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IREM Celebrates Jesse Miller, 2019 ARM® of the Year
If you’ve ever wondered what the IREM REME Awards are all about, the first thing you should know is they only go to individuals and companies that have demonstrated outstanding commitment and dedication to advancing the real estate management profession. Last year, the REME Award for Accredited Residential Manager (ARM) of the Year went to Jesse Miller, ARM®, and CPM® candidate.
Jesse earned this distinction by pushing the envelope on real estate management education and training, especially in mixed-use property management. Recognizing the growth of development and the gap in education on this topic, he successfully urged his company, Greystar, to partner with IREM and bring IREM education into Greystar offices. “We hosted the first-of-its-kind, live, in-person version of Managing Commercial Properties for mixed-use managers here at Greystar in Portland, and it was a great success.” Such a success that the program was adopted by other Greystar offices and will be available for IREM chapter delivery in U.S. locations as well.
Learn more about Jesse and his work on advancing the real estate management profession.
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New COVID-19 Message from 2020 IREM President Cheryl Gray
As the world moves towards loosening stay at home orders and slowly reopening businesses, IREM has published additional content and resources to help real estate managers navigate this next phase of COVID-19. Updates added to IREM’s COVID-19 page this week include:
For continued updates from IREM, bookmark the COVID-19 updates page for the latest information.
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Industry headlines
Most Real Estate Investment Trusts Are Still Getting Their Rent, Except in the Retail Sector
CNBC (05/19/20) Olick, Diana
In spite of the economic fallout from the COVID-19 pandemic, real estate investment trusts (REITs) have managed to collect most of the rent on properties in their portfolios. A new Nareit survey found that REITs in the United States received roughly the same amount of rent from April to May. Industrial REIT rent collection in May has been almost 96 percent of a typical month, for example, and down just 3 percentage points from last month. Apartment REIT rent collections have also posted strong numbers during the current month, remaining at 95 percent of a typical month and basically flat with April collections.
The glaring exception has been retail. REIT retail properties fall into three categories: free-standing retail, shopping centers, and regional malls. Free-standing retail -- which tends to be convenience stores, restaurants, and pharmacies -- stayed mostly the same between April and May, although there was an uptick in rent deferrals. Shopping center REITs collected just 48 percent of May rent. The survey lacked a sufficient regional mall REIT response rate to make a definitive conclusion about rent collection, but widespread shutdowns and high-profile bankruptcy filings from mall staples like Neiman Marcus and J.C. Penney have not boded well for the situation.
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Pier 1 Imports to Close All 540 Stores After 58 Years
New York Post (05/19/20) Fickenscher, Lisa
Pier 1 Imports has petitioned a court for permission to liquidate its remaining 540 stores once they reopen after pandemic-driven shutdowns, ending a nearly six-decade legacy of selling furniture and other home decor. The bankrupt home-goods retailer's plan now is to sell its remaining assets, including its intellectual property and e-commerce business, during a court-supervised auction in July. The Texas-based company has contracted with Gordon Brothers to start liquidating its various retail locations nationwide. Two months ago, Pier 1 canceled a court-administered auction to sell the company due to a lack of interest. "This decision follows months of working to identify a buyer who would continue to operate our business going forward," states Pier 1 CEO and CFO Robert Riesbeck. "Unfortunately, the challenging retail environment has been significantly compounded by the profound impact of COVID-19, hindering our ability to secure such a buyer and requiring us to wind down."
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How to Convert Apartment Website Traffic to Leases
Forbes (05/18/20) Galvin, Aaron
This time of year is traditionally the busy season for apartment leasing, but the pandemic has fundamentally altered the way apartment hunting looks. With lockdowns and stay-at-home orders in effect across the country, potential renters are turning to the Internet to research apartments. As such, building managers should be pushing for strong marketing campaigns to turn web traffic into leases. There are several ways to accomplish that. First of all, the marketing team and leasing team should be in constant communication, sharing how the building is marketed so that the leasing team knows how potential renters are finding the property.
Marketing efforts in the age of social distancing should have a heavy emphasis on visuals. From photography to videography, renderings and 3D tours, these visual elements of the process can help potential renters feel like they are actually touring the property itself. And at this point, many renters have come to expect high-quality visuals. But those visuals should be carefully selected, so that renters are viewing a specific gallery of the best photos rather than scores of potentially uninteresting pics. Finally, marketing teams should consider how renters will search for apartments when drafting copy for the website. Using the correct keywords can drive engagement with the site and bring in more potential residents.
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Solar Installations Power Through the Pandemic
Commercial Property Executive (05/21/20) Steele, Jeffrey
The COVID-19 pandemic has altered many aspects of life, but it has not halted the installation of solar energy systems at commercial properties. Bob Georgeoff, the vice president of renewable energy solutions provider Ameresco, said the pandemic has caused some inevitable delays, but it has not stopped the process. "Renewable energy continues to be a priority for building owners and occupants," Georgeoff remarked. Other experts concurred with Georgeoff. Tom Warren, co-leader of law firm Eversheds Sutherland’s Energy Projects Team, suggested that commercial properties have persisted with solar energy installations at least in part because of how cost-effective solar has become.
In general, commercial projects have fared better than residential projects during the pandemic. That is partly because most commercial buildings in the midst of projects received pre-pandemic approvals and permits. Another factor contributing to the continuation and even acceleration of commercial projects is that commercial buildings have largely been empty or near-empty as people across the country have worked from home. Georgeoff said his team has been able to take advantage of empty parking lots to get solar installation projects done ahead of schedule.
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Landlords Fume as Starbucks, Other Chains Seek Extended Rent Cuts
Wall Street Journal (05/19/20) Fung, Esther; Haddon, Heather
National restaurant chains and other major businesses are asking their landlords for rent relief amid the COVID-19 crisis, creating stress and tension. A number of major companies that made rent payments in April and May have indicated they cannot or will not in June. Chipotle and Shake Shack have said they are lobbying retail property owners to renegotiate leases or approve deferred rent schedules, while Starbucks has asked its landlords for a number of concessions. The COVID-19 pandemic forced eateries across the country to shut down in-person dining, instead focusing on take-out and delivery. Sales fell but rent remained constant, meaning rent payments took up a larger percentage of revenue than normal in April and May.
The financial pressure on national chains pushed them into asking landlords for help. But landlords have not been pleased with the requests. Landlords of Starbucks locations in particular fumed over the company's request for changes to base rent and lease terms. The landlords privately felt that Starbucks, with an $86 billion market capitalization, should be able to raise debt or more equity and find a way to pay its rent in full. In some cases, tensions have boiled over into disputes between tenants and landlords. One Texas landlord padlocked shops owned by a retail tenant late on rent, and other building owners have launched lawsuits to collect unpaid rent.
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This Is Not the End of Office Real Estate
Forbes (05/13/20) Dokovic, Dan
As the COVID-19 pandemic continues, some people have predicted drastic changes to office life — ranging from new health measures to a collapse of the traditional office experience. But while it is true that workers across the country have largely settled into a new routine working from home, it is unlikely that the coronavirus crisis will ring a death knell for traditional offices, according to Forbes columnist Dan Dokovic. He predicts that the innate need for community and social interaction will help offices rebound in the aftermath of the COVID-19 pandemic.
There are several reasons why the world will not shift to an entirely remote work environment when the pandemic subsides. First, science has shown that people who persistently lack social interaction suffer from poorer mental and physical health. A permanent remote work environment could be especially harmful for those who live alone. Second, remote work is simply not an ideal circumstance for many workers, particularly those who lack designated work spaces within their residences. Finally, a number of business leaders still maintain the home office stifles innovation. Seven years ago, then-Yahoo CEO Marissa Mayer infamously banned working from home. Her memo to employees read in part: "Some of the best decisions and insights come from hallway and cafeteria discussions, meeting new people, and impromptu team meetings. Speed and quality are often sacrificed when we work from home."
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Kastle Launches Integrated COVID-19 Program for Office Buildings, Suites
Security Sales & Integration (05/11/20)
Kastle Systems this month launched an integrated, building-wide plan to safeguard the health and safety of employees returning to the workplace in the COVID-19 era. The system, dubbed KastleSafeSpaces, will enable office buildings to take a lead role in screening and contact tracing. KastleSafeSpaces uses touchless access control, video analytics technology, and thermal cameras. The new system integrates virus-screening and contact tracing processes to confidently facilitate a safe return to the office.
"For American workers to return safely back into office buildings, there must be a comprehensive system in place that integrates technology and new safety protocols both for the building and for tenant spaces alike," remarks Kastle Chairman Mark Ein. "It can't be every building owner, tenant and occupant for themselves." A top provider of managed security services to commercial businesses, Kastle's technology has been installed in over 3,600 buildings and 41,000 businesses throughout 47 states.
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Victoria's Secret to Close About 250 Stores in the U.S. and Canada, Bath & Body Works to Close 50
USA Today (05/20/20) Tyko, Kelly
Victoria's Secret this past week announced plans to permanently shutter approximately 250 stores in the United States and Canada this year. Its parent company, L Brands, also plans to permanently close 50 Bath & Body Works stores in the U.S. and one in Canada. L Brands' total company sales plunged 37 percent in the fiscal quarter ended May 2, with nearly all of the company's stores closed since March 17 because of the coronavirus outbreak. Victoria’s Secret currently operates 1,091 stores in the U.S. and Canada, including 909 U.S. Victoria's Secret locations and 144 Pink stores. Of those, 235 U.S. Victoria's Secret and three Pink stores are slated to close along with 13 of its 38 stores in Canada.
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Federal Realty Launches Contactless Pick-Up at DC-Area Centers
Commercial Observer (05/19/20) Loria, Keith
Federal Realty has announced a new contactless pick-up plan at its Washington, D.C.-area shopping centers. The company owns more than 100 such properties nationwide, but the program will be limited to centers in Maryland, the District of Columbia, and Virginia. At those properties, customers can make use of the program, titled "The Pick-Up," to facilitate quick, contactless shopping in the age of COVID-19. Customers can place orders from any retailer occupying space at a Federal Realty shopping center, designate a preferred pick-up time, and wait in a designated parking spot for employees to bring the orders out to the car.
Stuart Biel, Federal Realty's senior vice president of regional leasing, said the program is designed to appeal to shoppers both in the immediate future and over the long term. "The new initiative creates a singular, reliable, centralized service that retailers and restaurants of all sizes can take advantage of," Biel said. While the program started out of necessity because of COVID-19 shutdowns, Biel said he envisions a use for it even when the pandemic subsides. "The initial rollout is just the start and will evolve over the weeks, months, years ahead," he remarked. "We view this as a permanent demand channel that our open-air properties are uniquely located to take advantage of."
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J.Crew Landlords Pursue Rent from Reopened Stores
Wall Street Journal (05/21/20) Biswas, Soma
As J.Crew starts to open some of its locations amid the COVID-19 pandemic, landlords are pushing to collect rent payments from the bankrupt retailer. Many states are gradually easing lockdown restrictions during the pandemic, and some J.Crew locations have re-opened as a result. The retailer has asked the bankruptcy court to allow it to stop paying rent for 60 days, claiming it needs to preserve cash after closing about 500 locations in March. But its landlords, including Simon Property Group, CBL, and Brookfield, are pushing back on that claim, saying they deserve to be paid rent on stores as malls and shopping centers open back up.
J.Crew filed for Chapter 11 bankruptcy protection in early May. The retailer had been struggling for years before the pandemic further battered its business. In addition to objections from the landlords, a committee representing J.Crew's unsecured creditors has also pushed back on the retailer's rent-deferment plan. The committee pointed out that J.Crew has not yet promised to pay back the deferred rent. J.Crew and its real estate adviser, Hilco Real Estate, are trying to negotiate rent concessions with landlords.
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British Finance Workers Prepare for Return to Office of the Future
Reuters (05/21/20) White, Lawrence; Cohn, Carolyn; Barbaglia, Pamela
The British financial industry is preparing to have workers return to office buildings, but employees may face a vastly different work environment. Companies are now making decisions like bans on hot desk policies and installing screens where social distancing is impossible. There are also plans to limit the number of people that use elevators at one time. Some buildings may also implement temperature checks and thermal imaging at entrances. Overall, businesses will be restricted in the initial phase on the number of workers that are allowed to return. Most firms are aiming to have about 10 percent of their staff report to their offices.
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How Shopping Centers Can Pivot During and After COVID-19
425 Business (05/18/20) Lachmann, Andrea
The COVID-19 pandemic has significantly disrupted the ways brick-and-mortar retailers conduct business. With shoppers largely staying at home and avoiding public places, the use of e-commerce has increased, accelerating the consumer trend shifting away from in-person shopping and towards e-commerce. Even so, shopping malls that can fundamentally change the ways they operate and market themselves will be well-placed to recover on the other side of the pandemic. One easy way to pivot is to increase virtual offerings. Some events, like children's craft lessons, can be moved to an online format, allowing parents and children to follow along at home.
Shopping malls would also do well to re-imagine current event programming. This could mean changing live music shows to be less raucous and more conducive to shopping, or capping attendance at fitness events and putting markers on the ground to ensure appropriate social distancing. Steps as small as putting markers down or clearly displaying schedules for frequent cleanings of communal areas can give shoppers peace of mind and make them more comfortable returning to shopping centers. Another way to connect with shoppers is to keep up a strong social media presence. Finally, malls should be prepared to continue at least one pandemic-era practice: curbside pickup.
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