Real Estate Management News - 05/23/2018

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May 23, 2018
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IREM® HEADLINES
Volunteer to Make a Difference
Fair Housing, Legislative Issues Dominate NAR Meetings in DC
Write and Win with Student Essay Contest

INDUSTRY HEADLINES
Many Lower-Tier Malls Face Extinction, Experts Warn
3 Ways to Drive Revenue From Apartment Amenities
What Is Easiest Path to Energy Efficiency?
Six Factors Driving Your Office Rent Through the Roof
Shopping Malls Might Be Dying, But Miami Is Planning to Build the Largest One in North America
Atlanta Leads the Country in Apartment Lease Giveaways, Analysis Finds
Multifamily Developers Embrace Green Building
Elliott Management Exits Stake in Taubman Centers
Luxury Apartments Achieve 1st Residential Fitwel Certification
Stay, Shop. Marriott Expands Its Partnership With Simon
Surprise! NYC Remains Most Expensive Place to Build in the World: Report
Smaller Apartment Building Conversions Filling Gaps in Baltimore


 

IREM Headlines


Volunteer to Make a Difference

Interested in exploring more occasions to make a difference at IREM? Read on for some exciting prospects you should consider:

IREM Volunteer
Are you passionate about IREM and the real estate management profession? Do you want to support IREM’s mission and goals, and contribute to the success of IREM’s future? If so, we have volunteer opportunities waiting for you! IREM volunteers benefit both personally and professionally when collaborating with their peers and are doing work that moves the profession and IREM forward. Applications are now open to serve on committees, boards or ad hoc groups for terms beginning in 2019. Application deadline is June 15, 2018. Click here to learn more about the new process 2019 appointments and to submit your application today!


Governing Councillor
The Governing Council, comprised of over 200 members, is IREM’s ultimate decision-making body. Our Governing Councillors have a strong understanding of local, national and international issues that need to be brought to the forefront of the IREM agenda. While serving as a Governing Councillor, you are responsible for adopting the strategic plan; approving budgets; determining legislative advocacy issues; and approving Bylaw amendments and modifications to the IREM Statement of Policies. Applications are now open to serve on the Governing Council for terms beginning in 2019 and will be accepted through July 15, 2018. Click here to learn more and submit your application!


Regional Vice President (RVP)
By providing ongoing guidance, coaching and support, RVPs are strategic advisors to chapter leaders and IAEs—they also act as conduit and ambassador between chapters and IREM Headquarters. Among their many duties, RVPs monitor and support the chapters in their regions through their individual and overall strategic planning, financial management, leadership and governance, and branding. Serving as an RVP is a unique leadership opportunity and a privilege to represent the chapters within a region. Applications are now open to serve as RVP for the 2020-2021 term and will be accepted through July 15, 2018. Click here to learn more about the required qualifications for being an RVP and to submit your application!


If you want to learn even more about volunteer opportunities with IREM, visit our Volunteer and Governance page.
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Fair Housing, Legislative Issues Dominate NAR Meetings in DC

When the National Association of Realtors (NAR) convened in Washington, DC last week for its annual legislative meetings, IREM—as the NAR affiliate focused on real estate management—was well represented by its volunteer and staff leaders. The overriding themes of the NAR meetings were observance of the 50th anniversary of the Fair Housing Act and key legislative issues being advocated on Capitol Hill.

Among the meeting’s speakers was HUD Secretary Ben Carson. One of the issues the secretary addressed was emotional support animals, which is a top public policy priority for IREM. The secretary criticized how some public housing residents have sought to have miniature horses, pigs and turtles recognized as emotional support animals without the involvement of qualified healthcare providers. In this regard, he commented on the questionable online certificates used to register emotional support animals. “Really it needs to be a legit healthcare provider that can document that there’s a true disability and that a support animal is needed,” Carson stated.

Secretary Carson also discussed what HUD is doing to tackle sexual harassment in housing. NAR members took this message to Capitol Hill last week, urging Congress to adopt sexual orientation and gender identity as protected classes under the Fair Housing Act.

Among other issues addressed at NAR’s legislative briefing were the National Flood Insurance Program (NFIP) and net neutrality. NFIP is set to expire on July 31, 2018, and NAR is calling on its members to help push their legislators to reauthorize the program, as well as make some additional changes. “We can’t just kick the can down the road, we need meaningful reform,” Austin Perez, a senior policy representative for NAR said at the conference. “IREM has made this a key legislative agenda item for 2018 as well, as evidenced by members advocating for it during recent in-district Congressional visits by IREM members throughout the country.

As for net neutrality, NAR has long been an advocate for internet service providers (ISPs) to treat all content equally and block the ability to provide “fast lanes” for favored sites. As a result of the Federal Communications Commission’s (FCC) decision to roll back the Obama-era net neutrality policy, NAR is supporting legislation that would re-impose net neutrality and take its enforcement out of the hands of the FCC.
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Write and Win with Student Essay Contest

Real estate students: Write your way to the 2018 IREM Global Summit in Hollywood/Ft. Lauderdale, Fla. by entering the Real Estate Management Student Essay Competition!

The annual contest, sponsored by IREM and the IREM Foundation, is run to support the study of real estate property and asset management and promote the development of future real estate management professionals. The winning entrant will receive the following prizes:

• Free registration to attend the 2018 IREM Global Summit, including roundtrip airfare, hotel accommodations and incidental expenses up to $250

• A cash award of $500 and a recognition plaque, presented at the IREM awards ceremony held during IREM's Global Summit

• Publication of his or her essay in the Journal of Property Management

The competition is open to students who, at the time of submission, are enrolled full-time in an undergraduate or graduate degree program in a field related to real estate. This year’s essay topic focuses on ways to market a career in property management to young professionals.

For more information about eligibility and requirements, click here. But do it soon—deadline to enter is June 1st!
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Industry Headlines


Many Lower-Tier Malls Face Extinction, Experts Warn
National Real Estate Investor (05/18/18) Diduch, Mary

Lower-quality shopping malls in markets with smaller populations and lower incomes will continue to close in the months and years to come, forecasts Suzanne Mulvee, director of research at CoStar. Department store closures coupled with the troubles in the specialty apparel sector have put many of these malls at risk. The country's top malls will continue to do just fine, as many have already been working to reposition themselves as entertainment centers. "It's not a pandemic, but it's a steady stream, if you will, of closures," Mulvee observes. There are approximately 1,200 malls in the United States, but around 25 percent of the Class B properties will suffer, she expects. "We don't think B malls will exist going forward," she boldly predicts.

Green Street Advisors recently forecast a 6.0 percent drop in market revenue per available foot (RevPaF) for Class B and C malls from 2018 to 2022 compared to a 0.5 percent increase for Class A malls over that same time span. For power centers, Green Street researchers expect a 3.5 percent drop in market RevPAF. In secondary markets, there likely can only be one mall that can survive, and markets where populations are dwindling will see the most struggle. DJ Busch, managing director of retail at Green Street, said his firm is very confident about the fate of the top 100 malls in the nation. But that confidence dips for the following 100, and the next 100 after that.
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3 Ways to Drive Revenue From Apartment Amenities
Property Management Insider (05/18) Alerasoul, Sarah

Apartment properties often miss the mark when determining an amenity's market value. The article's author details three ways apartment owners and operators can make sure they invest in the right amenities and avoid the wrong ones. Number one, emphasize quality over quantity. In general, your target residents are looking for a few specific things, not everything. For young professionals, fully equipped fitness facilities are often a huge draw. In a metropolitan area, for instance, a dog park can be ideal for canine owners. Two, ensure the price is right. Property managers must have access to lease transaction data if they want to determine the best possible rent rates. Finally, measure your success. The best apartment operators learn about amenity value by comparing the success of buildings with a certain amenity to those without them. By evaluating what competitors are doing, managers can price rental units accordingly and drive both occupancy and revenue.
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What Is Easiest Path to Energy Efficiency?
GlobeSt.com (05/11/18) Borland, Kelsi Maree

Research from JLL reveals that 46 percent of property owners spend capital on new lighting when working to create more energy efficient buildings. Lighting currently accounts for 17 percent of all electricity consumption. Carrie Gillis, senior project manager at JLL, observes, "Lighting consumes approximately 50 percent of a building’s electrical load, which translates to high electricity costs year over year." Many building owners and tenants are opting to install energy efficient LED lighting. In most cases, this is now required by code. In California, any new building projects and retrofits are subject to Title 24 (a.k.a. the California Building Code). While it may cost slightly more upfront to comply, studies have shown generally reasonable payback periods of two to three years.

Gillis also asserts, "Building owners are more incentivized given the offsets and rewards of spending green dollars upfront. It's important for building owners however to run financial analyses. It's easy to say, yes, you will benefit by spending green dollars, but we know that this type of investment needs to be measured, adjusted, and updated over periods of time." She adds that it is important to maintain continuous benchmarking data and keep pace with the changes taking place in the energy efficiency market. The ultimate goal is that building owners' asset investment goals are being met and maintained.
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Six Factors Driving Your Office Rent Through the Roof
Business Matters (05/17/18)

Commercial property experts have detailed a half-dozen key factors -- besides size and location -- that contribute to an office's rental value. First, there is your office's position in the building. Space on one of the top floors in a high-story building, especially one with panoramic views, often command a considerable amount more than offices on the lower floors. Second, if your office is in a building that offers lots of high-quality breakout space, meeting rooms, or even a luxury roof terrace, you'll almost certainly pay more for it than for one without such areas. Third, office buildings with the best IT infrastructure are demanding and getting premium rents.

Fourth, there is the quality of the space. A newly renovated building with the best fit out and new HVAC will always be a step up in price compared to a neighboring 1960s- or '70s-era building that is becoming dated. Fifth, the length of contract should be taken into consideration. If you are a tenant able to commit to a 12- or 24-month contract, you will be in a much stronger position to negotiate lower rents than those looking for a shorter term or a rolling contract. Finally, new office complexes with lower occupancy levels will typically have more scope for negotiation than a building that is at a higher occupancy.
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Shopping Malls Might Be Dying, But Miami Is Planning to Build the Largest One in North America
Mental Floss (05/18/18) Petsko, Emily

Part shopping center and part theme park, American Dream Miami is slated to become the largest mall in North America when it eventually opens in Florida's Miami-Dade County. In addition to retail stores, plans are in the works for an aquarium, water park, Ferris wheel, submarine ride, skating rink, ski slope, and a live performing arts. In addition, approximately 2,000 hotel rooms will be part of the mix. The project is being developed by Triple Five Group, which operates the landmark Mall of America in Minnesota and the West Edmonton Mall in Canada. Those are presently the two largest shopping and entertainment destinations on the continent.

American Dream Miami's imminent rise comes at a time when shopping malls are being shuttered nationwide. Business Insider calculates that more than 6,400 stores closed in 2017, and another 3,600 are expected to go out of business this year. American Dream Miami will cost $4 billion to construct and boast 6.2 million square feet of space when completed. Developers are hopeful it will attract tourists and also local thrill seekers who want a closer entertainment destination than Disney World and Universal Studios in Orlando. Opponents of the project warn that it will harm the local environment and cause traffic congestion. As of press time, Triple Five Group still needs to obtain several permits before construction can commence.
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Atlanta Leads the Country in Apartment Lease Giveaways, Analysis Finds
Curbed Atlanta (05/14/18) Green, Josh

A recent national market analysis by RealPage shows that rent concessions are not only the new normal in Atlanta, they are more normal there than in any other major U.S. city. Atlanta ranks among the 15 cities to have received almost 50 percent of all new apartment supply delivered nationwide in this ongoing development cycle, which dates back to 2010. But among those markets, metro Atlanta leads the pack in terms of average rent discounts of 9.1 percent as of the end of this year's first quarter, which translates to more than one month's free rent, reports RealPage.

In Atlanta proper, rents that were surging not long ago declined, on average, for three straight months per January's Apartment List rent report. While 2017 ended with Atlanta rents being 2.2 percent higher than a year earlier, the growth lagged behind the U.S. average (3.4 percent) and that of Georgia overall (3.8 percent). Nevertheless, new supply has shown few signs of slowing. According to RENTCafé, metro Atlanta was expected to log more apartment deliveries in 2017 -- nearly 12,000 -- than all but seven other markets. That is a 40 percent increase over 2016, which would suggest the apartment boom is still in full swing.
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Multifamily Developers Embrace Green Building
Multi-Housing News (05/02/18) Friedman, Robyn A.

As developers identify the benefits of sustainability for both their bottom line and residents' quality of life, they also are increasingly embedding sustainable building materials and methods within projects. As of March 2018, more than 1.5 million multifamily residential units were participating in the U.S. Green Building Council's LEED program, and this number should continue to grow as new projects come online. Factors driving this trend include support for sustainable building, with the National Multifamily Housing Council's Paula Cino noting, “Green building features are something that residents, as well as jurisdictions, are asking for from the builders and developers in their community.” She also says developers are realizing "that there are some tangible advantages to green building, particularly when it comes to energy efficiency and water savings. That can translate into some real dollars that go back into the owner/operator's pocket for the life of that building."

Jonathan Rose's Lauren Zullo stresses that green building helps property owners reduce the costs of energy and water usage, thus improving net operating income, raising property values, and boosting the return on investment from green building. Developers of sustainable multifamily properties also are adding new technologies and methods to further cut costs and raise energy efficiency, such as Passive House standards, non-hazardous materials, and colored roofs. Wood construction also is gaining favor, for reasons that include “cost, versatility, ease of construction, [and] the fact that wood buildings meet the same safety and performance requirements as other materials,” says WoodWorks CEO Jennifer Cover.
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Elliott Management Exits Stake in Taubman Centers
Wall Street Journal (05/15/18) Fung, Esther

This past week, hedge fund Elliott Management Corp. exited its stake in shopping mall owner Taubman Centers Inc., dampening expectations for deal activity anytime soon for the slumping real estate investment trust (REIT). Elliott has a reputation as an activist investment firm that often purchases ownership interests in companies and pushes for changes. "It is tough to effect change for mall REITs when the competitive set is limited," comments Alexander Goldfarb, managing director at Sandler + O'Neill Partners. "We doubt they would have exited so quickly if they saw long-term potential."
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Luxury Apartments Achieve 1st Residential Fitwel Certification
Multifamily Executive (05/11/18) Demirjian, Leah

The Pearl, a luxury apartment community in Maryland, has achieved the inaugural Fitwel certification for a multifamily residential building. Fitwel was established by public health and design professionals, including the U.S. Centers for Disease Control and Prevention (CDC). It aims to foster positive effects on occupant health and well-being via smart improvements to building design, awarding buildings one to three stars. The Pearl received a two-star Fitwel rating from the Center for Active Design, the standard's operator, by incorporating approximately 50 unique research-based design and policy strategies that support the physical, mental, and social health of its residents.

Developed by The Tower Cos., the apartment community's smoke-free outdoor spaces include open and green areas that encourage residents to remain active and also connect with one another. Features include a courtyard, a playground, and an urban farm. Inside, a centerpiece glass stairwell encourages residents to climb the steps and stay in shape. Friendly reminders are also posted at each elevator call area, promoting the health benefits of taking the stairs. "Our goal was to design The Pearl with elements that promote an active lifestyle and enrich people's lives by giving them a sense of still and calm," remarked Jeffrey Abramson, partner at The Tower Cos. "The Fitwel certification system has given us the tools to greatly enhance that experience for our residents." Tower Cos. plans to certify more properties in its portfolio using the Fitwel certification system.
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Stay, Shop. Marriott Expands Its Partnership With Simon
Baltimore Business Journal (05/18/18) Neibauer, Michael

Marriott International Inc. has announced it will open at least five new hotels in Simon Property Group Inc.-owned shopping centers over the next several years. Shopping malls, according to the world's largest hotel company in a statement, "are increasingly becoming ideal hotel destinations, offering consumers amenities steps from their room and providing both companies a powerful combination that optimizes real estate values." The initial openings will include two AC Hotels in Fort Lauderdale and Miami, Fla.; a Courtyard in Memphis, Tenn.; a Residence Inn on Long Island, N.Y.; and a Fairfield Inn in Garland, Texas. There are presently 15 Marriott-branded lodgings at Simon properties from Atlanta to Florida to Texas. "With consumers increasingly gravitating toward walkable, mixed-use communities, opening new hotels alongside Simon's thriving retail destinations is an important part of Marriott International's growth strategy in North America," concludes Eric Jacobs, Marriott's chief development officer.
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Surprise! NYC Remains Most Expensive Place to Build in the World: Report
The Real Deal (05/15/18) Brenzel, Kathryn

According to Turner & Townsend’s 2018 International Construction Market Survey, New York City is still the most expensive place in the world for construction projects. The survey finds that it cost an average of $362 per square foot to build in the city during 2017. San Francisco ranked as the second most expensive place to build with an average cost of $347 per square foot, followed by Hong Kong in third place with a cost of $344 per square foot. In New York City, high-rise office towers and apartment buildings were found to be the most expensive projects to erect.
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Smaller Apartment Building Conversions Filling Gaps in Baltimore
Baltimore Sun (05/14/18) Cohn, Meredith

While some of Baltimore's newest apartment towers are offering such posh amenities as rooftop pools and dog spas, more and more city dwellers are content with a new washer-dryer, a bicycle rack, and a lower monthly rent. In the shadow of the flashier projects that have opened or are in the process of opening near the Inner Harbor, Baltimore is seeing a steady stream of smaller, more affordable new apartment projects. They generally ask less than $1,500 a month and cater largely to young, single men and women new to Charm City. Most of the developers responsible are reusing commercial or industrial buildings located close to where people work or go out for fun and leisure, with tax credits and other financing "making the dollars work."

City officials hope these projects will help offset population losses in neighborhoods elsewhere in Baltimore that are seeing significantly less investment. Builders and developers report that the converted buildings have been leasing swiftly, especially in and around downtown. A 2017 study commissioned by the Downtown Partnership of Baltimore found the area could absorb nearly 7,000 more rental apartments over the next five years.
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