Real Estate Management News - 11/06/2019

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November 6, 2019
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IREM® HEADLINES
ENERGY STAR® Offers Ideas on Bigger Energy Returns for Smaller Commercial Properties
Boost Property Performance with Artificial Intelligence
Get the Whole Picture with IREM’s 2019 Income and Expense Analysis Reports

INDUSTRY HEADLINES
Sensory-Friendly Shopping Is on the Rise — How Storeowners Can Do It Right
How Multifamily Communities Utilize Social Media to Attract Tenants
Office Property Is Thriving in Big Coastal Cities. It's Tougher Everywhere Else.
American Dream Is Here. Is the Project an Example of Retail's Future?
Kilroy Lands Major Tenant for San Francisco-Area Project
SoCal to See Triple-Digit Rent Increases by 2021, USC Research Shows
Cincinnati Bell Announces DAS In-Building Wireless for 4G/5G Cellular Coverage
Retailers Are Panicking Because of Fewer Holiday Shopping Days
It's Official: Hines, PE Firm Buy Houston's Tallest Tower, Plan Renovations
Tired of Long Lines? Canadian Grocery Chain Debuts Smart Carts with Self-Checkout
New Georgia Tech Building Is Dedicated to Sustainable Design
Walgreens to Shutter In-Store Clinics, Add Jenny Craig Sites


 
 

IREM Headlines


ENERGY STAR® Offers Ideas on Bigger Energy Returns for Smaller Commercial Properties

Building owners and operators of smaller office buildings have opportunities to utilize energy efficiency to drive cost savings, increase tenant attraction and retention and improve the value of their property. Unfortunately, for a majority of them, limited staffing, resources and time make it challenging to pursue these beneficial measures.

ENERGY STAR is hosting a webinar, “Addressing Energy Efficiency in Small and Medium Sized Commercial Office Buildings,” on November 14 at 2pm EST to help owners and operators implement cost effective solutions, such as daylighting and occupancy sensors, that capitalize on the benefits of energy efficiency, and break down the process to maximize its value. The webinar will also discuss how to leverage experts and incentives that can help identify, prioritize and implement energy efficiency projects, and will offer marketing and leasing guidance to help market an efficient building.

Register here to learn more.

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Boost Property Performance with Artificial Intelligence

What’s your biggest property management challenge? Inefficiencies? Capturing real-time performance analytics? Staffing on holidays and weekends?

Many property management professionals battle these same issues every day. The good news is that these pain points—and many others—can be solved by adopting AI (artificial intelligence) technology. An AI-powered solution can help you manage everything, from responding to incoming calls, to collecting data for quality insights.

Here are several ways to apply AI to drive better customer experiences, and enhance your team’s performance.

Adopt Conversational AI
Many property managers say one of the biggest challenges is responding quickly to tenant and resident requests. A conversational AI solution can help ensure 100 percent of all incoming inquiries get a rapid, intelligent response.

Make Communication User-Friendly
In a world where information and services are increasingly available on demand, prospective tenants are less inclined to leave a message on an answering machine and wait until someone responds. An AI solution can reply to leads by text or email, making it easy for potential occupants to get the instant interaction they’re looking for without disrupting your team’s schedule.

Collect Accurate Data
Everyone’s made a typo while entering data at least once. Inaccurate and incomplete data creates a poor customer experience and makes it harder to gain insight into your building’s overall performance. AI-driven data collection tools are always on duty and capture relevant data 100 percent of the time.

Alleviate Your Team’s Stress
By implementing AI, you can reduce the stress associated with inquiries around the clock. AI-driven solutions give your team back the time they need to do what they enjoy most—building relationships with tenants, residents, and prospects for long-term success.

Learn more about leveraging AI to boost your efficiency and decision-making capabilities.
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Get the Whole Picture with IREM’s 2019 Income and Expense Analysis Reports

To get a picture of how your office building is performing relative to similar properties in similar geographies, you need a benchmark. IREM offers 2019 Income and Expense Analysis Reports, which compare 2018 data to 2017 on office buildings that have been audited to ensure the data reflects normal operating experience.

Data for this year’s reports was collected from 2,300 office buildings in downtown and suburban locations across the country. The typical suburban office property included in the report has an average of 135,579 square feet and is occupied by 11 tenants. Downtown office buildings surveyed for this report are larger, with an average of 318,884 square feet and 15 tenants. We also considered each building’s age, when available. Suburban office buildings are newer, with 87.6 percent of them built within the last 39 years. 66.3 percent of downtown properties were built after 1980.

Here are the highlights of our study:
  • Median total collections were $21.63 per square foot in the suburbs, and $23.94 per square foot downtown.
  • The national median operating cost to manage suburban office buildings rose 1.5 percent in 2018 over 2017.
  • Median year-end vacancy was 6 percent downtown and only 4 percent in the suburbs.
  • Real estate and other taxes were 33.7 percent of total operating costs downtown.
For all the data on office buildings, conventional apartments, shopping centers, federally assisted apartments, condominiums, cooperatives and planned unit developments, visit 2019 Income/Expense Analysis Reports.
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Industry Headlines


Sensory-Friendly Shopping Is on the Rise — How Storeowners Can Do It Right
Footwear News (10/28/19) Clack, Erin E.

Faced with increasingly fierce competition from e-commerce, brick-and-mortar retailers are looking to lure customers with in-store experiences that engage all the senses and motivate them to make purchases. This includes everything from digital signage to video displays and dramatic lighting. For some shoppers, though, these atmospheric elements can make a trip to the store or mall stressful. This is especially true for individuals with autism or other sensory sensitivities. Now, a number of retailers are also catering to this oft-neglected demographic by offering sensory-friendly events and spaces. Such department stores operators as Macy's and Target have experimented with quiet shopping hours at select locations during which lights are dimmed, background music is turned off, and the number of employees on the floor is minimized.

Others are providing special sensory rooms or designated quiet zones where customers can find respite from the bustling atmosphere of a store. Some retail companies are using the holiday shopping season as an opportunity to reach out to the special needs community. This year, for instance, CBL Properties will host Santa Cares events in over 40 of its venues in partnership with Autism Speaks. Families will be invited to attend a private, sensory friendly photo session and experience the long-held tradition of a visit with Kris Kringle. In addition to autism, there are a number of other disabilities and disorders that contribute to people feeling painful sensory overload, ranging from attention deficit hyperactive disorder and post-traumatic stress disorder to Alzheimer's disease and Tourette syndrome.
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How Multifamily Communities Utilize Social Media to Attract Tenants
AZBigMedia.com (10/28/19)

Social media has become an effective place to advertise products or services, as it continues to attract new users and root itself into daily life. Owners of apartment communities are getting in on the social media marketing game, using digital platforms to show off their buildings to try and attract new residents. One way they are using social media is through targeted ads. Many social media platforms now allow people to specify audiences for their ads. Consequently, Web-based marketing for an apartment building may be targeted to specific age groups, interests, or those living or interested in a certain geographic area.

Apartment owners and operators can also use social media to facilitate quick and easy communication. Where before it may have taken several days for a conversation to play out, now each side can quickly and conveniently communicate through messaging services on social media platforms. Residents can also leave online reviews on the building, thereby giving prospective tenants a general idea of how those currently living there feel. Finally, apartment management can use social media to promote special events or advertise deals on monthly rent, thereby drawing in users' interest.
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Office Property Is Thriving in Big Coastal Cities. It's Tougher Everywhere Else.
Barron's (11/02/19) Coumarianos, John

The market for U.S. office space seems as economically "bifurcated" as the country itself. The split, though, is not only between large, coastal cities and rural areas. Places such as Los Angeles and New York City are doing better than both their own suburbs and secondary cities. And with the biggest cities on both coasts performing well, West Coast building owners are enjoying especially torrid rent growth. Barron's examined comparable-building year-over-year revenue growth and changes in net operating income at REITs focused on office space using data from their third-quarter earnings reports. On the one hand is Boston Properties, the biggest publicly traded office REIT. Last week, it recorded NOI growth of 6.3 percent across its portfolio. Boston Properties owns office buildings exclusively in Boston, New York, the District of Columbia, San Francisco, and L.A. On the other hand is Mack-Cali Realty, a suburban New York office landlord whose most recent earnings report showed a same-property year-over-year decline of 4.4 percent in cash NOI.

Boston Properties' office buildings are 92.5 percent occupied, while Mack-Cali has tenants in 80 percent of its office properties. With Boston Properties on the positive side of the market divide are such West Coast office landlords Hudson Pacific Properties and Kilroy Realty with same-property revenue increases of 9.5 percent and 6.7 percent, respectively. Along with Mack-Cali are Brandywine Realty Trust, Cousins Properties, and Highwoods Properties with same-property revenue changes ranging between -0.8 percent and just 1.8 percent. These three REITs own office buildings in such markets as Austin, Atlanta, Charlotte, Dallas, Memphis, Nashville, Orlando, Phoenix, Raleigh, and Tampa.
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American Dream Is Here. Is the Project an Example of Retail's Future?
NorthJersey.com (10/25/19) Anzidei, Melanie

The American Dream mega-mall in northern New Jersey has officially opened its doors, with industry observers closely watching its performance to determine whether the mall has found a path for physical retail to jump to the forefront of consumers' shopping habits again. The Canadian developers Triple Five have been at the helm of the project, hoping that American Dream's blend of retail and experience-driven offerings will prove tempting to shoppers who have been lured away by e-commerce. Triple Five is projecting as many as 40 million visitors will cross through the doors of American Dream every year. Chuck Lanyard, president of The Goldstein Group retail brokerage, predicted that people in the retail industry will closely study American Dream and note what seems to be working. "You’re going to see other malls across the country finding ways to be that creative in order to be lucrative and successful," Lanyard said. Triple Five has long thrown in its lot with experiential retail, which sees retailers or shopping centers create experiences that will lure foot traffic to their properties. Triple Five also owns the Mall of America in Minnesota.

In the traditional sense, experiential retail has been driven by movie theaters, virtual reality games, and even escape room tenants. But American Dream takes the experience aspect to new heights, providing a theme park, water park, indoor ski slope, and aquarium. Tenants within American Dream are likely to provide their own experiences, too. Other malls in the area have reinvented themselves, too, in a bid to stay competitive in the crowded North Jersey market. For example, Westfield's Garden State Plaza in January unveiled an ambitious plan to bring mixed-used residential to the property, including an outdoor ice-skating rink and a green space for tenants. Meanwhile, the Paramus Park Mall replaced longtime tenant Sears with a Stew Leonard's supermarket to great success, and the Shops at Riverside in Hackensack is rebranding itself as a luxury destination that will include high-end restaurants.
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Kilroy Lands Major Tenant for San Francisco-Area Project
Commercial Property Executive (10/25/19) Dutton, Holly

Kilroy Realty Corp. just took a major step forward for Kilroy Oyster Point, its 656,000-square-foot office development in South San Francisco, by securing a 12-year lease from tech company Stripe. With the lease, Phase 1 of Kilroy Oyster Point is now 100 percent leased. Kilroy got its first big tenant over the summer, when biopharmaceutical company Cytokinetics committed to a 235,000-square-foot lease. Kilroy Oyster Point will feature a number of labs and office buildings, designed to seem tempting to life sciences companies. The life sciences market has seen significant growth over the past few months, prompting many major real estate companies to enter the sector and launch new divisions to capitalize on the explosion of growth. Just last month, LaSalle Investment Management bought a majority interest in a 793,000-square-foot property in San Diego, marking its entrance into the market. Meanwhile, New York-based Thor Equities launched Thor Sciences back in April, providing life sciences companies the opportunity to partner with a division entirely focused on life sciences.
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SoCal to See Triple-Digit Rent Increases by 2021, USC Research Shows
Commercial Observer (10/28/19) Cornfield, Greg

The USC Lusk Center for Real Estate has made a gloomy prediction for apartment rents in Southern California in the near future. According to the Lusk Center, in spite of salary and employment improvements in the area this year, the affordability crisis in Southern California is expected to worsen as monthly rents will increase by triple digits by the end of 2021. The forecast predicted that Los Angeles County will see its average rent increase by $139, Orange County by $106, Inland Empire by $100, San Diego County by $209, and Ventura County by $110. Already, housing costs and the slow pace of construction have led renters to leave Southern California and look for employment and housing in Phoenix, Las Vegas, and elsewhere, even though salary increases have slightly outpaced rents across the region in 2019.

But the projected rent increases, partly due to statewide rent control laws set to go into effect Jan. 1, are expected to exacerbate the affordability crisis. Industry leaders and property owners vehemently opposed the rent control laws, with some property owners looking to invest in other regions and some owners evicting residents without cause while the move is still legal. Richard Green, the director of the Lusk Center, explained that California's rules and regulations make it difficult to provide affordable housing. In Los Angeles County, the only market in Southern California with more renters than homeowners, apartment dwellers pay the highest rent in the region, which is why it has seen the highest number of residents leave.
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Cincinnati Bell Announces DAS In-Building Wireless for 4G/5G Cellular Coverage
Business Wire (10/28/19)

Cincinnati Bell Inc. has developed a fiber-based Distributed Antenna System (DAS) solution that delivers in-building cellular coverage. The DAS technology is designed for companies or organizations with large, multi-floor buildings and outdoor areas that have poor cell service. Cincinnati Bell says the solution supports 5G technology, multiple carriers, enhanced speed, and improved network reliability. The solution is particularly timely with 5G technology continuing to expand throughout North America. While faster, 5G creates connectivity challenges for in-building coverage, DAS helps ensure robust cellular coverage that will keep employees connected and enable organizations to leverage smart devices and sensors in large buildings and open spaces.
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Retailers Are Panicking Because of Fewer Holiday Shopping Days
Digital Commerce 360 (10/25/19)

Retailers are apprehensive about the upcoming holiday shopping season, with an unlikely culprit-- the calendar -- to blame. The season between Thanksgiving and Christmas is typically the busiest for brick-and-mortar shops. But this year, Thanksgiving falls on the latest possible day, leaving just 26 shopping days between the two holidays. That number, considerably lower than 2018's 32 days, is sending some retailers into a panic. As early as March of this year, companies were warning investors that the shortened holiday season could negatively impact sales. But analysts said that is a convenient excuse that investors are likely to disregard. For one thing, the holiday shopping season has begun to creep outward, starting closer to Halloween than Thanksgiving. Craig Johnson, president of Customer Growth Partners LLC, said retailers may be hung up on the old Black Friday holiday shopping start date. "The Internet and 24/7 shopping has made those old formulas obsolete," Johnson remarked.

Given that Thanksgiving falls later in the calendar, holiday shopping is likely to be more condensed in December than in the past. A Deloitte survey found that almost 70 percent of shoppers planned to spend in the first half of December, up significantly from 2018's tally of 53 percent. And given that there is a shorter period between Thanksgiving and Christmas, the lull between the post-Thanksgiving shopping and pre-Christmas shopping is likely to be shorter than in years past. That may actually contribute to a busier season for stores. Johnson, Deloitte, and the International Council of Shopping Centers each predicted that overall holiday shopping will likely rise roughly 5 percent in 2019.
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It's Official: Hines, PE Firm Buy Houston's Tallest Tower, Plan Renovations
Houston Business Journal (10/28/19) Pulsinelli, Olivia

The Houston-based international real estate firm Hines has teamed up with an affiliate of Cerberus Capital Management LP to buy Houston's tallest skyscraper, commonly known as JPMorgan Chase Tower, and the adjacent building formerly known as JPMorgan Chase Center. The deal, which was announced at the end of October, gives Hines and the Cerberus affiliate 2.1 million square feet of office and retail space. A press release about the deal did not provide specifics on the cost. But industry publication Real Estate Alert suggested in June that it could rise up to $627 million, or $300 per square foot. Real Estate Alert also reported that Cerberus was set to own a 90 percent stake and Hines set to take the remaining 10 percent.

Hines and Cerberus are set to make extensive renovations on the two buildings. JPMorgan Chase Tower, at 75 stories, is the tallest building in Houston, with more than 22,000 square feet of retail space. The renovations, overseen by St. Louis-based architecture firm HOK, seek to make full use of the space. The lobby and exterior plaza will receive upgrades. Meanwhile, connected, collaborative workspaces and a conference center will be added to the building. John Mooz, senior managing director at Hines, said the renovations were planned carefully to allow JPMorgan Chase Tower to retain its core architectural identity in spite of a sweeping upgrade. The adjacent building, formerly known as JPMorgan Chase Center, underwent renovations in 2011. It now includes a new lobby, large fitness center, auditorium, and extensive parking.
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Tired of Long Lines? Canadian Grocery Chain Debuts Smart Carts with Self-Checkout
The Washington Post (10/25/19) Holley, Peter

The Canadian grocery chain Sobeys has launched a pilot program using intelligent shopping carts that scan and weigh items and help customers skip long checkout lines by allowing them to pay on the spot. Sobeys' Smart Cart fleet features touchscreens that display a running count of purchases as shoppers scan and place their items in bags within the cart. Customers can pay as soon as their shopping is completed. Sobeys says that as the carts are upgraded, their screens will help customers navigate stores, fill out shopping lists, and suggest products for recipes. The carts are equipped with high-resolution cameras which, when combined with scales, enable shoppers to add items to their purchase without entering information or scanning bar codes.
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New Georgia Tech Building Is Dedicated to Sustainable Design
American School & University (10/24/19) Kennedy, Mike

The Georgia Institute of Technology recently dedicated the Kendeda Building for Innovative Sustainable Design on its Atlanta campus, touting it as one of the most sustainable facilities in the Southeast. The building, described as regenerative, is designed to generate more on-site electricity than it consumes, and collect and harvest more water than it uses. During construction, the building diverted more waste from landfills than it sent to them. Four years ago, the Kendeda Fund committed $25 million for Georgia Tech to design and build a living building on campus to prove a regenerative building was practical even in a region with such heat and humidity. An additional $5 million will support programming activities once the building is certified.
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Walgreens to Shutter In-Store Clinics, Add Jenny Craig Sites
Associated Press (10/28/19) Murphy, Tom

Walgreens this past week announced it will close 150 in-store clinics by the end of the year -- nearly 40 percent of the clinics in its stores -- as the community pharmacy chain shifts to other businesses it believes will attract more customers. The company said it will keep open more than 200 in-store clinics that are run in partnership with health care providers. Walgreens has been focusing more on testing primary care clinics, which offer more extensive care, connected to some of its stores in Kansas City and Houston. Walgreens also said it will open 100 locations for Jenny Craig at its stores nationwide, starting in January. "Jenny Craig at Walgreens will give customers the opportunity to interact face-to-face with Jenny Craig consultants, just as our patients have experienced for over a century with our pharmacists," said Jim O'Conor, senior vice president, neighborhood health destination at Walgreens.
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News summaries © copyright 2019 SmithBucklin



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