Real Estate Management News - 08/21/2019

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August 21, 2019
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IREM® HEADLINES
Debate Increases Around Opportunity Zones
Leadership is Key for Successful Real Estate Management
Nominating Committee Announces Slate of 2020 Governing Council Nominees

INDUSTRY HEADLINES
How Chicago's Willis Tower is Renovating Security
3 Rising Trends to Watch in Elevator Technology
Stores Starting to Feel a Lot More Like the Internet
Technology, Services Drive Apartment Tenant Retention
CBL Transforms 24 Former Anchor Stores as Malls Become 'Suburban Town Centers'
Top DC Office Conflict? Temperature
How Shopping Centers Can Use Design to Build a Better Experience
Murphy Signs Bill to Provide Redevelopment Designation for Stranded Malls, Office Parks
Brookfield Properties Redevelops Top Floors of Iconic Chicago Building
Google Fiber Is Going Wireless in Austin Through Webpass
Trees or Solar Panels? JPMorgan Plans to Chop 150 Trees at Seminole Parking Lots for Solar Canopies
More Designers Focusing on Acoustic Properties of Buildings


 
 

IREM Headlines


Debate Increases Around Opportunity Zones

Responding to criticism that the new opportunity zones tax break, designed to spur development in poor areas, is benefiting the rich, Housing and Urban Development (HUD) Secretary Ben Carson recently said to a crowd of real estate industry professionals, "[Skeptics] said this is just a mechanism for rich people to get richer—um, newsflash, rich people are going to get richer anyway…They're going to invest their money in something. So why not induce them to invest that money into a place that is traditionally economically neglected? And that becomes a win-win for everyone."

Opportunity zones offer investors tax breaks in exchange for putting their money into almost 8,700 areas around the country and in U.S. territories deemed to be underdeveloped. Investments held for at least 10 years will require no capital gains tax to be paid when the investment is sold.
And though investors are excited about the opportunity zone initiative, they readily confirm some of the fears critics have cited about the program. Some describe the break as a "windfall," saying it is going to projects that would be built regardless of whether the program had been created. Others call it a nice bonus, but hardly a difference-maker.

There are also predictions that many areas will see little or no investment, because it won't make sense for investors—who expect a certain return on their money—to bother with such areas. For example, nearly all of Puerto Rico has been designed an opportunity zone, but financial advisers discount the idea of investing there, pointing to government corruption and a declining population.

The IREM Government Affairs team will continue to monitor the ongoing discussions about opportunity zones and will provide updates as significant developments occur.
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Leadership is Key for Successful Real Estate Management

Real estate management and leadership naturally go hand in hand. Whether you’re motivating a staff team, negotiating with tenants, or handling a maintenance emergency, leadership skills are required on a daily basis. But what makes an effective leader?

Effective leaders influence others’ behavior, working in a way that increases confidence, effectiveness and productivity, which ultimately increases the company’s profitability. Also, keep these considerations in mind:
  • Leadership is relationship-oriented, emphasizing how one relates to and influences others, usually in pursuit of a common goal.
  • Characteristics of a leader include but are not limited to: decisiveness, strategic orientation, development of people, team leadership, achievement orientation, self-confidence and courage of conviction, impact and influence, and relationship building.
  • Each employee should be considered a leader of their position, even if that person does not have direct reports.
If you’re interested in exploring more aspects of leadership, IREM has published a Leadership Development White Paper series that focuses on twenty leadership competencies a real estate manager needs to survive in today’s relationship-driven environment. Among the topics covered are communication, conflict resolution, succession planning, critical thinking, delegating, and time management. Each white paper is available for purchase individually or as a full series —but free for IREM members—at irem.org.
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Nominating Committee Announces Slate of 2020 Governing Council Nominees

The IREM Nominating Committee has announced its slate of nominees for Governing Council, with terms beginning in 2020. The election of Governing Councillors will take place on Thursday, September 26, 2019 in San Francisco, CA, at the annual membership meeting during Governing Council, which is held in conjunction with the IREM Global Summit.

Click here to view the slate of Governing Council Nominees.
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Industry Headlines


How Chicago's Willis Tower is Renovating Security
Security Management (08/19) Kambic, Keith; Batchelor, Edward; Osborne, Angela J.

The landmark Willis Tower in Chicago, which hosts 15,000 tenants and thousands more tourists every day, is undergoing a $500 million renovation that will include a 300,000-square-foot retail space at the skyscraper's base. The renovations will increase traffic and extend business hours, presenting the facility's security team with new challenges. Currently, Willis Tower is protected by a complex security program that the Department of Homeland Security has recognized as one of the best in its class. Trusting in the leadership of its security team, the building management firm at Willis Tower, EQ Office (EQ), partnered with Guidepost Solutions early in the project to evaluate how the renovation might impact onsite security and oversee testing and installation of the new security systems.

Physical security solutions include new screening rooms, integrated elevator destination dispatch systems, and a new visitor management system, while improved screening lanes and organized access management will address increased foot traffic through the lobby. The EQ team also used the renovation to replace aging systems with cutting-edge technologies. Additionally, EQ and Guidepost Solutions will streamline the screening and entry process by offering multiple check-in methods and technologies. The case of Willis Tower shows that while major renovations can disrupt security and create new concerns, they also offer opportunities to evaluate and improve current security programs. Building ownership and management must work with security throughout the process, starting in the design phase and maintaining communication and transparency throughout.
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3 Rising Trends to Watch in Elevator Technology
Buildings (08/07/19) Reebenacker, Ryan

Elevators are among the most crucial elements of a building, and three rising trends demonstrate how elevator technology is developing, evolving, and improving. First, more and more buildings in the United States are embracing the use of TWIN elevator systems. Already popular in Europe, TWIN systems see two elevators share one shaft and act independently from one another. This serves four purposes: it provides more core space, supports added movement capacity, requires smaller motors, and allows one elevator to go into "sleep mode" when two are not needed. The two elevators sharing one shaft are both connected to a device that monitors the distance between them, ensuring that they never get close enough to bump one another or put anyone in danger. The TWIN system was developed by a German multinational conglomerate and recently arrived in Atlanta, with a planned expansion into Manhattan on the horizon.

The second trend relates to the use of analytics in elevator technology. The elevator industry is not immune to the digital transformation that has swept through everyday life, and one analytics provider, Schindler Elevator Corporation, highlights three clear benefits to using advanced elevator analytics. Analytics support predictive maintenance, provide real-time insights, and enhance communication from customers, passengers, and technicians. The third emerging trend in the elevator industry is not related to convenience, but rather safety. Occupants have always been cautioned to avoid elevators during emergencies and take the stairs instead. But since the terrorist attacks of Sept. 11, 2001, the National Elevator Industry Inc. (NEII) has worked to change building codes allowing people to use the elevator while being evacuated. Most modern elevators would need to be updated to meet requirements for emergency evacuation elevators, but if that can be achieved, the potential to save lives and hasten evacuations will increase significantly.
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Stores Starting to Feel a Lot More Like the Internet
CNN Business (08/15/19) Meyersohn, Nathaniel

More leading retailers are attempting to make the in-store experience closer to online retail, with the addition of augmented reality (AR), interactive touchscreens, and other technologies. The goal is to attract younger shoppers and relieve the drawbacks of in-store shopping, and boost profits on sales by avoiding shipping fees. Streetsense's Jamie Sabat said younger consumers use the Internet to shop products and brands, and the stores' new tech offerings are designed to engage customers and encourage impulse purchases. For example, Nike's flagship store in New York City caters to users of the NikePlus mobile app, allowing them to reserve items on their phones and request product holds for in-store pickup and instant checkout. Meanwhile, the Sephora beauty product chain is testing smart mirrors, which let shoppers use AR on in-store tablets to virtually try out makeup.
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Technology, Services Drive Apartment Tenant Retention
GlobeSt.com (08/12/19) Borland, Kelsi Maree

Apartment properties that have adapted to the changing trends in resident desires have been successful at retaining tenants and speeding up lease times. Above all, apartment dwellers now prioritize service-based amenities, new community meeting spaces, and smart technologies in their apartment communities. For example, as residents become more mindful of health and wellness, properties that have state-of-the-art gyms and fitness classes are more tempting than those with old gyms or without gyms at all. The key, according to Trion executive Max Sharkansky, is to simplify residents' lives. "By delivering in-demand, service-based amenities, we are saving them time and money, while simultaneously increasing the likelihood that they will renew their lease with us," he remarked.

Beyond those services, updated technology is another amenity that provides convenience for tenants. Smart thermostats, smart door locks, and package lockers all make tenants' lives easier, and the savviest building managers are investing in these technologies to set themselves apart from other apartment complexes. Sharkansky said Trion has added an app that serves as a virtual doorman, allowing residents to view visitors as they arrive and receive alerts when a delivery has come. Property managers, meanwhile, are embracing new software and apps that have simplified rent collection and made it possible to address repair requests.
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CBL Transforms 24 Former Anchor Stores as Malls Become 'Suburban Town Centers'
Times Free Press (08/12/2019) Flessner, Dave

CBL Properties has announced that it will transform 24 former anchor spaces in its shopping malls for other purposes. Of those two dozen stores, 14 have already reopened or are actively undergoing renovations with scheduled openings by the end of the calendar year. The other 10 stores have been committed to other development. CBL said its decision was driven by the changing trend of shopping centers becoming diverse town centers with a variety of spaces fulfilling a variety of purposes. Instead of just apparel retailers, for example, malls now commonly include grocery stores, restaurants, offices, and more. CBL is adding these types of retailers as well as new ventures like entertainment centers, fitness studios, and even casinos in an attempt to entice visitors back to its malls. CBL Chief Executive Stephen Lebovitz wrote in a statement that the planned renovations will achieve the company's "vision of transforming [its] properties from traditional enclosed malls to suburban town centers."

CBL's renovation projects include a Wisconsin mall getting WhirlyBall and a Movie Tavern by Marcus, a Pennsylvania mall getting a supermarket, a Michigan mall getting an entertainment center, a Kentucky mall getting a HomeGoods, and a North Dakota mall getting a Ross Dress for Less. In Chattanooga, Tenn., where CBL is headquartered, the company will add a Dave & Buster's and a Dick's Sporting Goods as well as a hotel to one of its properties there. In total, CBL manages 113 shopping centers across 26 states.
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Top DC Office Conflict? Temperature
WTOP (DC) (08/12/19) Clabaugh, Jeff

The staffing firm Robert Half said that one of the biggest points of contention for office workers in Washington, D.C., and elsewhere is workplace temperature. In fact, the firm found that some 42 percent of D.C. office workers have reported having disagreements with co-workers over the temperature inside the office. The Occupational Safety and Health Administration (OSHA) recommends that offices be kept between 68 and 76 degrees Fahrenheit, but there are still plenty of opportunities for workers to get in arguments over any temperature in that range. The complaints may range from dissatisfaction with how warm or cool it is to dissatisfaction with the distance between a particular worker's desk and the vents.

There is no clear etiquette for how to actually change the thermostat if the situation calls for it, but oftentimes that does not even matter because the temperature is set by building maintenance personnel. Robert Half's Beth Sears suggests that offices err on the side of cooler temperatures. She pointed out that employees can always don a long-sleeve top or a sweater. But when it is too hot, it is difficult to shed layers. Moreover, Sears suggested that any employee who feels the temperature is uncommonly cool or warm inquire with his or her colleagues to determine whether they feel the same way. If there is a common complaint about temperature, it can be brought to the attention of building management or the office manager.
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How Shopping Centers Can Use Design to Build a Better Experience
Retail Dive (08/15/19) Lawrence, Billy

Brick-and-mortar shopping malls have been on the defensive since the 2008 financial crisis and the rise of e-commerce. But in recent times, some malls have bounced back by diversifying their offerings and creating more of an experience rather than merely providing a place to make merchandise purchases. Profitable and effective malls now are able to offer consumers things they cannot get from their phones or laptops. This means a mix of entertainment, dining, and shopping, all deliberately laid out so that each retailer is located in its optimal spot. When malls are more than just transactional, studies show they are more likely to be successful. And a careful design is proving to be the key to creating the best experience for shoppers.

The Shops at La Cantera in San Antonio, for example, powered through the financial crisis and has only grown in popularity since. Nordstrom and Neiman Marcus anchor the north end of the open-air shopping center, while the south end is full of family-friendly retailers. From east to west, customers at the Shops at La Cantera can find a number of stores that appeal to a younger crowd, as well as restaurants. A shopper looking for a strategic path, then, knows exactly where to enter and exit the mall because the layout is deliberate. The Shops at La Cantera also benefits from its landscaping and flora. Live oaks cast shade onto the mall, which is organized around a curved linear garden that is tied to the famed San Antonio River Walk. The gardens change throughout the mall, honoring San Antonio culture and providing different types of water features, shade structures, and lounge seating. Part of what makes the Shops at La Cantera so popular is that it provides an entire experience for visitors, rather than a bare-bones location to make purchases.
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Murphy Signs Bill to Provide Redevelopment Designation for Stranded Malls, Office Parks
Real Estate New Jersey (08/12/19) Burd, Joshua

New Jersey Gov. Phil Murphy has signed a bill that will allow municipalities to provide redevelopment incentives for stranded shopping malls and office parks across the state. New Jersey's Assembly and Senate unanimously passed the bill earlier this summer. It expands the criteria for a property in need of redevelopment, thereby bringing more assets into the conversation. Under the new guidelines, a property qualifies if it contains a building or buildings used, or at one point used, for commercial retail, office space, and/or manufacturing or industrial purposes if the building or buildings have been vacant or mostly vacant for at least two years.

New Jersey has a number of suburban office parks and shopping malls that can be revitalized by investors. In recent years, there has been a trend of stakeholders pouring money into revitalization projects, and the expanded law will further encourage these efforts. Assemblyman Ron Dancer (R-Ocean County) said that revitalizing such properties will "lead to higher tax revenues and create local jobs," thereby breathing new life into communities burdened by such stranded properties. Late last year, New Jersey took a big step toward rejuvenating stranded properties when its Economic Development Authority began offering grants of up to $50,000 for local governing bodies to study redevelopment efforts.
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Brookfield Properties Redevelops Top Floors of Iconic Chicago Building
Commercial Property Executive (08/14/19) Baiceanu, Roxana

Brookfield Properties has embarked on a major new project in Chicago -- redeveloping six floors of the landmark Marshall Field and Company Building. Brookfield is collaborating with Clayco, Lamar Johnson Collaborative, and the Telos Group on the project. They plan to turn the half-dozen floors into state-of-the-art office space with a first-quarter 2020 completion date targeted. Brookfield acquired the building, which dates back to 1893, from Macy's last year. The department-store retailer has occupied the building since 2006 and will continue to operate its flagship store on the first seven floors. The Marshall Field and Company building is a National Historic Landmark and a City of Chicago Landmark. It is also on the National Register of Historic Places.

Brookfield is planning to construct a new lobby and entrance and insert new elevators into the structure. It will also upgrade heating, air conditioning, and plumbing systems. New amenities will include a fitness facility, a basketball court, a conference center, a lounge, and a rooftop garden with views of Lake Michigan. The firm's planned cosmetic upgrades range from window refurbishment to skylight rehabilitation. Finally, Brookfield and its partners are hoping to have the property LEED certified at the Silver level.
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Google Fiber Is Going Wireless in Austin Through Webpass
CNet (08/07/19) Blumenthal, Eli

Google announced this past week that it will expand its Google Fiber capability in Austin, Texas, via its Webpass subsidiary. Google has provided gigabit wireless Internet to Austin since 2014, but this is the first time it has teamed up with Webpass to expand its wireless Internet capability in the same city. Google bought Webpass in 2016. Although the subsidiary operates in eight cities, including Austin, it has not publicly combined with Google before to offer services. The new method, which will be called Google Fiber Webpass, allows Google to reach more Austin residents without relying on hardwiring the way traditional broadband expansion does. Google Fiber Webpass is designed for apartment communities and other multifamily housing, with the Internet beamed through rooftop antennas and receivers.
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Trees or Solar Panels? JPMorgan Plans to Chop 150 Trees at Seminole Parking Lots for Solar Canopies
Orlando Sentinel (08/09/19) Comas, Martin E.

JPMorgan Chase's plan to install more than a dozen solar canopies in Seminole County, Fla., is not without controversy. JPMorgan plans to use the solar panel canopies to help power two office buildings as part of a two-year plan to use only renewable energy. But the bank has to chop down 150 large shade trees to make room for the canopies, sparking a debate over whether solar panels are worth it if trees must be axed to make space for them. Given that trees clear out carbon dioxide and pollutants from the air, it is unclear to some whether there will be a strong environmental benefit to chopping them down and installing solar panels in their place. According to the Department of Agriculture's Forest Service, 100 trees clean out 53 tons of carbon dioxide from the atmosphere each year. Meanwhile, solar energy prevents roughly 5,760 pounds of carbon dioxide from entering the atmosphere at all on a yearly basis.

Even though the bank will have to chop down the trees, experts applauded JPMorgan's commitment to renewable energy, suggesting there is no clear answer whether the trees would be better than the panels. Will Liner, an urban forestry program manager with the Florida Forest Service, said the only way to really ascertain whether panels would be harmful or helpful would be to evaluate them on a case-by-case basis. Meanwhile, Seminole Commissioner Lee Constantine said it was good to see a company put such emphasis on green policies, but questioned whether JPMorgan would take steps to alleviate the loss of 150 trees. "I just want to make sure that we're not clear cutting and that there is going to be mitigation for that. Are they going to replant trees [elsewhere]?" he wondered. Under Seminole County guidelines, JPMorgan is required to replace all trees it takes down or pay into the county's Arbor Tree Fund. Given the lack of space on JPMorgan's properties, the bank will likely have to pay into the fund.
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More Designers Focusing on Acoustic Properties of Buildings
Building Design + Construction (08/08/19) Fabris, Peter

According to a new report from BBC Future, more building designers are focusing on the acoustic properties of buildings. Studies have shown that excessive noise at work is linked to depression, anxiety, and poor job performance. Architects are keeping this in mind when creating new structures. Using virtual reality systems and acoustic modeling software, architects are able to determine how a building might sound through aural simulations. Currently, there is research being done on spaces with excellent acoustic qualities with the hopes of creating an algorithm that architects can use when designing a building. Ultimately, architects may be able to design structures that can cancel out noise by exploiting the physics of sound interference.
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