Real Estate Management News - 07/17/2019

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July 17, 2019
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IREM® HEADLINES
Opportunity Zones: Will Opportunity Knock, or Knock You Down?
CPM Women Honored at Globe St. Event

INDUSTRY HEADLINES
Reis: National Retail Vacancy Experiences First Drop Since 2016 Among Neighborhood Shopping Centers
'The Experential Office' Is Here as Property Managers Take a Cue From the Hospitality Industry
Submetering Best Practices for Multi-Tenant Buildings
Does Air Conditioning Make You Sick? Here's the Truth.
Can't Take the Heat? 'Cool Walls' Can Reduce Energy Costs, Pollution
FCC Partially Blocks San Francisco Apartment Internet Ordinance
Charming Charlie to Shutter All 261 Stores After Filing Chapter 11 Bankruptcy
Valley Fair Owner Aims to Go Green on Shopping Center Overhaul
Services Help Apartments Deal With Mountains of Boxes
Arrowhead Mall in Glendale Is Defying the Odds. Here's the Secret to its Success
Grocery Delivery. Valet Trash Pickup. Dog Walking. These Aren't Your Grandparents' Rental Apartments.
Robotic Vending Machines Coming to Columbia Are Ready to Serve You


 
 

IREM Headlines


Opportunity Zones: Will Opportunity Knock, or Knock You Down?

There has been much recent discussion surrounding the use of opportunity zones as a way for property investors to save on taxes while jumpstarting real estate development in areas that need it the most. And while in theory they meet these expectations on both fronts, in practice that may not be the case. There are definitely factors for property and asset managers to consider before deciding if it’s the kind of opportunity worth pursuing for their buildings.

The implementation of opportunity zones is a strategy that came to life as part of the Tax Cuts and Jobs Act of 2017. There is still some confusion about the rules for opportunity zones, causing some real estate professionals to be reluctant to take advantage of them. A panel discussion that took place at the recent RECon conference discussed just such things—both the benefits to be reaped, and the challenges of which to be aware.

Click here to read a new IREM blog about observations and conversations taking place around opportunity zones and what circumstances should be in place to get the most out of them.
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CPM Women Honored at Globe St. Event

The spotlight was shining brightly on the achievements of women in commercial real estate at the GlobeSt.com Women of Influence retreat in Broomfield, Colo., last week. From those outstanding women who had been nominated in various categories, four CPM Members were singled out as being the best of the best in their categories.

In the Property/Facility Manager category, Renee Savage, CPM, of Capital Growth Properties Inc., AMO, in La Jolla, Calif., was named the Gold Winner; and Tessie Nolan, CPM, of Granite Properties in Plano, Tex., was right behind her as Silver Winner.

The Gold Winner in the Humanitarian category was Karen Whitt, CPM, of Colliers International, AMO, in Washington, D.C.

Jana Turner, CPM, of RETS Associates in Newport Beach, Calif., was named the Bronze Winner in the CRE Consultant/Advisor category.

In announcing these winners, Globe St. noted that multiple factors were taken into account, including: “the nominee’s impact on, and reputation within, her firm and broader professional community; the nominee’s professional career highlights, from deal-making savvy and innovation to client satisfaction and personal growth; a proven ability to achieve goals and display ingenuity in terms of creative thinking and problem solving; her dedication to furthering the development of her field and the role of women within it; accomplishments and involvement in her company, the CRE industry and broader social community; a personal commitment to the highest ethical standards, service and excellence; and so much more.”
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Industry Headlines


Reis: National Retail Vacancy Experiences First Drop Since 2016 Among Neighborhood Shopping Centers
REBusinessOnline.com (07/09/19) Hiller, Kristin

Commercial real estate data firm Reis announced that neighborhood and community shopping center retail vacancy dropped 10 basis points to 10.1 percent in the second quarter, marking the first time since the first quarter of 2016 that vacancy has declined. The second quarter of 2018 saw the rate rise 20 basis points to 10.2 percent. Reis drew its data from its bank of commercial real estate property information, which includes figures from 77 metropolitan areas across the country. The facts and figures complicate a popular talking point that online shopping is ushering in the death of retail.

Reis also found that both the national average asking rent and effective rent increased 0.4 percent in the second quarter. In this year's first quarter, the vacancy rate rose following announcements from long-time mall staples JC Penney, Payless ShoeSource, Charlotte Russe, and Gymboree that they would be closing stores. Though the closures will likely continue to impact shopping centers, Reis chief economist Victor Calanog pointed out that grocery stores, "home/houseware stores, gyms . . . discount variety stores, discount clothing stores, and even trampoline parks" have been moving into vacant properties and fueling growth. "Older stores that are not keeping up with new business strategies or modernizing will likely continue to suffer and close in this tumultuous time," Calanog concluded.
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'The Experential Office' Is Here as Property Managers Take a Cue From the Hospitality Industry
Washington Business Journal (07/11/19)

Property managers are increasingly incorporating amenities and methods from the hospitality industry into commercial office buildings in an attempt to increase tenant retention and improve outreach to prospective tenants. This "experiential office" philosophy seeks to support a tenant-first approach and make office spaces more comfortable and relaxing for workers. "As tenants look toward a more concierge-style experience, serving clients and their exceeding expectations is paramount," said Megan Matthews, property management lead for JLL Mid-Atlantic.

Earlier this year, JLL launched its Curae Approach to Experience Management, an experiential office project that will combine tenant-focused property management activities with technology to create an all-encompassing service for office properties. This people-centric project will incorporate many amenities traditionally seen in hospitality contexts, including spa services, but will also take it a step further by offering services ranging from nutrition counseling to flu shots. "Just like the hospitality industry, at the core of property management is a desire to maintain the integrity of the building and deliver excellent client service at the same time," Matthews added.
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Submetering Best Practices for Multi-Tenant Buildings
Buildings (07/08/19) Penny, Janelle

Buildings with old infrastructure and outdated submetering systems are primed to make mistakes when billing tenants for their utility usage. These structures may bill tenants based on the physical space their unit occupies rather than actual utility usage. Such a system is deeply flawed, of course. An office occupying a large unit may use far less energy than a data center in a smaller unit, for example. This problem is compounded by the sort of submetering machinery building owners and operators choose to purchase. Cheaper equipment may not have industry-standard features that can individually track energy usage, while machines that can only be manually read will constantly require a human employee to sit and copy numbers into an Excel spreadsheet -- a tedious and error-prone process. The time a human employee spends watching the machine and copying down numbers would be better spent actually analyzing the numbers to find trends, patterns, and discrepancies.

Buildings looking to upgrade their submetering systems should first engage a mechanical engineer to check and update the building's electrical documentation. It can be difficult in older buildings, in particular, to upgrade submetering systems, especially if previous owners have overseen renovations without proper documentation and updated drawings. After the mechanical engineer has updated electrical documentation, building owners should consider selecting several building systems to monitor. Meanwhile, building management should be certain to tune up any other automated infrastructure in the building whenever necessary. The best submetering systems will have remote data logging capabilities, eliminating the need for a human employee to sit by and copy down numbers, and automatic notifications enabled to alert employees to significant issues.
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Does Air Conditioning Make You Sick? Here's the Truth.
Huffington Post (07/10/19) Birch, Jenna

Air conditioning (AC) is ubiquitous in the United States, but some experts suggest that it may contribute to health issues, and taking other steps to cool down may be a smart idea. If an AC system is properly monitored and maintained, it filters out air and particle pollution while reducing the risk of heat-related illness during the hot days of summer. Moreover, it eliminates the need to open the window and expose the interior environment to outside allergens. But when AC systems are not maintained properly, they can contribute to eye, nose, and throat irritation as well as respiratory discomfort and coughing fits.

A recent study from the International Journal of Epidemiology found that occupants of air-conditioned office buildings reported more symptoms of ill health than occupants of buildings incorporating natural ventilation. AC's tendency to contribute to poor health can be explained by moisture in the units that leaves the system open to tiny pollutants, thereby exposing occupants to toxins, allergens, or irritants. And studies suggest that workers are more productive in comfortable temperatures that can be reached without an over-reliance of AC. Experts say that fans, cool roofs, energy efficient windows, and even just sitting in the shade are among the ways to cool down building exteriors.
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Can't Take the Heat? 'Cool Walls' Can Reduce Energy Costs, Pollution
Berkeley Lab News Center (07/09/19) Roberts Jr., Glenn

A new study from Berkeley Lab has found that Sunlight reflecting "cool" exterior walls are just as efficient and, in some cases, more efficient at saving energy than sunlight reflecting "cool" roofs. The research team modeled more than 100,000 retail stores, office buildings, and homes of varying types and ages in California and elsewhere in the United States, finding that cool walls saved as much or more energy than cool roofs. The researchers found that California and stretches of the southern United States were prime locations for energy savings due to cool walls. Cool walls have a higher-than-average solar reflectance and high thermal emittance, making them able to efficiently release absorbed heat, thereby cutting both emissions and costs.

Between 40 percent and 60 percent of all buildings in the United States were built before 1980, when building codes required less wall insulation than they do today. Installing cool walls in these older buildings could lead to savings three to six times greater than for newer buildings. Ronnen Levinson, co-author of the report, comments, "Repainting the exterior walls of pre-1980 buildings -- whether homes or office buildings or stores -- with cool paint offers the greatest benefit because they have the least insulation." Levinson and his colleagues found that cool walls can lead to yearly energy cost savings of 11 percent for retail stores, 8.3 percent for single-family homes, and 4.6 percent for medium-sized office buildings.
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FCC Partially Blocks San Francisco Apartment Internet Ordinance
NBC Bay Area (CA) (07/10/19) Jackson, James

The FCC has voted to partially block Article 52, a City of San Francisco ordinance intended to give apartment renters greater freedom in selecting their Internet service provider (ISP). The FCC opposed Article 52's mandate that existing ISPs must share wiring in multiple-tenant buildings -- a move that the city believes will increase competition, but the FCC interprets as undercutting previous Commission decisions. Under the ordinance, an apartment building would be required to give residents the freedom to choose their own ISP regardless of what companies already had infrastructure within the building. Earlier this month, San Francisco Mayor London Breed wrote a letter to House Speaker Nancy Pelosi, defending Article 52 and expressing concern over a potential FCC ruling blocking its implementation. But even though the FCC ultimately blocked the ordinance, it was divided in its decision. Jessica Rosenworcel, currently serving her second term on the FCC, issued a dissent characterizing the Commission's decision as "crazy."
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Charming Charlie to Shutter All 261 Stores After Filing Chapter 11 Bankruptcy
Fox Business (07/12/19) Joyce, Kathleen

Charming Charlie filed for Chapter 11 bankruptcy late last week and will be closing all 261 of its stores, many of them mall-based, in 38 states. This marks the second time the fashion accessories retailer filed for Chapter 11. In 2017, there were 390 Charming Charlie stores in the United States, Canada, the Philippines, and the Middle East, reports Fortune. As part of its earlier bankruptcy filing, which ended in April 2018, the company shuttered 100 stores. The 261 remaining stores have already begun "going out of business" sales.
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Valley Fair Owner Aims to Go Green on Shopping Center Overhaul
San Jose Spotlight (07/10/19) Bitters, Janice

Unibail-Rodamco-Westfield (URW) have vowed that the newly-expanded Valley Fair Mall in southern California will be eco-friendly when it reopens next year. The mall is in the midst of a $1.1 billion renovation project, including the installation of solar panels. URW said this past week that when the renovation is complete, almost 30 percent of the mall's energy will be powered by solar arrays placed on top of several new parking garages. URW's push to make Valley Fair Mall green stems from its social responsibility plan, dubbed "Better Places 2030," which seeks to cut the company's global carbon footprint in half by 2030. Valley Fair Mall is one of URW's largest shopping centers, making it a prime target for the "Better Places 2030" initiative. The current renovation and expansion project will increase the mall's square footage by 650,000 square feet and add more than 160 new stores.

URW is also installing solar panels at two of its other malls in the United States in the next year -- Westfield UTC in San Diego and Garden State Plaza in New Jersey. But in addition to the solar panels at these three malls, URW is introducing a number of initiatives and projects to reduce emissions at other properties in its portfolio. The company aims to have retailers in its malls reduce carbon emissions by up to 80 percent and is drafting biodiversity action plans for each property. URW has also partnered with Uber to promote carpooling and is installing more charging stations for electric vehicles at its properties.
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Services Help Apartments Deal With Mountains of Boxes
Daily Herald (IL) (07/05/19) Roth, Katherine

Online shopping has made it easier for consumers to buy goods, but it has also created a considerable headache for apartment building managers who must handle all the delivery boxes and accommodate any special requests, such as storing food or flowers. Goods can be damaged or stolen when packages pile up in building lobbies, but some property managers find themselves burdened with more boxes than ever and limited space to store them. One solution that more and more apartment communities are embracing is the installation of special lockers to store delivered goods. These lockers may be located in the building, outside the building, or at third-party locations. Amazon Locker, for example, is based at Whole Foods. When the packages are delivered, they are stored in the lockers, which can be modified to be refrigerated or to accommodate other special circumstances, and an alert is sent to the apartment resident. The resident can input a unique code to open his or her locker and retrieve the package.

Other services seek to alleviate the delivery headache for apartment owners and operators. One service, Fetch, collects delivered packages, stores them off-site, and returns to deliver them when the resident has come home for the day, thereby removing all responsibility from property management. Meanwhile, some buildings have decided to tackle the problem head-on and reduce the need for third-party services. These sites have renovated space to create package storage rooms and hired additional staff members to handle the incoming flow of deliveries. Other apartment buildings have said they will not accept any packages, requiring residents to use one of the third-party services.
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Arrowhead Mall in Glendale Is Defying the Odds. Here's the Secret to its Success
Azcentral.com (07/05/19) Bowling, Joshua

Arrowhead Mall in Glendale, Ariz., is proving that online shopping has not killed shopping centers for good. The landmark retail complex benefits from the steady expansion of the West Valley outside of Phoenix, which has seen recent growth fueling more demand for food, shopping, and entertainment destinations. Arrowhead Mall has increased its push for traffic outside of the crucial November-December holiday season by offering free outdoor concerts in the summertime and also featuring beer gardens and food vendors drawn from local businesses. Such efforts have made July the second-most profitable month for the mall behind December, according to senior property manager Jesse Benites.

Meanwhile, Arrowhead is widening the variety of attractions inside the mall to increase its appeal as a hang-out spot. These include murals, sculptures, and other art installations that are designed to be posted to social media with the mall tagged. Finally, Arrowhead has carefully selected the retail stores inside the mall, which is over 90 percent occupied. These stores include various boutique retailers that offer a unique customer experience they can't get online, as well as companies like the mattress seller Amerisleep, which has traditionally been an Internet-only business but which has opened a brick-and-mortar location in Arrowhead.
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Grocery Delivery. Valet Trash Pickup. Dog Walking. These Aren't Your Grandparents' Rental Apartments.
Herald News (MA) (07/11/19) Heroux Pounds, Marcia

Some apartment buildings in South Florida are pulling out all the stops in an attempt to entice consumers to continue renting instead of making the leap to homeownership. In the past, apartment complexes across the region have offered amenities like a swimming pool and a tennis court and that was enough. Now, common apartment services include free or discounted WiFi, grocery delivery, special lockers to store packages and deliveries until renters can retrieve them, housekeeping, and taking out the trash.

Moreover, apartment complexes are becoming increasingly tolerant of dogs, cats, and other pets in the building, offering dog-walking services and hosting canine washes and other pet-friendly amenities on the property. One unnamed Aventura, Fla., building has an on-site medical center, while a Miami building has installed a wine room, three separate movie theaters, a music room, and a state-of-the-art games room. Ken Johnson, a real estate economist and professor at Florida Atlantic University, said that the trend both in South Florida and nationwide is to rent. This is partly because of attractive rental prices, tax benefits, investment outlook -- and the influx of such new and engaging amenities and services.
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Robotic Vending Machines Coming to Columbia Are Ready to Serve You
ABC Columbia (S.C.) (07/05/2019) Dean, Rochelle

The Columbia, S.C., market plans to have about 20 robot-run yogurt stations that will start popping up as early as next month in area shopping malls, retail centers, and other heavy pedestrian-traffic locations. The robotic servers will not be operational until May 2020, however. According to "Reis & Irvy's," the parent company of Generation Next, these will be the first fully automated frozen yogurt/ice cream robot vending machines to ever hit the market. The kiosks will have the capability to serve up a variety of six flavors and an equal number of toppings. The robotic design makes it a unique experience for consumers young and old and creates excitement and foot traffic for mall operators and building owners.
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