Real Estate Management News - 06/29/2016

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June 29, 2016
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LEADERSHIP SPOTLIGHT
IREM and GNP earn 2016 Green Lease Leader Award at BOMA Conference

IREM® HEADLINES
Join Thought Leader Joe Greenblatt, CPM, as he facilitates IREM’s new course!
Want to Save $200? Register for the IREM Fall Conference by 6/30
REAP Returning to Chicago, Dallas, and Washington, D.C. in September

INDUSTRY HEADLINES
The Brexit Impact On Multifamily Investment
Landlords Look to Lure Small Businesses Into Big Spaces
Renters Are Making More, and Landlords Get It All
Madison Officials Renew Calls for Security Cameras at Malls, but Mall Owners Remain Mum
Google Fiber Is Buying High-Speed Internet Provider Webpass to Expand Its Reach in Cities
JLL: Trophy Towers in Dallas' Skyline Getting Top-Dollar Rents
REIT Sector Gets Lower Marks on Pay Plans
Little Caesars HQ Orders Up a 'Pizza-Slice' Facade
New East Side Apartment Building Is Green From Top to Bottom
Digital Printing Adds Realism to Wood Flooring
Spring Rewards Targets Nashville Malls for Growth
France's Shopping Malls Going Strong in the Digital Era


 

Leadership Spotlight


IREM and GNP earn 2016 Green Lease Leader Award at BOMA Conference

On June 27, 2016, IREM and GNP Realty Partners were named as a 2016 Green Lease Leader at the annual BOMA International Conference & Expo in Washington, D.C.

Green Lease Leaders, now in its third year, was established by the Institute for Market Transformation (IMT), a nonprofit organization that promotes energy efficiency in buildings, and the U.S. Department of Energy’s Better Buildings Alliance. IREM and GNP Realty Partners earned the Team Transaction award, on a collaborative effort to incorporate sustainability elements into the operations of IREM’s leased space. The Team Transaction category was created as a way to recognize deals where all parties come together to push the boundaries of energy efficiency in commercial space.

IREM collaborated with GNP Realty Partners, the full-service real estate firm acting on behalf of the building owner, the National Association of REALTORS® (NAR), to select advanced lighting designs, state-of-the-art HVAC systems, and efficient appliances and electronics.

“Green Lease Leaders, like IREM and GNP, are at the forefront of a corporate movement to align incentives and empower landlords and tenants to improve the sustainability of their buildings, while delivering energy cost savings to the bottom line,” said IMT’s executive director Cliff Majersik.

“Through the tenant and landlord relationship, Green Lease Leaders are creating a real opportunity to improve building energy performance, and using the lease as a powerful tool to help both parties achieve energy savings,” says Dr. Kathleen Hogan, Deputy Assistant Secretary for Energy Efficiency, U.S. Department of Energy. “We are excited to recognize the leadership of these companies for spurring collaborative partnerships and helping make green leasing a standard practice in the marketplace.”

Read more about the Green Lease Leaders Awards.
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IREM Headlines


Join Thought Leader Joe Greenblatt, CPM, as he facilitates IREM’s new course!

Building for Tomorrow: Leading a Successful Property Management Company

Classroom Premiere July 27-29 in downtown Chicago. Hurry -- space is limited!


Register today for the live classroom premier in downtown Chicago, right on the Magnificent Mile, of Building for Tomorrow: Leading a Successful Property Management Company.

Joe Greenblatt, CPM and IREM Past President is President and CEO of Sunrise Management, a San Diego based AMO firm where he manages a multifamily portfolio of over 13,000 units in California, Nevada and Arizona. He has owned a commercial management company and has served as a court appointed receiver for both residential and commercial properties. In addition to serving as IREM’s International President, he currently serves on IREM’s Executive Committee and on the Executive Committee of the National Association of Realtors.

Joe will lead you to discover the latest strategies and best practices for building and leading a sustainable, customer-centric real estate management company. Designed for management company owners, executives, and department heads charged with driving business results, this interactive course gives you a template to create a forward-thinking organizational environment to grow your business. And, completion of this course earns your firm credit towards IREM's prestigious AMO accreditation.

Topic covered include:
• The making of a best practice real estate management company
• Talent strategies
• Creating a leader development program
• Forward-thinking strategies for business growth
• Defining an ethical, client-centered organization

Course fact sheet with location, lodging, and travel information.

Can’t make the classroom premiere? Building for Tomorrow is also available in a convenient online format.
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Want to Save $200? Register for the IREM Fall Conference by 6/30

You’re invited! Pack your sunglasses and head to San Diego for the IREM Fall Conference, October 18-21. Want to save big bucks? Then make your plans now. Just register by June 30, and we’ll knock $200 off the registration fee!

This year’s IREM Fall Conference will be one to remember. Inspiring speakers, fun networking events and motivating education sessions are guaranteed to keep you on your toes.

You can look forward to conference sessions like:
• 10 Trends in Multifamily Property Management
• Corporate Cyber Security: Every Company is Susceptible
• Mixing it Up: The Power of Well-Managed Mixed-Use Properties
• Evaluation of Staff and Structure for Optimal Results
• Transforming Leadership in the New Age of Real Estate

Just interested in education? Take advantage of the professional education day pass, giving you access to all the education sessions on Friday, October 21st – including the keynote session featuring Mike Walsh and Industry Leader lunch featuring Marla Maloney, CPM and Tony Long. Register by June 30, and this pass is just $299.

What are you waiting for? Register for the IREM Fall Conference today.
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REAP Returning to Chicago, Dallas, and Washington, D.C. in September

The Real Estate Associate Program (REAP) is an industry-backed, market-driven program that serves as a bridge between talented multicultural professionals and commercial real estate companies looking for talent. Employers meet potential minority employees—not in mandatory diversity training—but in voluntary, business-oriented opportunities that raise comfort levels on both sides. The 10 week program is offered in the country’s major markets including: New York, Washington, D.C., Atlanta, Chicago, Dallas, Cleveland, and Los Angeles. Teachers are industry leaders in the market’s most prominent companies teaching financial analysis, market analysis, brokerage, asset management, leasing, and development. With the support of industry leadership, REAP is widely acknowledged to be the most successful diversity initiative in the commercial real estate industry.

Applications are now available at www.projectREAP.org for REAP offerings in Chicago, Dallas-Fort Worth, and Washington, D.C. and will close on July 22, 2016 at 5:00 pm. To qualify for the program, applicants must have a four-year degree from an accredited institution and three to five years of professional post-college work experience. Applicants will be screened and interviewed in August 2016. Tuition for those selected is $750.00. Real estate experience is not necessary to be selected, as REAP seeks to identify candidates from across a wide spectrum of disciplines interested in a career in commercial real estate.

Application Deadline: July 22, 2016 at 5:00pm

IREM is a proud Silver Level Sponsor of REAP. As a sponsor, IREM is given the opportunity to meet REAP students while they participate in program offerings throughout the US and teach asset management classes. During REAP’s spring offering in Atlanta, Velda Simpson, IREM Regional Vice President, had the opportunity to teach REAP’s Office Asset Management class. For more information on REAP or to apply for the upcoming REAP offerings in September, visit www.projectREAP.org.
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Industry Headlines


The Brexit Impact On Multifamily Investment
Forbes (06/21/16) Sanjay, K.C.

United Kingdom voters decided last week to leave the European Union. While analysts are mixed about the effect the so-called "Brexit" from the EU will have on the British economy, Axiometrics economists say the result could make an impact on apartment investment in the United States. International investors have been increasing their holdings in the U.S. over the last several years, as they have gained a better understanding of America's multifamily housing sector and more of an appreciation of its profitability. Before recently, the idea of professionally managed apartment properties of 300 or more rental units just did not translate. But international investors sunk $16.3 billion into U.S. multifamily housing last year, accounting for around 11 percent of the record $150 billion worth of transactions in the sector, Real Capital Analytics (RCA) reports. While Canadian investors provided the bulk of that international money (around $11 billion), those from Great Britain had the second highest concentration at nearly $2 billion.

The Brexit could decrease the value of British real estate, at least in the short term, as the U.K. attempts to first negotiate its way out of the EU, then seeks new trade deals on its own. That, in turn, could send British speculators looking for someplace safe to investment in, and the United States boasts one of the world's most attractive apartment markets in the world. Multifamily -- which includes apartments, condominiums, student housing, senior housing, and other products -- accounted for between 25 percent and 30 percent exposure of all commercial real estate portfolios in 2015 and the first three months of this year. This means multifamily is bringing in more than its share of investment compared to such other sectors as office, retail, hotels, and industrial.
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Landlords Look to Lure Small Businesses Into Big Spaces
The Real Deal (06/25/16) Cameron, Christopher

Shopping malls have traditionally evoked images of large department stores, big-box retailers, and national chains. More and more, though, retail investors and property owners are seeking out small, local, mom-and-pop tenants to fill vacant spaces. That's because small retail business sales growth has outpaced that of its larger rivals almost every month over the last four years, according to a recent CNBC report. "They're performing far stronger than a restaurant tenant that we have there in 5,000 square feet that's national," states Anjee Solanki, national director of USA retail services at Colliers. Kimco, North America's biggest publicly traded owner and operator of open air shopping centers, is another major landlord that has taken notice. It recently expanded a program that offers small businesses one year of free rent and reduced property charges from one to 19 states. "[Shoppers] are not going to find that tenant anywhere else, and that's ultimately what you're looking for," concluded Jesse Tron, an industry analst formerly with the International Council of Shopping Centers.
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Renters Are Making More, and Landlords Get It All
Bloomberg (06/22/16) Clark, Patrick

Some 26 percent of U.S. renters paid at least 50 percent of their income to landlords in 2014 -- an increase from 20 percent in 2001, according to the new State of the Nation’s Housing report published by Harvard’s Joint Center for Housing Studies (JCHS) and cited by Bloomberg. On the positive side, the JCHS study found, the number of homeowners who are moderately cost-burdened (paying 30 percent to 50 percent) or severely cost-burdened by mortgage payments (paying 50 percent or more of their income) actually decreased from 2013 to 2014. Additional data compiled earlier in June by Greg Willett, chief economist at RealPage, suggests that market-rate renters are keeping up with rising rents. Some are even putting money away for an eventual down payment on a house.

The median rent-to-income ratio -- derived from 4 million apartments tracked by RealPage -- has hovered between 22.9 percent and 23.3 percent since 2010. While monthly rents increased over that period, so did the median income of market-rate renters from $44,000 in 2010 to nearly $58,000 in the first half of this year. That's partly because changing home-buying behavior has kept higher earners in the rental pool longer, Willett notes. This has all been good news for apartment owners and operators, who observe that most U.S. renters have been able to find apartments that fit their budgets. It's the poor, though, who are still bearing the brunt of a tight market. The availability of affordable housing falls at the lower end of the market-rate segment, creating ever worsening affordability challenges in lesser-quality rental apartments. For the bottom tier of rental units, i.e. "Class D" apartments, the median renter is spending more than 30 percent of his/her income on rent.
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Madison Officials Renew Calls for Security Cameras at Malls, but Mall Owners Remain Mum
Wisconsin State Journal (06/24/16) Rivedal, Karen

The controversial arrest of a young African-American woman on June 21 outside East Towne Mall in Madison, Wis., has raised questions about the installation of security cameras. CBL & Associates, which own the mall, refused to explain why it will not put security cameras in common areas of its shopping centers despite Madison officials saying that such technology could have provided useful footage of Genele Laird's arrest, which was caught on bystander video. "The safety and comfort of our shoppers, employees and tenants is our top priority," the company said when asked about the cameras. Madison Police Chief Mike Koval said security cameras would enhance public safety at malls and accused CBL of being "fairly derelict" for refusing to install the technology.

There have been several instances in the past year, including multiple shooting incidents, that could have been handled more easily with the proper cameras in place, according to Koval. "We are hoping that this (latest incident) will create yet another catalyst," toward persuading CBL to install security cameras, added Koval. City of Madison Alder Paul Skidmore claimed CBL has rejected installing security cameras in its malls "as a policy," out of concern that the presence of cameras will cause the properties to be seen as unsafe. Skidmore said extensive security camera use in other downtown areas of Madison have resulted in noted safety improvements.
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Google Fiber Is Buying High-Speed Internet Provider Webpass to Expand Its Reach in Cities
ReCode (06/22/2016) Bergen, Mark

Google Fiber last week announced plans to acquire Webpass, a high-speed, fiber Internet provider serving five cities, for an undisclosed sum. The deal, which still requires regulatory approval, would be the first acquisition for the broadband unit under Alphabet. Google Fiber made the deal to boost its efforts to deliver broadband Internet wirelessly, an experimental technology it hopes will expand coverage at cheaper costs. The acquisition gives the Alphabet unit a foothold in apartment complexes and commercial businesses.

Indeed, a major hurdle for Google Fiber's expansion across cities is gaining a foothold in large apartment buildings. Such large broadband incumbents as Comcast and Time Warner Cable often sign multi-year accords locking their service into those buildings. Webpass has focused much of its residential business on apartments and on commercial offerings, providing Internet -- which ranges from 100 megabits per second to one gigabit per second -- to business tenants. Webpass would provide Google Fiber subscribers access to two new markets: Boston and Miami. Webpass also provides service in Chicago, San Diego, and San Francisco, where Google Fiber has already announced plans to expand.
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JLL: Trophy Towers in Dallas' Skyline Getting Top-Dollar Rents
Dallas Business Journal (06/23/16) Carlisle, Candace

North Texas' booming economy has driven rental rates higher in Dallas' skyline towers -- a trend JLL researchers expect will continue for the city's most well-located, sought-after office towers. The latest JLL data shows that Dallas skyline properties posted gains of almost 7.8 percent in the past couple of years, with a vacancy rate of 17.3 percent. This gives skyline towers a $9 per square foot rental rate spread versus similar Class A office buildings that do not reach the horizon. "Many of our skyline buildings, which represent our urban core's top-tier assets, are in high demand by tenants as evidenced by rising rents and above average occupancy," remarked Walter Bialas, JLL's research director in Dallas-Fort Worth. "What is critical to understand is that while the newest buildings are seeing good leasing activity, it is not just these properties attracting tenant attention."

JLL recently released its 2016 JLL Skyline report for Dallas, which tracked more than 1 million square feet of new office space under construction in the city's skyline. The report found that sought-after properties in downtown are getting as much as $48 to $50 per square foot for full-service rents. Over the next year to 18 months, the team expects monthly rent will continue to grow. According to JLL's Brooke Armstrong, "a lot of tenants are making moves based on recruiting and retention and are looking for buildings with amenities. We have a lot of new product coming online and they are asking for higher rents because of increased construction costs." Meanwhile, building owners and operators are expected to continue pushing rental rates, particularly those that have put a significant investment in their assets.
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REIT Sector Gets Lower Marks on Pay Plans
Wall Street Journal (06/21/16) Fung, Esther

The real estate investment trust (REIT) industry, which has received high marks in years' past for adopting compensation programs that investors like, has suffered a bit of slippage in 2016. Since the first of the year, mall giant General Growth Properties Inc. and three other REITs have had pay plans rejected by shareholders in nonbinding votes. By contrast, just one REIT received such a drubbing last year. Meanwhile, proxy advisory firm Institutional Shareholder Services Inc. (ISS) recommended that investors vote against the compensation programs of 25 REITs this year -- an increase from 14 last year. "The REIT industry as a whole has taken somewhat of a black eye because of a number of bad-acting, smaller companies that have not provided transparency at all," concluded John Roe, head of advisory at ISS Corporate Solutions.
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Little Caesars HQ Orders Up a 'Pizza-Slice' Facade
Detroit Free Press (06/22/16) Gallagher, John

Little Caesars announced this past week that its new downtown Detroit headquarters will feature a unique facade comprised of glass sections shaped like pizza slices to honor its signature product. Groundbreaking is slated to take place later this summer with a 2018 completion targeted. The exterior of the nine-story building will feature multiple 14-foot tall pizza-slice shapes of glass. The pizza maker said the distinct shape of glass, in combination with the height of each formed-glass unit, will make the building's facade the first of its kind in the world. Olympia Development of Michigan is the developer for this Little Caesars Global Resource Center, while Detroit-based Brinker-Christman has been tapped as construction manager. Locally based SmithGroupJJR is the architect of record.

About 700 Little Caesars employees will work in the new building. The cost, which has not yet been estimated, will be entirely financed privately by Little Caesars with no tax incentives. The architecture of the building evolved over the last 12 or so months to include the new glass façade and other elements to achieve a more modern look. The new building will measuring approximately 234,000 square foot once completed. The latest renderings of the headquarters released this past Tuesday show how the building's design allows in a large amount of natural light as well as allows great views of the city from within. In addition, the interior design allows for more collaboration spaces for staffers. Research and development space will be triple the company's current HQ site and include a state-of-the-art test kitchen.
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New East Side Apartment Building Is Green From Top to Bottom
Milwaukee Journal Sentinel (06/24/16) Daykin, Tom

The new Sage on Prospect apartment building in Milwaukee features a "blue roof," where rainwater pools and then slowly drains to the sewage system. The roof also holds solar panels that generate nearly 36 kilowatts of electricity to power the five-story, 34-unit apartment building. The basement has two dozen, 325-foot deep geothermal wells that pump water to both heat and cool the building. Sage on Prospect is set to open in August, and will likely become the second market-rate apartment property in Wisconsin to win LEED platinum status, says Mike O'Connor, co-owner of Dominion Properties, which is building Sage on Prospect by converting and expanding a former nursing home.

The new building will also include electricity costs in the rent and will have a single meter for the entire building, which eliminates standard meter fees for the renters, O'Connor says. Both buildings also have backup generators in case emergency power is needed, he says. Sage on Prospect will use natural gas only for its hot water heater, according to O'Connor, noting that the geothermal system, solar panels, and other sustainable features required a larger upfront investment by Dominion, but also will help attract environmentally conscious tenants and reduce operating costs. This will help pay back that investment, which O'Connor says increases the project's cost by only around 3.5 percent.
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Digital Printing Adds Realism to Wood Flooring
Property Management Insider (06/20/16) Blackwell, Tim

Continued advances in digital print technology have resulted in some of the most realistic patterns in simulated wood and tile flooring options. "The floor, not necessarily the sky, is the limit for the multifamily housing industry," the article's author writes. The rich, grainy look and feel of wood is turning apartment design choices, in particular, up a notch. Laminate flooring, also called floating wood tile, has come an especially long way since Pergo's introduction two decades ago. Most recently, the company rolled out Pergo Outlast+, a more durable and aesthetically pleasing plank that can stand up to the test of apartment living. "[Laminates] are now the new trend on wood-looking product and they're much more realistic than they've been in the past," Mark Voykovic, division merchandising manager for flooring at Home Depot, states. "It's really exciting. The repeat patterns are not like every 15 tiles, it's like you're getting to the 100s now."

Unlike laminates of the past, Pergo Outlast+ provides waterproof protection for 24 hours after accumulation of moisture due to a tighter interlocking of planks. Such protection coupled with a limited, 10-year warranty now make laminates a good choice for apartments in such areas as bathrooms, kitchens, and laundry rooms that were otherwise taboo on account of damage risk. Voykovic concluded, "[Pergo Outlast] allows a multifamily owner to now think about putting laminate into an apartment or single-family rental home. The product that is more realistic, has scratch resistance, and it's highly durable."
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Spring Rewards Targets Nashville Malls for Growth
Tennessean (06/21/16) Alfs, Lizzy

Spring Rewards, a card-linked loyalty program targeting shopping malls nationwide, is investing heavily in Nashville. Earlier in June, the three-year-old startup announced a partnership with Simon Property Group to bring the mallwide rewards program to the landmark Opry Mills mall. Spring Rewards' founders have always aimed esire to connect digital marketing with in-store outcomes, offering cash back deals to drive customers into shops and eateries. The free-to-join program links directly with Visa, MasterCard, and American Express. At Opry Mills, the newly launched Simon Insider program with Spring offers members $20 to spend at the shopping center for every $250 spent mallwide. Members who spend $1,000 or more in a month can gain access to new Simon Insider reserved parking spaces near primary entrances.

Ed Vittoria, Simon Property Group's vice president of loyalty, marketing and innovative partnerships, is excited for the future possibiliites. He states, "We have been evaluating a loyalty program concept for almost five years. . . . We've known all along that the secret to making something like this work is to integrate the credit cards that our shoppers already use, and making it very simple for the consumer to register the card." The program's main goal is to streamline rewards programs, especially at malls where there are often 100 or more retailers. Additionally, it eliminates extra cards, coupons, or vouchers. The company has launched at 30 malls throughout the United States with plans to launch in another 40 by the end of December. Spring Rewards' two- to three-year growth plan is to launch at 400 malls.
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France's Shopping Malls Going Strong in the Digital Era
eMarketer (06/22/15)

Even though digital shopping is fast becoming the norm in France, physical stores still play a key role in the retail habits of the country's population. Most importantly, shopping malls remain popular according to a recent study by Unibail-Rodamco, owner of 72 large commercial and retail centers in major Western European cities. Conclusions were based on online interviews with more than 2,000 Internet users ages 16 to 70 conducted by Ipsos back in the first quarter. The research showed that different age groups tend to have different needs and priorities as shoppers. But all age brackets welcomed the "one-stop shop" aspect of shopping centers. In fact, 52 percent of those surveyed said they visited a shopping center at least once per month, and all age groups visited with the same frequency.

Teens and young adults (ages 16 to 24) were most likely to see shopping as a social occasion involving friends, according to the research. Partly for that reason, this demographic was actually not the one most wedded to digital shopping. Instead, e-commerce was most important to respondents ages 25 to 54 who are generally pressed for time because of job and family commitments. Additionally, budget constraints were a factor for this group. "In particular," the article's author notes, "respondents ages 35 to 54 were far more likely than the average to compare prices online before a purchase to find the best deal."
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