shared information about its property management degree program as well as information about IREM.
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Reviewing the Performance of Performance Reviews

Once a corporate must-do, the annual employee performance review in many companies has transitioned from being an annual event to an ongoing year-long process. At a time when work is increasingly complex, teamwork and collaboration take precedence over individual achievement, and businesses are moving quickly, structured annual reviews have been pushed aside in favor of more frequent and less formal one-on-one conversations.

An article from a recent issue of Journal of Property Management provides insights into how two real estate management companies, both AMO Firms, are making changes, leaving cumbersome annual reviews by the wayside. Krista Washbourne, vice president of learning and talent development at Lincoln, AMO, and Kathy Valentine, vice president of human resources at RiverRock Real Estate Group, AMO, shared with JPM what their companies are doing as they move toward more fluid, ongoing conversations about employee performance and development.

The new approach launched this spring at Lincoln encompasses informal, quarterly check-ins followed by more formal annual feedback sessions, all within a user-friendly, intuitive software platform accessible to all associates. The check-in and feedback sessions center on forward-focused questions designed to propel associate growth and foster associate accountability. At RiverRock, the formal annual performance review was discontinued a number of years ago, replaced by an approach that incorporates RAP—Review, Analyze and Plan—sessions. These are two-way conversations between the employee and supervisor to discuss what went well since the last RAP session, what didn’t go as well as they would have liked and what goals are anticipated for the upcoming period.

Learn more about what these companies are doing and how their experiences might be right for your company in the March/April issue of JPM.
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Industry Headlines


Tips for Indoor Painting Projects in Occupied Buildings
Buildings (05/09/19) Kloepple, Sarah

Property owners and managers about to embark on a major painting touch-up or project in their building may find it not feasible to close off particular spaces while the work is being done. Consequently, they need to continue on with the project in a manner that is as least disruptive as possible to the building's day-to-day operations. The key is taking the necessary precautions beforehand to complete the job safely and quickly. When painting in a high-traffic area during operating hours, especially important is maintaining indoor air quality (IAQ). Recommended are paint products that are labeled as either having low or no volatile organic compounds (or VOCs). They will give off less odor, enabling the painters to proceed with less disruption. Rick Watson, director of product and technical information at Sherwin-Williams, also advises using products that are GREENGUARD certified. Such paints have low chemical emissions and can actually improve IAQ.

Of course, odors are subjective. So, it's entirely possible tenants still won't be completely comfortable. To that end and whenever possible, make sure doors and windows are open to get as much air movement as possible. Fans can also be used to remove odors. Choosing products that are proven to be quick-drying is also wise. In addition, to avoid any major disruption, Watson recommends working on painting projects when there is the least amount of foot traffic as possible. Plan a paint job around a big meeting or a corporate outing when large numbers of staff are out of the building, yet still on company time. Starting paint jobs near the end of the work day is another possibility.
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Planet Fitness Is Moving Into Old Toys 'R' Us and Sears Stores
CNN (05/06/19) Meyersohn, Nathaniel

As such retailers as Toys "R" Us and Sears have been permanently shuttering locations, Planet Fitness is stepping in to fill some of those vacated spaces. Planet Fitness recently announced plans to open 225 gyms this year, with an undisclosed number of those to be located in sites that Toys "R" Us or Sears previously occupied. The gym chain has been on an expansion tear in the past several years and now operates more than 1,800 gyms nationwide -- up nearly 60 percent versus 2016. Planet Fitness executives say their chain has the potential to top 4,000 across the United States in the long run. The $10-a-month gym pitches members on joining a "judgment free zone" and even serves free pizza. Planet Fitness appears to have plenty of opportunity for growth considering 80 percent of Americans do not belong to a gym.

Best of all, the chain is Amazon-proof, as the online retail giant does not compete directly with gyms. Cowen analyst Oliver Chen notes, "You can't generate a six-pack on your couch." Planet Fitness leadership says two key trends have buoyed their company. First, more Americans are wanting to get fit. Since 2008, gym membership in the United States has risen 37 percent, reports the International Health, Racquet & Sportsclub Association. Second, retail stores are indeed continuing to disappear, opening up new commercial real estate for growing companies like Planet Fitness in need of large spaces. Gyms and supermarkets have become attractive options for retail landlords because Americans visit them frequently, including during the week when it's often tough to draw foot traffic to other forms of retail.
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How Self-Driving Will Impact Office Real Estate
Commercial Property Executive (05/02/19) Kupiec, Andrew

A recent CBRE report forecasts that self-driving automobiles could account for between 11 percent and 27 percent of vehicle-miles traveled by as soon as 2030. When such vehicles become more prevalent, the consequences and impact on workplace real estate could be considerable. In short, self-driving cars have the potential to upend how far people are willing to "drive" to their jobs. Traffic congestion, crowded public transportation, and other factors have resulted in the widely acknowledged 30-minute radius for commuting. Many people will not take a job if the commute is longer than a half-hour, which, in turn, has limited the radius of an ideal office location. Offices can't be located too far from population centers for risk of being unable to attract top talent.

Self-driving cars, though, could reinvent the work commute for many. Employees would be able to maximize their commute by taking time to work, relax, even sleep more, while also re-evaluating how far they are willing to commute to get to the office. On a wider scale, streamlined travel in self-driving autos could ease congestion. Consequently, tomorrow's office locations could be more dispersed than today's, giving building owners, operators, and tenants new opportunities when it comes to deciding on where to invest, build, and lease space. And as the less important the location itself will become, the more important the workplace itself promises to be. These office spaces will need to be more amenity-rich than ever, with walkable areas likely to grow.
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San Francisco Plan Would Require Largest Commercial Buildings to Use 100 Percent Renewable Electricity
Building Design + Construction (05/07/19) Fabris, Peter

San Francisco has proposed a plan that would require large private commercial buildings to operate on 100 percent renewable energy. According to the plan, commercial buildings larger than 500,000 square feet would have to meet the requirement by 2022. By 2024, buildings larger than 250,000 square feet would have to comply with the rule. Finally, by 2030, all commercial buildings larger than 50,000 square feet would have to meet the requirement. The San Francisco Board of Supervisors is expected to discuss the proposal in June. Officials do not expect building owners and operators to challenge the idea.
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Pilates. Spinning. Furnished Office Space? Equinox Adds Co-Working
Wall Street Journal (05/14/19) Putzier, Konrad

Equinox is partnering with co-working operator Industrious to offer furnished office space close to the fitness company's various upscale gyms. This marks the latest sign that the office, fitness, and hospitality industries are beginning to converge. The first workspace in the partnership is set to open by the end of this year in a 72-story skyscraper in Manhattan's Hudson Yards. Industrious, which currently has 76 office locations in more than 40 U.S. cities, has raised $142 million in venture funding. Equinox and Industrious plan to partner in several other major U.S. cities in the near future, according to Industrious' co-founder and CEO Jamie Hodari.

The deal comes as more professionals embrace greater integration between their on- and off-the-job lives. Another player in this niche is co-working company WeWork Cos., which now runs a wellness venture and has added short-term rental apartments to some buildings where it offers workspaces. Another reason more buildings are now offering multiple services is that banks that previously shied away from financing multi-use projects are coming around, reports Urban Land Institute CEO Edward W. Walter. He concludes, "Lenders and investors have realized there's a lot of good things coming out of mixed-use buildings, including a more diversified income stream."
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Drones in Aisle 5? Grocery Stores Becoming Unusual Hotbeds of Innovation
The Washington Post (05/03/19) Holley, Peter

Texas-based data subscription service Pensa has created a drone and its underlying artificial intelligence (AI) to enhance supermarket operations. The drone can hover to scan grocery store shelves and check inventory levels. It uploads this data to the cloud so grocers and brand manufacturers can leverage fine-grained information about customers' shopping habits. Pensa CEO Richard Schwartz said grocery stores are serving as a test-bed for the growing overlap between online and offline domains. Among the most ambitious is Walmart. In New York, the retail giant is testing its Intelligent Retail Lab, which incorporates AI-driven cameras, sensors, and processors to flag out-of-stock items to internal apps monitored by workers.
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Seven-Tower Downtown Office Collection for Sale
Crain's Chicago Business (05/07/19) Ecker, Danny

AmTrust Realty is looking to cash out on seven downtown Chicago office towers that could collectively fetch nearly $1.4 billion. The New York real estate investor has hired Eastdil Secured's Windy City branch office to sell its entire portfolio of Chicago office buildings. Eastdil is marketing the buildings as the Chicago Legacy Collection, which includes two towers in the Illinois Center complex: the 45-story building at 111 E. Wacker Drive, and the 32-story tower at 233 N. Michigan Ave. The 6.3 million-square-foot collection also includes a 44-story building that Bank of America will vacate in 2020 when it moves to its new namesake tower at 110 N. Wacker Drive. Over the years, AmTrust spent over $1 billion acquiring all the properties. AmTrust aims to sell the buildings as a portfolio. However, a Crain's Chicago Business source says it is open to selling them individually.

AmTrust is putting its properties on the selling block amid strong demand for office space downtown and lots of coastal investors scouting Chicago to find value in office deals. Thanks to companies going on hiring binges and flocking to the downtown sector, office vacancy in the city's central business district has stayed static at around 13 percent the last two years or so even as large new towers have hit the market. However, analysts note, there are headwinds on the horizon for downtown office building owners. Lots of new supply is in the pipeline at the redeveloped Old Main Post Office, the Bank of America tower and planned skyscrapers next to Union Station and at Wolf Point. Finally, office landlords are bracing for property tax hikes as new Cook County Assessor Fritz Kaegi implements a new approach to valuing properties that will likely put more of the local tax burden on commercial real estate over the next several years.
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Unilever North America Headquarters Receives LEED Platinum Certification for Sustainability
Business Wire (05/14/19)

Unilever North America's newly redeveloped headquarters building in Englewood Cliffs, N.J., has received LEED Platinum certification from the U.S. Green Building Council (USGBC). The certification process assesses buildings across a number of categories, ranging from sustainable sites and water efficiency to indoor environmental quality and location and transportation. Plans for the project launched five years ago in support of the Unilever Sustainable Living Plan, which calls for the consumer goods giant to reduce its carbon footprint by 50 percent while doubling its business. The new building unified four office complexes from the Englewood Cliffs corporate campus into one, state-of-the-art workplace. The project was completed last year.

Workplace strategists teamed up with designers from Perkins+Will to help Unilever craft a future-proofed vision for its new headquarters. The concept and design, known as "The Marketplace," entailed the retrofitting, renovation, and repositioning of the company's existing corporate campus. The resulting building achieved a more than 40 percent reduction in square footage, while being able to house more employees. Consequently, less resources have been needed to light, heat, and cool the building. The final building design incorporates smart technologies by EDGE, which automate the structure's features and functions. Approximately 75 percent of the construction materials were diverted from landfill during the building phase. Finally, a shuttle service from New York City, Hoboken, and Jersey City is available that has supported a 40 percent reduction in employee vehicles.
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DOE Announces $33.5 Million for Energy Efficient, Advanced Building Construction Technologies and Practices
Department of Energy News Release (05/03/19)

The U.S. Department of Energy (DOE) recently announced $33.5 million will be made available for early-stage research and development of advanced building construction techniques that can reduce energy bills. The goal is to create energy retrofit and construction technologies that address envelope, heating, cooling, water heating, and ventilation challenges. The funding is available for integrated building retrofits, new construction technologies, and advanced technology integration. The new construction technologies topic focuses on building design, construction, and installation to improve affordability, scalability, and performance of energy-efficient building systems and methods. The goal is to find solutions that lead to construction of buildings and residences that are 50 percent more efficient compared to current code.
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Seeking an Edge, Developers, Investors Turn to 'Proptech'
The New York Times (05/07/19) Prevost, Lisa

Property technology (proptech) has made gains, as developers and investors pursue competitive advantages in real-estate purchasing, sales, and management. Rudin Management has led this movement, initiating proptech investments for an operating system (OS) with smartphone-like functionality to enable interoperable building systems. One of Rudin's spin-offs designed Nantum, an OS that collects real-time data on building occupancy, water usage, and office temperatures to cut electric consumption by 40 percent and steam consumption by 70 percent.

Rudin also invests in outside proptech vendors like Enertiv, which builds platforms for operating systems in commercial buildings, using sensors and digital models to track equipment performance, make maintenance recommendations, and identify nascent malfunctions. Proptech's growth in real estate has also made been noticeable on the residential side, where Opendoor and other firms have constructed platforms to facilitate "instant buying" home purchases.
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Big Boxes Becoming a Big Headache for Shopping Center Landlords
Crain's Chicago Business (05/01/19) Gallun, Alby

reached a record high of 15.7 million square feet in the Chicago metro area


Anchor tenants are pulling some shopping centers under water. With big chains like Carson's and Sears going out of business or closing stores, the amount of available retail anchor space has reached a record high of 15.7 million square feet in the Chicago metro area -- up from the previous record of 12.8 million in 2018, according to CBRE. The amount of available anchor space in that market has doubled since 2012. Because so few retailers are scouting for large spaces these days, many shopping center owners are looking beyond traditional tenants and signing leases with everyone from fitness facilities to entertainment concepts. According to CBRE, non-traditional tenants accounted for 44 percent of the more than 2 million square feet of big store leases signed here in the last year. Switching uses can often run retail landlords afoul of co-tenancy clauses in leases with other tenants at their properties. Because major department stores often drive traffic to a shopping center, smaller tenants will typically insist on language in their lease agreements that allow them to break their deal and move if a department store closes. This potential legal snag has yet to result in a mass exodus or widespread demands by tenants for rent concessions, though.

Meanwhile, some mall and shopping center owners are deciding they would be better off razing empty department stores and replacing them with multifamily housing or hotels. For instance, the owner of Northbrook Court in suburban Chicago wants to demolish a Macy's department store at the mall and redevelop the property with 300 rental apartments, a supermarket, food hall, and gym. The amount of available anchor space in and around the Windy City soared in the last year primarily because of the demise of Carson's, which dumped nearly 2.8 million square feet on the market. Meanwhile, the average rent for signed leases for Chicago-area anchor space fell to $8.39 per square foot this year, a 22 percent decrease from 2018 and the lowest level since 2010.
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Microsoft Teams Up with Starbucks on Predictive Drive-Thru Ordering and Bean-to-Cup Blockchain
GeekWire (05/06/19) Levy, Nat

Microsoft is working with Starbucks on a series of initiatives. The Starbucks app already gives recommendations based on order history. But Microsoft is helping the company extend that technology to the drive-thru, with digital boards that will make order recommendations. The recommendation system relies on store transaction histories and more than 400 other store-level criteria. Starbucks also is using several Azure cloud products to connect more than a dozen pieces of equipment in each of the company's 30,000 stores to make it easier to be proactive about maintenance instead of reactive.

Connecting all of its machines to the cloud also enables Starbucks to more rapidly update its menu. Before, Starbucks would have to send thousands of USB drives and upload them manually -- a process that would take weeks. Now, the company just sends out updated recipes via the cloud. Additionally, Microsoft is working with Starbucks on a new blockchain program, whose goal is to connect coffee drinkers with coffee farmers. Customers will be able to use an app to trace the journey of their coffee from the farm where the beans originate to their cup.
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News summaries © copyright 2019 SmithBucklin



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