Real Estate Management News - 02/22/2017

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February 22, 2017
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IREM® HEADLINES
Use Income/Expense Data for Fact-Based Decisions
February 28 Deadline for Nominations for IREM’s 30 under 30
Yardi Renews IREM’s Energy Efficiency Grant

INDUSTRY HEADLINES
Top 10 Workplace Trends for 2017
Race to Revamp Shopping Malls Takes a Nasty Turn
4 Mistakes to Avoid When Moving Offices
Strategies for Cutting Energy and Water Usage in Multifamily Housing
Big Apartment Landlord Sues Airbnb
Village Squares Are Models for New Shopping Centers
Scaled-Down Appliances for Small Spaces
In Santa Monica, a New Frontier in Earthquake Safety Could Soon Begin
Fire Department Working to Know Campus Buildings Inside and Out
Paramount’s Entire Office Portfolio Achieves LEED Certification
LA's Blighted Apartments Buildings to Get Extra Inspections
Minnesota Report Suggests Efficiency Push Could Generate 15,000 Jobs


 
 

IREM Headlines


Use Income/Expense Data for Fact-Based Decisions

The best business decisions are based on a thorough understanding of the facts. The purpose of the IREM Income/Expense Analysis® program is to put the important financial facts of property operation at the fingertips of the investor, the developer, the appraiser, the lender and, above all, the property manager.

The operational experiences of over 11,000 buildings and developments have been analyzed and compiled in five useful and informative publications: Income/Expense Analysis®: Conventional Apartments; Income/Expense Analysis®: Office Buildings; Income/Expense Analysis®: Shopping Centers; Income/Expense Analysis®: Federally Assisted Apartments; and Expense Analysis®: Condominiums, Cooperatives & Planned Unit Developments.

The Income/Expense Analysis® publications of IREM are a valuable resource with a wide range of applications, including:

• Budget preparation
• Feasibility studies for developments and improvements
• Market analysis
• Appraisals
• Loan requests
• Property performance analysis
• Identifying opportunities for improving efficiencies
• Acquisition/disposition due diligence

When applied intelligently, this data can prove to be of great value and consequence. That is why it is drawn upon by thousands of lenders, appraisers, property owners, investors, developers, government agencies, researchers, and real estate professionals. It is of particular benefit to the professional managers of real property assets in view of the important asset management decisions with which they are faced.

The IREM Income/Expense Analysis Reports are available in softcover book, interactive PDF/Excel, Online Labs and Metro Reports. And don’t forget to submit your data this year.
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February 28 Deadline for Nominations for IREM’s 30 under 30

Editor’s note: IREM is recognizing the next generation of real estate management leaders with a selection of top 30 Under 30 members, to be featured in the July/August 2017 issue of JPM.

We last published a 30 Under 30 recognition in 2009. We followed up with one of those featured, Emily Goodman-Shortall, to see what she has been up to since receiving the recognition and how being named a 30 Under 30 has helped her career.


It’s hard to believe that it has been 8 years since the last 30 under 30 in JPM. I had my profile piece framed and it hangs proudly in my office. I was so proud to have been named in that group and I list the accomplishment on my resume. It sure does get potential employers’ and clients’ attention.

I’m am ecstatic to report that I have remained active in IREM, serving on the Executive Committee and as Regional Vice President, as well as several other chair and co-chair positions. In addition, my involvement with IREM—especially early in my career—opened up avenues for professional growth that helped shape my career in important ways. Professionally since my profile appeared in the 30 under 30, I have been promoted several times in my former organization and have started my own firm. As a direct result of the 30 under 30 feature, I have been asked to speak at countless industry-related events, and have been identified as a mentor to some incredible up-and-coming CPMs.

Volunteer service with IREM drew me deeper into the community and introduced me to colleagues who have become lifelong friends. IREM meetings and conferences further expanded opportunities for networking and collaboration, which allowed my work to be more productive and successful. Many of the most important turning points in my career can be traced back to my membership with IREM.

I was talking with a longtime member a few months ago about why he enjoys his volunteer service with IREM so much. His words struck me as clear and on target. He said, “The Institute is not here to give you things. The Institute is here to help you get the most out of your professional career.” I think there are thousands CPMs who would agree with this, and who have experienced firsthand the value of being part of an organization that represents an incredible community of property management professionals.

The 2017 IREM 30 Under 30 nomination deadline is February 28, 2017. Nominate yourself or an eligible colleague today!
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Yardi Renews IREM’s Energy Efficiency Grant

Yardi is leveraging its trusted brand and leadership in the real estate software industry for an exciting initiative to improve our shared environment. Yardi’s goal is to help reduce energy use in commercial, residential, and mixed-use properties over a period of several years through education and technology. Yardi has enlisted the help of several prominent organizations, including IREM, to develop education and programs for thousands of members on the front lines of real estate management and operations.

Yardi recently renewed IREM’s Yardi Energy Efficiency Grant for 2017. Now in its third year, the grant has allowed IREM to develop the IREM Certified Sustainable Property certification, the IREM Energy Efficiency Survey, as well as a subsequent report titled “Building Performance That Pays: Insights from the First IREM Energy Efficiency Survey,” a series of online courses on energy management, and a live workshop on accessing and using energy data.

IREM’s educational activities funded by the Yardi Energy Efficiency Grant, such as online courses and live workshops, are helping equip property managers and their teams with the skills necessary to pursue energy efficiency. The IREM Certified Sustainable Property certification also serves this purpose. The program includes a set of tools, templates, and resources that permit property teams to initiate sustainability programs from scratch, if necessary, and expand existing programs. The IREM Energy Efficiency Survey informs our activities and provides data against which companies can compare their energy efficiency practices.

IREM sees the Yardi Energy Efficiency Grant as a welcome challenge in developing programs that result in more environmentally and financially sustainable properties. We have met the challenge by working with our members and chapters to target different levels of expertise, property types, and market dynamics. We thank Yardi for this opportunity and look forward to building upon our success.

To access IREM energy efficiency education, visit www.irem.org/energy. The IREM Certified Sustainable Property program is at www.irem.org/gogreen. To learn more about the energy efficiency solutions and services offered by Yardi, visit www.yardi.com/smartenergy.
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Industry Headlines


Top 10 Workplace Trends for 2017
Buildings (02/17/17)

Sodexo has released its 2017 Global Workplace Trends report, which highlights some of the most important factors currently impacting the world's workers and their bosses in the workplace. In general, the study asserts that workplaces that can blend on-the-job life with outside life, cater to employee needs via improvements in wellness, and invest in space design and learning programs "will be at the forefront of business" in the year to come. "We've distilled key findings from different sectors, generations, and countries to produce a report that provides a holistic view of the global workplace," an official Sodexo statement read.

One of the trends detailed in the report is the so-called "rise of cross-workplaces." Indeed, the newest iteration of collaborative workspaces takes co-working to the next level, with organizations not only sharing physical space and resources but also structuring interactions across boundaries that encourage problem-solving approaches. Another trend to watch out for in 2017 is the redefining of the workplace experience. From physical space and technology to virtual work considerations and amenities, the way workers experience their surroundings will be increasingly key to a happy staff.
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Race to Revamp Shopping Malls Takes a Nasty Turn
Wall Street Journal (02/14/17) Kapner, Suzanne

As the nation's shopping mall operators scramble to redevelop aging properties, many are being hamstrung by contracts signed decades ago with department stores that govern how the overall properties are used. The agreements require anchor stores to obtain permission from mall owners prior to changing the configuration of the stores. However, they also prevent the landlords from modifying malls without the anchors' consent. Now a growing number of department stores are exercising their right to block the owners' ability to carry out sorely needed modifications. In many cases, compromises have been reached. But a handful of high-profile cases have landed in court that, in turn, has stymied redevelopment for years.

The legal squabbles come as online shopping is forcing many of America's approximately 1,100 malls to re-imagine and reinvent themselves. Green Street Advisors expects several hundred low-quality malls to either be permanently shuttered or "become irrelevant" in the next decade. “There is recognition on everyone's part that malls need to adapt," states Taubman Centers Inc. COO William Taubman. "But [landlords] don't necessarily have the same agendas as the anchors." Sears Holdings Corp., for instance, recently sued the owner of The Gardens Mall in Florida for trying to block the retailer from subleasing space in its store to Dick's Sporting Goods Inc. The litigation is ongoing. These accords, known in the business as reciprocal easement agreements, were designed to safeguard the rights of mall owners and anchor tenants by ensuring each had adequate access to parking and common areas and that neither could reconfigure their space unilaterally.
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4 Mistakes to Avoid When Moving Offices
NASDAQ (02/18/17)

Moving to a new office space can be stressful, with so much that can go wrong -- everything from failed negotiations with the building owner to problems with the movers. The article's author details four big mistakes that can be avoided when relocating to new office digs. The first is "not choosing the right type of building." In general, large office buildings will have a structured leasing process and a dedicated property management office. Additionally, they may have on-site building maintenance teams that can fix minor issues and/or provide cleaning services. Such buildings, though, are usually pricier per square foot and have more security and insurance requirements. Small buildings generally have fewer amenities, but their prices per square foot are lower and there are fewer requirements. The second big mistake that can be avoided is "not inspecting the space before moving in or signing the lease. A thorough walk-through is a must. If possible, obtain written confirmation from the building owner that the structure will provide the specific items you talked over or negotiated, like fiber Internet hook-up.

A third mistake is "not checking if the building has union contracts. Such accords may require union contracts, which can limit the number of vendors a tenant can use for building services such as Internet, phone, and electricity and thus artificially inflate prices of these services. A fourth and final mistake to be avoided is "not liquidating your old office furniture soon enough." It make take a few dozen phone calls to find a liquidator or reseller that is interested in used office furniture. "That's why you need to start planning your office liquidation a couple months in advance of your move date, the article's author concludes. "You don't want to be left with a bunch of furniture and nothing to do with it."
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Strategies for Cutting Energy and Water Usage in Multifamily Housing
Property Management Insider (02/16/17) Blackwell, Tim

Some in the multifamily housing industry have questioned whether the Environmental Protection Agency’s (EPA's) ENERGY STAR program is worthwhile, citing resident energy-consumption data as a barrier to receiving the certification. However, energy-efficient buildings save on operating expenses and enjoy higher asset values, competitive advantages, and better retention rates. Energy consumption and environment impact rank as high public concerns, so apartment owners and operators can promote the value of their property’s energy efficiency to residents. ENERGY STAR also offers collateral that properties can use to promote their energy-efficiency initiatives and how those actions save residents money.

As of the end of last year's second quarter, more than 35,000 multifamily properties representing 4.3 billion square feet were benchmarking. More than 200 apartment communities have earned the ENERGY STAR certification as of January 2017. Michael Zatz, who has overseen ENERGY STAR's commercial buildings program for the past 11 years, says the water consumption and cost component of the rating system fits especially well with apartment community needs as whole-property water usage data is more readily available to owners and operators than whole-property energy use. "We think in multifamily, many more people are going to be able to use the water score than are going to be able to use the energy score," Zatz comments. "But we see that changing . . . as more and more utilities are beginning to provide whole-property energy data upon request."
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Big Apartment Landlord Sues Airbnb
Wall Street Journal (02/17/17) Kusisto, Laura; Bensinger, Greg

Apartment Investment & Management Co. (AIMCO), one of the biggest apartment owners in the country has filed civil lawsuits in California and Florida against short-term rental website Airbnb Inc., alleging that its residents are renting out apartments on the site in violation of their leases and are creating unsafe conditions for their neighbors. AIMCO, which owns or manages nearly 50,000 apartments nationwide, is seeking an undetermined amount of damages. AIMCO Chief Executive Terry Considine has issued a written statement that reads: "It is not acceptable to us that Airbnb actively promotes and profits from deliberate breaches of our leases, and does so in utter disregard of the disrespectful and unsafe situations created for our full-time residents and their families." Airbnb is expected to fight the lawsuit.

This marks the first instance of a major apartment owner suing Airbnb, states Green Street Advisors analyst Conor Wagner. He adds that other apartment owners and operators might decide to follow AIMCO's lead if they can't win cooperation from Airbnb. Wagner states, "If you don't want this going on in your building, and Airbnb won't desist, then this might be their only recourse." AIMCO contends that its apartment buildings have suffered property damage, nuisance, and disturbance along with loss of revenue. It is seeking compensation for losses and is petitioning the courts to prohibit Airbnb from listing rental units in its buildings in the future.
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Village Squares Are Models for New Shopping Centers
Houston Chronicle (02/15/17) Tomlinson, Chris

Retail developers built too many shopping malls in the 1970s and '80s, and many went up so quickly that they were of poor quality. If they weren't properly maintained, they aged quickly. Now, some of these same developers are taking cues from the village squares of old when designing and building new shopping centers. For instance, Houston's Town & Country Mall, which was surrounded by acres of parking lot, is gone. In its place is the CityCentre shopping and business area, which opened in 2010 after the mall was torn down earlier in the decade. This contemporary version of the village square provides a place where mothers can push their baby strollers and children can chase each other across a central plaza, surrounded by cafes and retail shops. Everything is meticulously planned, from which retail tenants occupy space to the periodic evening concerts to the quarterly fun runs.

Some industry experts believe such projects represent the future of brick-and-mortar retail in the age of online shopping. "It's our job to seek out tenants that are compelling enough for people to actually go to," remarks Jonathan Brinsden, CEO of Midway, the developer of CityCentre. "You can buy things on Amazon. So what is it that you are selling, or what experience are you offering, that is compelling enough for me to go to your store?" The affluent neighborhood nearby appealed to Midway executives, who recognized that the intersection of Interstate 10 and Beltway 8 was the demographic center of Greater Houston. Indeed, approximately two million people living within a 20-minute drive. Brinsden and Midway Chairman Brad Freels visited 27 mixed-used projects in 17 cities looking for inspiration.
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Scaled-Down Appliances for Small Spaces
Multifamily Executive (02/17/17) Shanesy, Lauren

According to the latest research from RentCafe and Yardi Matrix, the average size of a new one-bedroom apartment last year clocked in at the smallest area in a decade at 934 square feet -- an 8 percent decrease from 2006. With urban city centers growing denser and individual rental units shrinking, multifamily housing developers can benefit from maximizing space and selecting appliances with smaller footprints. Enter Haier, which is now the parent of GE Appliances. It recently launched a suite of scaled-down appliances as part of its Small Space Living solutions product line. The built-in and freestanding lineup includes a 28-inch-wide French door refrigerator and an 18-inch dishwasher. Both are designed to provide a full-service kitchen even in a small apartment. Other offerings in the new suite range from a 24-inch, 2-cubic-foot gas freestanding range to a 24-inch above-range microwave oven to a 24-inch, 2-cubic-foot combination washer/dryer with stainless steel drum.
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In Santa Monica, a New Frontier in Earthquake Safety Could Soon Begin
Los Angeles Times (02/15/17) Lin II, Rong-Gong; Ranoa, Raoul; Schleuss, Jon

Santa Monica's City Council last week tentatively approved the country's most extensive seismic retrofitting effort, which could require safety improvements to as many as 2,000 earthquake-vulnerable buildings. The council's vote was unanimous. Santa Monica's safety rules would go beyond what Los Angeles has done by requiring not only wood-frame apartment complexes and concrete buildings to be retrofitted, but also steel-frame structures. The ordinance would require the owners of the 2,000-plus buildings identified by the city to conduct a seismic evaluation, and, if needed, have the buildings retrofitted.

For the ordinance to receive final approval, City Council members will need to pass the law a second time in the next month. If the measure receives this second affirmation, the proposal will become law 30 days after. Seismologist Lucy Jones applauded the elected officials showing such enthusiastic support for strengthening buildings. “It's great for Santa Monica," she stated. "They're going to have safer buildings. It is also hopefully the start of a wave. Jones is working closely with the Southern California Assn. of Governments to educate local governments about seismic retrofits.
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Fire Department Working to Know Campus Buildings Inside and Out
Illinois State University News (02/16/17)

In the coming weeks, Normal (Ill.) Fire Department personnel will be periodically visiting Illinois State University to make sure they are familiar with the layouts and safety equipment in all campus office buildings. The visits are being made so that firefighters will know the location of stairwells, alarm panels, standpipes, fire suppression systems, areas of rescue assistance, and other building details they could make a difference during an emergency situation. Later this summer, fire department personnel will conduct training within campus residence halls to ensure they are familiar with the interior of those buildings, too. These ongoing visits and and training events are part of a partnership between the university and the Normal Fire Department to ensure campus safety.
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Paramount’s Entire Office Portfolio Achieves LEED Certification
Commercial Property Executive (02/15/17) Gagiuc, Anca

Paramount Group Inc. this past week disclosed that all of the office buildings in its consolidated portfolio have earned either Platinum or Gold LEED certification. Additionally, the assets were awarded ENERGY STAR certification. Albert Behler, chairman and CEO of the New York City-based company, remarks, "This accomplishment reflects on the quality of our assets and our ongoing commitment to good corporate citizenship and sustainability initiatives. In addition, these certifications also help us manage operating costs, attract and retain premium tenants and ultimately enhance portfolio value." Last year, the Building Owners and Managers Association (BOMA) of New York awarded the Pinnacle Award to two of Paramount's properties, 900 Third Avenue and 712 Fifth Avenue. Also in 2016, San Francisco's One Market Plaza office building was honored by BOMA San Francisco as the "Outstanding Building of the Year" in the association's more than one million square foot category.
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LA's Blighted Apartments Buildings to Get Extra Inspections
89.3 KPCC (CA) (02/14/17) Huang, Josie

Thousands of apartment buildings in Los Angeles are in dire need of repairs. In too many cases, though, the building owners have allowed them to fall into blight. A new city plan aims to reverse that trend. Under an ordinance passed by the L.A. City Council early last week, such buildings will be inspected every two years by city staff instead of every four years. "Over the course of the next several years, the tenants who reside in buildings deemed blighted or low-quality will see a dramatic improvement in living conditions," assures Rushmore Cervantes, head of the city's Housing and Community Development Department.

Cervantes' department is responsible for periodically inspecting every apartment building in L.A. with two or more rental units. In a city where over 50 percent of the residents are renters, that's a lot of apartments. Cervantes insists the majority of apartment owners are doing a good job maintaining their properties. He estimates that about 4 percent are neglectful. "Sometimes it can be a lack of financial means or it could be lack of know-how," he remarked. The new law calls upon city staffers to provide technical assistance to building owners, such as identifying financing options for repairs.
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Minnesota Report Suggests Efficiency Push Could Generate 15,000 Jobs
Midwest Energy News (02/10/17)

Minnesota could create 15,000 jobs and save more than $3.1 billion by reducing energy use in municipal buildings, universities, schools, and hospitals, according to a new report from the BlueGreen Alliance. The report, titled "20 for MN: A Proposal To Reduce Minnesota’s Energy Use In The M.U.S.H. Sector By 20 Percent," is an effort to "bring more attention to the fact that this is one of the areas of the economy that can improve the environment and creates jobs," says Minnesota regional program manager Bree Halverson. A concentrated effort would spark overall employment in various fields and across the state because investment in aging buildings is needed everywhere, Halverson says.

The money saved on energy costs in the sector targeted by the report, now known as M.U.S.H. (municipal buildings, universities, schools, hospitals), could be used for other investments in human capital, infrastructure, and other needs. Halverson notes that the state could create a green bank -- as have Iowa and Kentucky -- to fund energy improvements. Green bonds, PACE (property assessed clean energy) programs, closing tax loopholes, and using other financing instruments could help pay for improvements, too.
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