Real Estate Management News - 8/14/2019

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August 14, 2019
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IREM® HEADLINES
Alleged Discrimination in ‘No Housing Vouchers’ Advertising
The Shifting Terrain of Land Reclamation
Maintain Performance with the IREM Maintenance and Risk Management Certificate

INDUSTRY HEADLINES
The Future of the Mall Might Be On Your College Campus
LEED-ing Multifamily Projects in CA
Silverstein Unveils the City's Largest Office Terrace at 3 WTC
ING Real Estate to Score Office Buildings on Indoor Mobile Coverage
Walgreens Plans to Close 200 U.S. Stores, According to New SEC Filing
Researchers Develop Novel Process to Study How Trees Affect Building Temperatures, Air Flow in Extreme Heat
How to Retain Tenants During a Construction Boom
Walmart: No Plans to Increase Security After El Paso Shooting
America's First Mall Is Undergoing a Major Overhaul—and It Shows Where Retail Is Headed
The Office Landlord's Big Gamble: WeWork Is Sole Tenant in At Least 5 NYC Buildings
Foodsby Zeros In on Office Lunch Deliveries, Carving Niche Amid a Boom
U.S. Still Faces a Glut of Retail Space


 
 

IREM Headlines


Alleged Discrimination in ‘No Housing Vouchers’ Advertising

While, as in other cities across the U.S., it is illegal in the District of Columbia to refuse to rent to people who are part of the rapid rehousing program or who use federal rental assistance vouchers, the act of doing so remains widespread in the city. According to a study from the Urban Institute, about 15 percent of District landlords do not accept vouchers, despite it being a legal requirement to do so. Recently, a District court ordered a real estate and property management company to remove statements in its housing advertisements that say the company will not rent apartments to people who receive housing assistance. The court, which granted a preliminary injunction in late July, alleged the company’s advertisements—seen stating, “we are not accepting any vouchers or rapid rehousing,” in images submitted as part of the lawsuit—are a violation of D.C.’s Human Rights Act. The District’s anti-discrimination law, among the most expansive nationwide, prohibits housing discrimination based on a person’s source of income. The D.C. attorney general’s office is also seeking a permanent injunction, which could include stipulations that the company provide additional reporting to the court or be placed under court monitoring, as well as financial penalties.

IREM will be monitoring this case closely, recognizing that the issue is important to many of its members: CPM members manage nearly 40 percent of all U.S. federally-assisted housing units and 25 percent of all U.S. public housing units.
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The Shifting Terrain of Land Reclamation

The July/August issue of the Journal of Property Management highlights reclaimed land projects in Bahrain and Japan. Bahrain has increased its landmass by over 12.5 percent through reclaimed land projects over the past 30 years, and Japan has added several hundred square miles to its coastline, making up 0.5 percent of its total landmass. IREM’s Japan chapters in June held their Annual Meeting and Award Ceremony on Minato Mirai 21, a large, master-planned development in the city of Yokohama that was built on reclaimed land.

Reclaimed land projects create unique challenges for property managers, including the need to build out entirely new infrastructure for a development, but climate change may be one of the most serious going forward.

The effects of climate change are being watched around the world at the highest levels. Singapore is composed of 22 percent reclaimed land, and in July Singapore Senior Minister Teo Chee Hean noted that the country continues to monitor sea levels, adding that they may need to further adjust beyond 2011 regulations that raised the minimum level for newly reclaimed land by 1 meter to 2.25 meters above the highest recorded tide level.

Two notable projects in Singapore, the Tuas Terminal port and Changi Airport Terminal 5, will be built at a further 1 meter and 1.5 meters above the minimum requirements, respectively, hopefully ensuring that they will be safe from rising sea levels for the foreseeable future.

In a report released last week, the United Nations Intergovernmental Panel on Climate Change noted that climate change will significantly worsen land degradation, particularly in low-lying coastal areas. This news suggests that reclaimed land and its accompanying requirements and issues should be kept in mind by property managers in the future.
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Maintain Performance with the IREM Maintenance and Risk Management Certificate

Effective real estate managers don’t underestimate the importance of qualified maintenance professionals. A high-performing maintenance team improves the resident and tenant experience and contributes to the property’s financial performance. They not only circumvent costly repairs with regular maintenance, but also get repairs done right the first time. And the more different types of issues they can handle, the more valuable they become.

To help develop these important skills, IREM offers a Maintenance and Risk Management Certificate program. Program participants learn to employ best practices, from developing a proactive maintenance plan to creating a maintenance budget, managing contractors and determining appropriate staffing for the property. They’ll walk away with a solid foundation to reduce potential loss and preserve the owner’s investment.

Multi-Housing News recently published an article on the maintenance challenges certain properties are experiencing. IREM member Pamela Sullens, CPM, and COO of Golden Mountain Real Estate, was featured in this story and says, “The selection of maintenance techs, I believe, is paramount to the success of the bottom line.” Even after a solid team is in place, the task of maintaining a high level of performance continues.

The IREM Maintenance and Risk Management Certificate program takes about 4-6 hours to complete online. Each participant is also required to pass a 100-question online exam to earn the certificate. But in this short timeframe, maintenance professionals will hone their skills, develop new skills and become the business partners that real estate managers need.
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Industry Headlines


The Future of the Mall Might Be On Your College Campus
BuzzFeed News (08/01/19) Miranda, Leticia

Chain retailers are increasingly viewing universities as prime locations for new shopping centers and malls. Many companies are opening stores on or near college campuses, hoping to attract students looking for convenient shopping and to establish relationships with young people who are still developing their shopping habits and preferences. Kathy Sawin, executive vice president of brokerage services at retail brokerage firm Metro Commercial, said that colleges have a competitive edge when attracting prospective students if they have a well-stocked retail strip or block near the campus. In the early 2000s, Sawin helped the University of Pennsylvania become one of the first universities in the country to host retailers directly on its campus when it turned an unused parking lot into a retail area complete with stores and eateries. Those retailers today include Lululemon Athletica and Urban Outfitters, and the school boasts a retail space occupancy rate ranging between 90 percent and 100 percent. The University of Pennsylvania attracted the retailers by offering favorable leasing terms, offsetting some of the worry the businesses felt about committing to a brick-and-mortar location when they could not gauge an average household income for the area.

The University of Southern California is another school that has embraced retail on its campus, opening the $700 million Village project in 2017 containing retail on the ground floor and housing on upper floors. Target is one retailer committing to increasing its presence near universities. It opened its first small-format store near the University of Minnesota five years ago, and has opened 26 additional small-format stores near colleges and universities since then. In July alone, it opened a store near Michigan State University, a store near the University of Kentucky, and a store near the University of Washington. Target executives have said they plan to open dozens more over the next few years. These smaller Target locations are geared toward the college students who shop there, offering dorm room and school supplies, quick meals, and tailgating essentials.
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LEED-ing Multifamily Projects in CA
Multi-Housing News (07/25/19) Gagiuc, Anca

California is the top U.S. state for LEED-certified multifamily properties, and a number of projects completed in the past year that hold or are pursuing such certification stand out. Los Angeles' Coronel Apartments is a 54-unit development, with six units reserved for extremely low-income households. The property's sustainable features include solar thermal water heating, drought-tolerant landscaping, and energy-efficient lighting and appliances. The LEED Platinum-certified Oakcrest Heights in Yorba Linda, meanwhile, employs vernacular architectural forms originally present in single-family developments. The unit mix comprises one-, two-, and three-bedroom floor plans averaging 876 square feet and private balconies/patios.

Camarillo's Springville Senior development has earned LEED Gold certification by diverting 75 percent of construction from landfill and using low-emitting volatile organic compound paint, carpets, adhesives, and sealants. Energy Star appliances and low-flow water-saving fixtures add sustainability along with enhanced insulation, energy-efficient low-E windows, and innovative filtration. Finally, Hana Gardens in El Cerrito, Calif., has a unit mix of one- and two-bedroom apartment plans, with half accessible to people with disabilities.
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Silverstein Unveils the City's Largest Office Terrace at 3 WTC
Commercial Observer (08/07/19) Baird-Remba, Rebecca

Silverstein Properties has converted part of the 17th floor of 3 World Trade Center in Manhattan to an 11,000-square-foot outdoor office terrace -- New York City's largest. Roughly 50 percent of the terrace is open for the building at large, while the other half is reserved for 3 WTC's anchor tenant, GroupM. Jeremy Moss, Silverstein's leasing director, decided to introduce the terrace project after he witnessed Hudson River Trading create a private terrace for its offices at 4 WTC. Fortunately, 3 World Trade had an outdoor area that was originally created for its large, automatic window-washing rig.

Moss says having the terrace is a big advantage for companies. "This is something that lets you stay within the building, get some fresh air and some vitamin D," he said. The terrace contains topiary and ferns, benches, tables, and chairs. All of the furniture can be easily moved to accommodate meetings or social gatherings like wine tastings, yoga classes, or even concerts. In the near future, there will be a coffee bar, a bar serving alcoholic beverages in the evenings, upscale vending machines, and periodic food service from Italian marketplace Eataly.
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ING Real Estate to Score Office Buildings on Indoor Mobile Coverage
Telecompaper (08/05/19)

ING recently announced that it will begin scoring office buildings on the quality of their indoor mobile coverage. The Dutch bank said that buildings with higher-quality coverage can generate 5 percent more rent than their peers, according to estimates based on data from the United States and United Kingdom. ING's real estate division will measure the Internet and mobile services inside office buildings before collaborating with a company called WiredScore to issue a score. WiredScore has already developed scoring systems in the U.S. and U.K. Those scores account for speed, reliability, back-up options, sustainability, indoor coverage, and future-proofing for 5G and IoT. The ING scoring system is expected to roll out in November.
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Walgreens Plans to Close 200 U.S. Stores, According to New SEC Filing
USA Today (08/06/19) Tyko, Kelly

Walgreens announced in an SEC filing this past week that it plans to close around 200 U.S. stores. According to a document posted on the SEC's website, the move to permanently shutter stores follows "a review of the real estate footprint in the United States." The stores closing represent less than 3 percent of Walgreens approximately 9,600 U.S. locations. Phil Caruso, a Walgreens spokesman, commented, "As previously announced, we are undertaking a transformational cost management program to accelerate the ongoing transformation of our business, enable investments in key areas and to become a more efficient enterprise. As part of this effort, we plan to close approximately 200 stores in the U.S."
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Researchers Develop Novel Process to Study How Trees Affect Building Temperatures, Air Flow in Extreme Heat
Iowa State University News Service (07/31/19)

Iowa State University (ISU) researchers have created a computational model to assess how tree shading and air flow affects building temperature in extreme heat. The researchers inventoried a neighborhood of 1,142 trees and 340 buildings, and rendered this data as a three-dimensional model to simulate trees' impact on indoor energy use, accounting for energy input of nearby buildings and effects of the surrounding environment. The simulation also factored in tree shading and so-called "evapotranspirational cooling," and employed "meshing" capabilities to accurately model the relationship between trees, buildings, air temperature, and air movement. This allowed scientists to visualize how trees of various heights and distances from structures impact the exterior wall's temperature and surrounding air flow. Said ISU's Ulrike Passe, "We are developing data-driven models and physics-based computational fluid dynamics models to see if a building can be operated with natural air flows or if it needs air conditioning."
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How to Retain Tenants During a Construction Boom
GlobeSt.com (08/07/19) Borland, Kelsi Maree

Even in the midst of an apartment building boom in many areas of the country, savvy property managers are taking steps to retain residents and keep occupancy steady. These firms are tailoring specific strategies to specific locations rather than instituting policies across their entire portfolios. So far, the custom attention has played well with tenants. Each apartment community has its own demographics, and people may want different amenities depending on where they live. Property managers are increasingly offering amenities based on tenants' desires, like family-friendly buildings that offer day-care services. Millennial apartment residents, meanwhile, may be more inclined to get high-tech amenities that maximize convenience.

When tenants rely on a building's on-site amenities and services, they are more likely to extend their lease, even if there are a crop of new multifamily buildings going up elsewhere. Max Sharkansky, managing partner at Trion Properties, concurs that catering to the demographics of each individual building is key to retaining tenants. "We are focused on adding strategic upgrades and offerings to our existing properties, while keeping rental pricing affordable," he stated. For Sharkansky, it is all about making tenants engaged with their apartments. In addition to delivering custom amenities based on location, Trion Properties arranges social gatherings for residents of buildings to build a greater sense of community and feel appreciated by building management.
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Walmart: No Plans to Increase Security After El Paso Shooting
Newsday (08/05/19) Calavia-Robertson, Daysi

Walmart spokesman Randy Hargrove said the company has no current plans to increase security at its locations nationwide after the mass shooting at an El Paso, Texas, location that killed 22 people, wounded dozens of others, and stunned the nation. Hargrove reiterated that safety is among the retailer's top priorities, and said that Walmart will continue to "assess the need and deploy additional resources as necessary." But, he added, "at this time, there is no directive to increase security." Walmart's current security measures include asset protection associates, who are unarmed and who protect store merchandise and employees, as well as surveillance cameras. Some Walmarts also have security guards patrolling the parking lot, while others employ armed, uniformed, off-duty police officers to provide extra protection. In addition, Walmart has required quarterly active shooter training for the past four years.

Meanwhile, New York-based shopping center owner Kimco Realty Corp. said it would not institute new center-wide security measures in the aftermath of the El Paso shooting and the subsequent mass shooting in Dayton, Ohio. David Bujnicki, Kimco's senior vice president of investor relations and strategy, said that individual stores within Kimco-owned centers are responsible for their own security. He added that Kimco gets involved in implementing greater security measures when its properties host community events. “We have a close working relationship with local authorities, and have on-site security personnel and video surveillance at many of our properties," Bujnicki said.
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America's First Mall Is Undergoing a Major Overhaul—and It Shows Where Retail Is Headed
Footwear News (07/25/19) George-Parkin, Hilary

Seattle's Northgate Mall, famous for its status as the country's first shopping mall, is undergoing a major transformation in order to keep up with changing trends in retail. Online shopping has lured customers away from visiting malls and shopping in person on a regular basis, leaving many shopping centers with closed stores and less foot traffic than ever before. Simon Property Group, which owns Northgate Mall, is combating this by redesigning the space the mall takes up. Last summer, the company announced plans to tear down 60 percent of Northgate Mall and replace it with housing units, office space, a hotel, a fitness center, and a centrally located green space.

Since then, Seattle's forthcoming NHL team announced it will move in, becoming an anchor tenant for the newly imagined development with its headquarters offices, a training center, and three regulation rinks. In 2021, a light rail station will open up at the site, connecting Northgate to surrounding neighborhoods in a more sustainable way than relying on personal cars as malls have traditionally done. Northgate's redevelopment shows that the future for shopping malls includes more than just stores and food courts. Instead, multifamily housing, gyms, coworking spaces, and big food halls are going to become more common in malls to entice shoppers back by promoting an "experience."
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The Office Landlord's Big Gamble: WeWork Is Sole Tenant in At Least 5 NYC Buildings
The Real Deal (08/06/19) Jeans, David

New York City office landlords are notoriously cautious about renting an entire building to one company, but the co-working service WeWork is increasingly breaking down this resistance. WeWork currently accounts for about five million square feet of office space citywide, and it occupies all the rentable space in at least five buildings. In at least a dozen other buildings, WeWork accounts for more than 50 percent of the rentable space. Landlords who lease to WeWork are betting that the company will continue to see success in its model of subleasing space for premium rates. According to reports, some of the biggest landlords in New York City have begun demanding that WeWork guarantee more than 11 percent of its overall lease obligations, which is the level it currently promises.

WeWork has operated for almost a decade and is preparing for an initial public offering that will give landlords a look at the strength of its business model. It's currently the largest tenant in New York City, the District of Columbia, and central London, and it is a major player in Chicago. Cushman & Wakefield found in 2018 that properties with high WeWork occupancy tend to trade at higher capitalization rates than the average for similar buildings, suggesting that investors view WeWork as something of a risk. While landlords are generally split in their opinion over whether WeWork is a valuable asset or a dangerous risk, most agree that it will be around for a while to come.
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Foodsby Zeros In on Office Lunch Deliveries, Carving Niche Amid a Boom
Star Tribune (Minnesota) (08/02/19) Niksa, Matthew

A new Minneapolis-based startup called Foodsby is aiming to make a name for itself as a lunchtime food-delivery provider. GrubHub and Uber Eats are dominating the third-party food delivery market, but high delivery fees can turn off both customers and restaurants. Foodsby is embracing a different model, partnering directly with restaurants to coordinate food delivery for office employees at lunch. Foodsby's founder Ben Cattoor said that enough people placing an order at once will offset high delivery fees. Office workers can check the Foodsby app or website in the morning, determine what options they have that day, and place their order before the mid-morning deadline. Then, at a pre-determined time, the restaurant will deliver all of the lunch orders to the office building, and workers can pick their food up then. Customers only have to pay the menu cost of the food plus $1.99 and sales tax, while restaurants pay less than 10 percent of the order fee to Foodsby.

Foodsby has recently expanded to offer Foodsby Meetings, a service providing lunchtime deliveries at the customers' preferred time for a $10 group delivery fee. Rob Wormley, senior manager of brand communications at Foodsby, said that participating eateries are reporting 15 percent to 20 percent increases in lunch sales after partnering with the service. Foodsby is currently serving more than 4,000 businesses in 18 metro areas, with plans to expand to a dozen more by the end of the year. Cattoor said that the business model only works for lunchtime office food orders, pointing out that individuals ordering from home create the same issue that arises from Uber Eats and similar services -- high delivery fees for just one person's meal.
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U.S. Still Faces a Glut of Retail Space
Payments Journal (08/06/19) Pucci, Raymond

According to newly released data from the International Council of Shopping Centers, the United States has 23 square feet of real estate per person -- significantly more than many other countries, and with a sizable lead over No. 2 Canada with 17 square feet per person. The United Kingdom and France measure in with five square feet per person. This disparity may be due to the big-box retail stores in the U.S. that greatly enhance the country's square footage.

But even as America boasts more retail space than any other country, stores are closing nationwide as e-commerce continues to be a big factor in the shopping game. Mall owners have responded to this trend by diversifying the options at their shopping centers, adding more dining, entertainment, and even healthcare options to accompany the apparel retailers that have traditionally populated malls. Mall owners are also betting that adding residential and office space near shopping centers will increase the foot traffic and merchandise sales at those centers.
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News summaries © copyright 2019 SmithBucklin



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