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New COVID-19 Resources Available from IREM
We continue to monitor the situation surrounding the Coronavirus and its impact on property managers, and have developed resources for members and property managers around the world to use as necessary in supporting tenants and residents in these uncertain times. New resources added this week include:
- From the Front Lines videos on Coronavirus aid and rent abatement
- Free on-demand courses focused on helping you run your business
- FHFA mortgage forbearance for multifamily owners
- IREM and CCIM call-to-action for assistance from Congress
- IREM advocacy actions
- Free recording of Bisnow’s webinar from March 19, 2020
- New blog on curbing residential evictions
For continued updates from IREM, bookmark the Coronavirus updates page for IREM’s official statement and new information about COVID-19.
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New IREM Webinar Covers the Evolution of Affordable Housing and Rent Control
Since the 1980s, household incomes have not kept up pace with home or rental prices. This discrepancy between household incomes and home prices widened dramatically during the housing market boom in the mid-2000s, and the gulf between home price growth and income growth has accelerated in the years since the recovery.
In 2017, approximately 37 million renter and owner households spent more than 30 percent of their incomes on housing, with more than 18 million spending more than half of their incomes on housing. Between 2001 and 2017, the number of renter households allocating more than half of their incomes toward rent increased by nearly 45 percent.
Join Ted Thurn, IREM government affairs director, on April 14 for the webinar Affordable Housing – Rent Control, and learn about the affordable housing crisis. The webinar is free for members and $99 for non-members.
Highlights will include:
- The rise of the issue of housing affordability
- The outcome of the 2020 election and what it could mean for the real estate industry
- The increase of state rent control proposals
Learn more and register here.
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IREM Celebrates First REME Award to China-based Company
IREM’s REME Awards celebrate achievements in real estate management in several categories, including Corporate Innovation. Shenzhen Unova Business Management Co., Ltd. (Unova), was honored with this award in 2019, the first REME Award for a China-based company.
Unova, which specializes in commercial real estate operations and management, acquired a 15,000-square-meter space in Shenzhen, a city in southeast China. The company performed a major renovation, converting it into a co-working and retail space in the heart of the city’s central business district.
With whimsical design, the facility reflects China’s desire to transform itself into a global center for creative innovation. It’s an ambition that dates from 2015, when the Chinese government called for ‘mass entrepreneurship,’ leading to over six million start-up enterprises registered in 2017 alone. The demand for flexible office space followed.
Unova’s fresh take on co-working space is occupied mainly by advertising agencies, art firms, start-ups and freelancers. But there are also floors reserved for larger businesses looking for creative workspace. Design elements include:
- Details from Leonardo da Vinci and Van Gogh paintings applied to bathroom décor
- A frying pan transformed into a mirror
- A plunge pool converted into a meeting space
The space reached an 80% occupancy rate within three months of a soft opening, proving the company fills an important gap in the local real estate market. While the Shenzhen facility meets the needs of an underserved market for flexible office space, retail businesses are also drawn to the property, with cafes, salons and gyms open to the public.
Unova hopes to replicate their success in cities across China, and the world, with unconventional design and surprising elements that distinguish their properties in a growing industry.
Read more.
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Industry headlines
Insight: Coronavirus Challenges Facing Commercial Property Owners
Bloomberg Law (03/18/20) Abell, Patrick
The coronavirus pandemic has created unprecedented roadblocks for commercial building owners, who must contend with widespread social distancing and isolation while simultaneously remaining responsive to the needs of employees, lenders, tenants, and customers. Though there is a long list of considerations for such owners and their management staffs at the moment, there are some that should be prioritized in the midst of the pandemic. First and foremost, commercial building owners should be cognizant of personal safety. In following guidelines from the World Health Organization and the Centers for Disease Control and Prevention, owners can prioritize the health of their employees, building occupants, contractors, and vendors.
Commercial property owners should also focus on emphasizing public safety in common areas by completing regular deep cleans and keeping cleaning and sanitizing products well-stocked. In addition, they should review their insurance policies to get up to date on what damages may or may not be covered as they suffer business interruptions and potential closures. Building owners should also double-check their tenant lease agreements to determine what steps are possible with each individual occupant. Finally, commercial property owners should ensure they are compliant with all relevant government regulations.
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JLL: Green Offices More Likely to Bring In Rent Premium, Less Likely to Sit Empty
Edie.net (03/17/20)
JLL has released a report on the state of sustainability in commercial construction today. According to the report, developers and landlords are shouldering the burden of pushing for sustainability, but they will get a good return on their investment as tenants and investors increasingly prefer green office space. In the report, JLL focused on the next wave of office development in central London, predicting that tenant demands for "highly sustainable" commercial buildings will increase by 8 million square feet by 2030. Already tenants in central London account for 1.5 million square feet of net-zero office space and 12 million square feet of office space with science-based emissions targets.
JLL's report also explores the financial incentives of going green, analyzing rental activity in central London from 2016 through 2019 and finding that the most sustainable buildings achieved a rental premium of 10 percent. Office buildings with a BREEAM sustainability rating of "very good" or higher achieved higher rents than their less sustainable counterparts. Office buildings with the highest sustainability scores tended to have less vacancy, too. "The first developers to undertake the task will reap the rewards of high levels of demand and the intrinsic higher performance of their product," concluded Sophie Walker, JLL's U.K. head of sustainability.
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Simon Property Group Closes All of Its Malls Due to Coronavirus
USA Today (03/18/20) Tyko, Kelly
Simon Property Group, the country's biggest owner of shopping malls, have closed all of its malls and retail properties due to the coronavirus outbreak. The closings, which are currently slated to end March 29, come after such department store chains as Macy's, J.C. Penney, and Nordstrom and popular mall brands like Gap, Victoria's Secret, and Sephora all announced they are also temporarily closing locations. Simon Property President and CEO David Simon issued an official statement that read: "The health and safety of our shoppers, retailers and employees is of paramount importance, and we are taking this step to help reduce the spread of COVID-19 in our communities." The closings include all 209 of the Indianapolis-based company's U.S. properties, which include malls and premium outlets in 38 states and Puerto Rico.
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Report: Physical Security Tech in Smart Buildings Attracted Over $2.9 Billion in Global Investment in 2019
Security InfoWatch (03/18/20) Tomlinson, Daphne
More than $2.9 billion was invested last year in companies providing physical security solutions at multifamily and office buildings. That continues a multi-year trend of increased investment in the physical security sector. Some of the investment is coming in sizable individual packages, like $1 billion from the private equity firm Silver Lake Partners. But even discounting that significant investment, physical security technology still ranked as the highest-funded category for smart buildings in 2019. China especially is putting large amounts of money into physical security solutions, including AI-driven facial recognition.
Some of the investment is being poured into alternative methods for access control. Instead of physical keys, smart buildings are using artificial intelligence, electronic locking, and biometric authentication. Other firms specialize in transforming existing locks into smart locks. Meanwhile, other popular physical-security innovations range from weapons screening systems to gunshot detection sensors to emergency response and mass notification systems.
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How Some Iowa Apartment Operators Are Managing Properties While Practicing Social Distancing
Business Record (03/18/20) Bolten, Kathy A.
Apartment building managers in central Iowa are working together to find and share ideal operating methods while public health officials urge social distancing. Chris Costa, president and CEO of Knapp Properties, said property managers have to find a way to practice social distancing while still serving residents, keeping workers safe, and leasing units. But according to Costa, property managers do not have to go it alone. "There's been a groupthink solution to things, and that's been very welcome," he said.
One of the key questions being debated among Iowa apartment managers is whether prospective residents should be able to tour occupied units. Knapp Properties and several other firms decided not to show occupied apartments. "You don't have any idea of the health of people walking through the unit or those who occupy the apartment," Costa said, explaining his reasoning. Instead, many Iowa property managers are offering tours of unoccupied units while also providing the option for a virtual tour. And Knapp Properties, like some of its peers, has decided to perform only emergency maintenance in occupied buildings for at least the next several weeks.
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Rite Aid Plans to Spend $700 Million Over 2 Years to Change How Its Stores Operate
PennLive (03/17/20) Urie, Daniel
Rite Aid will be making major changes and will spend $700 million over the next two years, company officials said in a call to analysts this past week. Rite Aid CEO Heyward Donigan said changes over the next few years will include an overhaul in merchandise, implementing workflow changes, and streamlining pharmacy workflow to free up time for its pharmacists. Donigan added that Rite Aid's strategic plan, dubbed RX Revolution, will focus on where 80 percent of its revenue comes from: medication and pharmacy services. "Our plan is to double down on the business of pharmacy," she declared. Rite Aid plans to hire more technicians and train them to do some of the responsibilities that are now performed by its pharmacists so that the pharmacists can engage more with customers and offer them more consultative support.
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Requests for Cleaning Companies to Sanitize Buildings Jump at Alarming Rate
WTAE.com (PA) (03/18/20) Ingram, Sheldon
Jan-Pro Pittsburgh is just one cleaning service that has reported a significant increase in deep-cleaning and sanitizing requests in the midst of the Covid-19 pandemic. Bill McNamara, owner of Jan-Pro Pittsburgh, said his company has recorded a 500 percent increase in client calls, highlighting just how concerned the general public is about the coronavirus. According to McNamara, Jan-Pro Pittsburgh uses environmentally-friendly chemicals to thoroughly clean and sanitize office buildings, churches, and other public spaces where large amounts of people gather. McNamara adds that the chemicals his company uses have been successful at eliminating past diseases, though he has acknowledged that he cannot definitively say his chemicals will kill Covid-19. McNamara pointed out that they have been successful against "the other 18 strains of coronavirus," including SARS, in addition to MRSA.
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The World's Smartest Buildings
Yahoo Finance (03/14/20) Kimani, Alex
Countries across the world have set ambitious carbon emissions targets as social awareness around climate change continues to grow. Many experts now believe smart buildings are essential in reducing carbon emissions. Such structures transform the way energy is used and expended. Incorporating smart technology into buildings ranging from high-rise apartments to office complexes to shopping malls can make a significant contribution towards reducing carbon emissions.
Smart buildings make use of Internet of Things (IoT) technology to enhance key building processes, optimizing energy consumption. Statistics show that such intelligent buildings save 50 percent or more energy when compared to their standard counterparts. Approximately 115 million residential and commercial buildings consume an estimated 40 percent of the total U.S. energy output. Reducing the energy output in these buildings will help guide the United States towards its climate-related goals.
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Activated Spaces Are Key to the Designs of the Future of Office, Residential, and Retail
Urban Land Institute (03/23/20) McCormick, Kathleen
Designers and developers have said that retail and commercial spaces are changing rapidly as consumer demand shifts. While the actual size and shape of the space was once sufficient, now consumers expect more like walkability, sustainability, and open space. Meanwhile, designers and developers are emphasizing community and shared experiences. Steve Lindley, the moderator at a recent Urban Land Institute panel, said advances in smartphone technology have driven the consumer shifts. Because cell phones are now the conduit to food, retail, and entertainment, physical spaces are no longer the default. Instead, designers and developers must craft retail and commercial spaces that make people want to visit.
Curt Kremer, founder of the commercial real estate firm George Oliver, said offices must now rival coffee shops or other comfortable environments. "We try to make multiple experiences so employees aren't stuck in their offices, and we try to cultivate the experiences they’re looking for," Kremer explained. That means adding amenities like a gym, lounges, a library, a cafe, outdoor games, and even a food-truck cantina area. Jason Schupbach, director of the Herberger Institute for Design and the Arts at Arizona State University, said office and retail spaces must ultimately be fun and enjoyable for the people working and visiting.
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Costco Acquires Last-Mile Specialist Innovel for $1 Billion
Supermarket News (03/17/20) Redman, Russell
Costco Wholesale Corp. has purchased third-party delivery and logistics provider Innovel Solutions for $1 billion. Innovel was a subsidiary of Transform Holdco LLC, the operator of Sears and Kmart department stores. For decades, Innovel has provided Sears with so-called "final mile" delivery of large and bulky products like major appliances and furniture, along with installation and "white glove" support services. Innovel has more recently begun serving other customers, including Costco since 2015. Innovel provides warehousing, transportation, installation, and home delivery services to commercial, retail, and manufacturing. According to Costco, Innovel's network covers nearly 90 percent of the U.S. and Puerto Rico.
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Two Valley Shopping Centers Hanging Holiday Lights to Brighten Public Spirits
Arizona Daily Independent (03/20/20)
Tempe Marketplace and Desert Ridge Marketplace, both in Arizona, have turned to a unique method to brighten moods as the COVID-19 pandemic disrupts daily life. The shopping centers have both broken out their holiday lights to string up colorful, cheery decorations that families can enjoy from the safety of their own cars. According to a press release from the centers' owner, Vestar, the holiday lights are out in spring to show that there is still reason for light and hope even in the midst of a pandemic.
Emilie Andrews, regional marketing director at Vestar, said she hopes the lights will cheer families up. "We noticed homes nationwide reinstalling holiday lights and thought, 'Why not us, as well?'" Andrews remarked. Both shopping centers are currently still open and have added more hand sanitizing stations, increased the cleaning of restrooms and other spaces during the day, implemented nightly sanitization, and increased employee training. While most retail tenants have chosen to remain open, all restaurants have been ordered to close and move to takeout-only, delivery, and curbside service models.
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Structural Insulated Panel Systems: Delivering Energy Efficient Buildings
PBC Today (Winter 2020) Carpenter, Andrew
As energy efficiency and climate change play a bigger role in building design, Structural Timber Association CEO Andrew Carpenter touts the value of structural insulated panel systems (SIPS). Not only do SIPS lower levels of thermal bridging and deliver high thermal performance for the life cycle of the building, the system is lightweight and free from compression shrinkage. "Optimizing the performance of the building envelope reduces ongoing running costs, improving energy efficiency, and reducing carbon emissions," Carpenter notes.
SIPS-made buildings essentially double as carbon storage units, as gas that normally would be released as atmospheric carbon dioxide is instead contained within the building materials. The ability to manufacture SIPS offsite, meanwhile, allows for greater speed and accuracy over conventional construction approaches while also curbing onsite labor and transportation outlays. Carpenter believes that as climate change looms, "there must be a fundamental change in the way buildings are constructed."
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