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NOVEMBER | DECEMBER 2014<br />
MAXIMIZE ESCALATION INCOME<br />
Enhance Your Building’s Cash Flow<br />
Magazine<br />
LOW-RISE ELEVATORS<br />
Choosing the Best Option for Your Property<br />
CREATING A BETTER WORKPLACE<br />
Well-Designed Offices Can Improve Well-Being<br />
IG<br />
ATA<br />
Big Data Is Changing the Way<br />
Commercial Properties Operate
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NOVEMBER | DECEMBER 2014<br />
24<br />
BIG DATA, BIG REWARDS<br />
Phil Mobley<br />
Analytics are changing the way<br />
commercial properties operate,<br />
but the end goal of tenant<br />
satisfaction remains the same.<br />
32<br />
LOW-RISE ELEVATORS: MYTH &<br />
REALITY<br />
Sasha Bailey, LEED AP BD+C<br />
How do you choose the best<br />
elevator for low-rise applications<br />
30<br />
MAXIMIZE YOUR ESCALATION<br />
INCOME<br />
William H. Brownfield, CRE, CCIM, and<br />
Lawrence M. Mayerhofer, CPA<br />
Understand these four key<br />
concepts to enhance your<br />
building’s cash flow.<br />
34<br />
CREATING A BETTER WORKPLACE<br />
Jessica Bates<br />
Companies are realizing the<br />
impact of a well-designed office<br />
on their employees.<br />
6 FROM THE CHAIR<br />
A global resource for industry knowledge.<br />
8 ON THE HILL<br />
Important issues saved for lame-duck session;<br />
the EPA expands ENERGY STAR ® opportunities.<br />
14 IN THE STATES<br />
Building re-tuning training sessions offered;<br />
new mandatory sick leave legislation signed in<br />
California.<br />
16 UP TO CODE<br />
ICC and ASHRAE to consolidate green code<br />
efforts; North Carolina considers codecompliance<br />
alternative; BOMA’s Codes Toolkit<br />
offers resources for state and local code-adoption<br />
process.<br />
18 GET TO KNOW…<br />
Lacey Willard—Executive Committee member,<br />
work-life integration enthusiast.<br />
20 NEWS & NOTES<br />
REITs outperform in pension funds; survey finds<br />
tenants have little tolerance for pests; BOMA<br />
mourns the passing of Henry Palm.<br />
22 LEGAL-EASE<br />
Complying with the employer mandate under the<br />
Affordable Care Act.<br />
40 TRENDS, STATS & FACTS<br />
Highlights from BOMA Canada’s BOMEX ® 2014.<br />
45 GREEN SCENE<br />
Four tips for maintaining a successful recycling<br />
system.<br />
46 HEALTHCARE PULSE<br />
Non-traditional tenants find a place in medical<br />
office buildings.<br />
48 MARKETPLACE<br />
Check out the latest products and services.<br />
50 EYE ON EDUCATION<br />
On-demand webinar highlights successful lease<br />
negotiation tactics.<br />
The cost for BOMA Magazine is $75 a year for subscribers and $50 a year for BOMA<br />
International members.<br />
Publication of advertising should not be deemed as endorsement by BOMA International. The<br />
publisher reserves the right in its sole and absolute discretion to reject any advertisement at<br />
any time submitted by any party. Material contained herein does not necessarily reflect the<br />
opinion of BOMA International, its members or its staff.<br />
Volume 10, Number 6 The BOMA Magazine November/December 2014, (ISSN 1532-4346),<br />
Copyright 2014. The BOMA Magazine is published bimonthly in January/February; March/<br />
April; May/June; July/August; September/October; and November/December by the Building<br />
Owners and Managers Association (BOMA) International, 1101 15th St., NW, Suite 800,<br />
Washington, D.C. 20005; Telephone 202-408-2662; Fax 202-326-6377; www.boma.org.<br />
Periodicals Postage paid at Washington, D.C. and additional mailing offices.<br />
For advertising rates and information, contact Paul Hagen at Stamats Buildings Media 866-965-4205.<br />
On the Cover: Cover design by Elisa Geneser, Art Director.<br />
POSTMASTER: Send address changes to: The BOMA Magazine, Attn: List Department,<br />
1101 15th St., NW, Suite 800, Washington, D.C. 20005. Undeliverable U.S. copies should<br />
be sent to: The BOMA Magazine, Attn: List Department, 1101 15th St., NW, Suite 800,<br />
Washington, D.C. 20005. Return undeliverable Canadian addresses to: PO Box 875, STN A,<br />
Windsor, ON N9A 6P2.<br />
BOMA MAGAZINE 5
FROM THE CHAIR<br />
CREATE YOUR OWN SUCCESS<br />
Magazine<br />
Lisa M. Prats, CAE, Publisher<br />
Courtney C. McKay, Editor<br />
Jessica Bates, Associate Editor<br />
A GLOBAL RESOURCE FOR<br />
INDUSTRY KNOWLEDGE<br />
Commercial real estate has always been an industry<br />
driven by relationships—and these relationships are<br />
becoming even more important as our industry expands<br />
around the globe. I saw this firsthand during my recent<br />
travels representing BOMA International at BOMEX ® , BOMA<br />
Canada’s annual conference, in Winnipeg (see page 40 for<br />
a recap) and at BOMA China’s second annual conference<br />
in Shanghai. Whether you’re in Canada, China or any of the<br />
other countries that are home to a BOMA International affiliate,<br />
you will find property professionals who are interested<br />
in helping each other succeed, advancing the industry and<br />
learning best practices through thoughtful dialogues.<br />
BOMA International has an important role to play in facilitating these dialogues and the<br />
exchange of ideas. Emphasizing the “International” in BOMA International has long been<br />
a priority, but it’s not enough to simply place another marker on a world map. Instead, we<br />
must strive to be a global resource for industry knowledge through world-class education,<br />
measurement standards, networking opportunities, research and guidebooks that will<br />
enable property professionals around the world to achieve excellence in their buildings or<br />
portfolios. Why Because we continue to find that working together to share our insights<br />
and resources across global markets not only makes each individual market stronger, but<br />
also makes the commercial real estate industry stronger as a whole.<br />
China is in the midst of extraordinary commercial real estate growth, and with this growth<br />
comes an increased focus on preserving asset value and prolonging building life. To address<br />
this need, BOMA International worked with BOMA China to develop a Mandarin-language<br />
version of BOMA’s Preventive Maintenance Guidebook, which was unveiled during the recent<br />
conference. This publication will help establish key operational best practices in a market<br />
that continues to develop at a rapid pace, and it follows the footsteps of BOMA’s Guide to<br />
Developing a Standard Operating Procedure Manual, which was translated into Mandarin<br />
a year ago and has seen widespread use since that time.<br />
The exchange of ideas does flow both ways, though, and there is much to learn from<br />
beyond our own borders. With international investments on the rise and companies competing<br />
in a worldwide economy, it is more important than ever to understand global trends and<br />
what other markets are doing better—in fact, it’s a smart business strategy. What’s the best<br />
way to gain these insights Reach out to your counterparts in other countries to compare<br />
notes, which will help you CREate your own success for your career and your company.<br />
Relationships matter—and BOMA International is working to build stronger ones with<br />
our colleagues worldwide as we continue to expand BOMA’s global outreach. I encourage<br />
you to cultivate broader business relationships, too.<br />
Contributing Editors: Ronald Burton;<br />
Amy Chisholm, CAE, CMP; Marissa Mitzner,<br />
LEED Green Associate; Scott A. Morris;<br />
Emily Naden, LEED Green Associate;<br />
Karen W. Penafiel, CAE<br />
Elisa Geneser, Art Director<br />
Kristi Kidd, Graphic Artist<br />
Published by: Building Owners and Managers<br />
Association (BOMA) International<br />
BOMA International Officers<br />
Chair and Chief Elected Officer<br />
John G. Oliver, BOMA Fellow<br />
Oliver & Company<br />
Atlanta, Georgia<br />
Chair-Elect<br />
Kent C. Gibson, CPM, BOMA Fellow<br />
Capstone Property Management, L.C.<br />
Salt Lake City, Utah<br />
Vice Chair<br />
Brian M. Harnetiaux<br />
McCarthy Cook<br />
Costa Mesa, California<br />
Secretary/Treasurer<br />
Daniel W. Chancey, RPA<br />
Commercial Advisors Asset Services, LLC<br />
Memphis, Tennessee<br />
President and Chief Operating Officer<br />
Henry H. Chamberlain, APR, FASAE, CAE<br />
BOMA International<br />
Washington, D.C.<br />
Call for Nominations:<br />
Vice Chair and Executive<br />
Committee Members<br />
BOMA International’s Nominating Committee<br />
is seeking candidates for the position of vice<br />
chair and for five principal members and one<br />
associate member of the Executive Committee<br />
to the Board of Governors. For further information,<br />
contact Ann Coslett at acoslett@boma.org.<br />
Connect with BOMA<br />
Join BOMA on Facebook<br />
Join BOMA on LinkedIn<br />
Join the EER and BOMA 360 User Groups<br />
See BOMA on YouTube:<br />
www.youtube.com/bomainternational<br />
John G. Oliver, BOMA Fellow<br />
Chair and Chief Elected Officer<br />
Follow BOMA on Twitter:<br />
BOMA Magazine @BOMAmagazine<br />
BOMA President Henry Chamberlain @HenryBOMA<br />
BOMA Vice President Lisa Prats @LisaPratsBOMA<br />
6 BOMA MAGAZINE NOVEMBER | DECEMBER 2014
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ON THE HILL<br />
BY EMILY NADEN, LEED GREEN ASSOCIATE<br />
U.S. CONGRESS LEAVES LOOSE ENDS FOR<br />
LAME-DUCK SESSION<br />
Prior to the mid-term elections, no<br />
one on Capitol Hill was feeling very<br />
cooperative. During its two weeks in<br />
session in September, Congress passed<br />
only a continuing resolution (CR) to fund<br />
the government through December 11,<br />
2014. The CR also includes funding for<br />
a U.S. response to the Ebola outbreak,<br />
authorizes support for Syrian rebels<br />
fighting ISIL and extends the Internet Tax<br />
Freedom Act. Everything else was left for<br />
a lame-duck session scheduled to begin,<br />
at press time, on November 12.<br />
Issues saved for the lame-duck session, which will likely<br />
be kept short, include finalizing funding of the federal<br />
government for fiscal year 2015, immigration reform<br />
and, potentially, an attorney general nomination. BOMA<br />
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ON THE HILL<br />
International also hopes to see Congress<br />
tackle some of commercial real<br />
estate’s top-tier issues: extending the<br />
Terrorism Risk Insurance Act (TRIA)<br />
and retroactively extending the 15-year<br />
depreciation period for leasehold<br />
improvements, which may be included<br />
in the tax extenders package. Both of<br />
BOMA’s key issues are expected to<br />
receive serious consideration during<br />
the lame-duck session of Congress,<br />
as they have already gained significant<br />
traction in both chambers, but the<br />
outlook is uncertain. What is certain is<br />
that BOMA will continue to work with<br />
coalition partners to push lawmakers to<br />
reauthorize TRIA before its December<br />
31 expiration.<br />
BOMA International will also continue<br />
to work with its partners in the<br />
Invest in America coalition during<br />
the lame-duck session to convince<br />
the House of Representatives to take<br />
up legislation reforming the Foreign<br />
Investment in Real Property Tax Act<br />
(FIRPTA). FIRPTA was first introduced<br />
during the American farm crisis more<br />
than 30 years ago to discourage overseas<br />
investors from buying American<br />
cropland. However, when it became law<br />
in 1980, FIRPTA imposed a 35 percent<br />
capital gains tax on international investors<br />
with an interest in any type of U.S.<br />
commercial property. This punitive tax<br />
remains a significant barrier to new<br />
investments that could help America<br />
grow. Today, no other asset class or<br />
industry is singled out for such negative<br />
tax treatment.<br />
When it became law,<br />
FIRPTA imposed a 35<br />
percent capital gains<br />
tax on international investors<br />
with an interest in any type<br />
of U.S. commercial property.<br />
This punitive tax remains<br />
a significant barrier to new<br />
investments that could help<br />
America grow.<br />
The primary change currently being<br />
sought would be to increase the ownership<br />
stake a foreign investor may<br />
have in a publicly traded real estate<br />
investment trust (REIT) without being<br />
subjected to FIRPTA from five to 10<br />
percent. Similar legislation passed<br />
the House in 2010 by a vote of 402-11.<br />
Efforts are under way to urge leadership<br />
to have the House consider the<br />
bill under the suspension of the rules,<br />
which is typically reserved for noncontroversial<br />
measures. Debate on a<br />
bill brought up under suspension of the<br />
rules is limited to 40 minutes, amendments<br />
typically are not permitted and<br />
it takes a two-thirds vote for passage.<br />
BOMA International is hopeful that<br />
Congress once again will consider<br />
FIRPTA reform during the current<br />
lame-duck session.<br />
10 THE BOMA MAGAZINE NOVEMBER | DECEMBER 2014
ON THE HILL<br />
NEWS FROM ENERGY STAR ®<br />
Two big announcements came out of<br />
the U.S. Environmental Protection<br />
Agency’s (EPA’s) ENERGY STAR® program<br />
office this fall. First, in celebration<br />
of 15 years of the ENERGY STAR<br />
certification for buildings, the EPA is<br />
offering special one-time recognition<br />
to organizations that certify five, 15, 50<br />
Belco was founded to restore previously inaccessible piping<br />
in the NYC market place by utilizing a proven British lining<br />
technology. We are expert applicators for Spray-In-Place-Pipe<br />
(SIPP) and Cured-In-Place-Pipe lining technologies.<br />
The major benefit of Belco Pipe Restoration is the ability<br />
to customize the pipe lining solution (method and epoxy)<br />
to your specific piping issue. Our state of the art green<br />
building technologies restore pipes from ½ inch to 60<br />
inches in diameter. Belco Pipe Restoration coats pipes<br />
made of a wide variety of piping materials and within<br />
systems with varying service needs including but not<br />
limited to domestic water, HVAC, drains, etc.<br />
Belco products are solutions for:<br />
Corrosion<br />
Pin-holing<br />
Leaching of lead<br />
Water quality deterioration<br />
Chronic scaling<br />
Flow deterioration<br />
Joint leaks<br />
Pipe Encrusting or rust<br />
or 150-plus buildings in 2014. The EPA<br />
has extended the deadline to apply<br />
for certification to December 12, 2014,<br />
so applicants have more time to earn<br />
this recognition. BOMA International,<br />
a seven-time ENERGY STAR award<br />
winner, encourages all BOMA buildings<br />
to benchmark their data using<br />
the ENERGY STAR Portfolio Manager.<br />
Buildings that achieve a score of 75 or<br />
before<br />
cleaned<br />
higher within Portfolio Manager can<br />
become ENERGY STAR certified. More<br />
information at<br />
www.energystar.gov/<br />
CertificationNation.<br />
The EPA also<br />
announced that<br />
the ENERGY<br />
STAR program<br />
has expanded. For<br />
years, office buildings<br />
have been<br />
able to receive<br />
ENERGY STAR<br />
scores—now multifamily properties<br />
can, too. The EPA has unveiled a 1-100<br />
ENERGY STAR scoring system for<br />
multifamily housing properties, which<br />
provides a simple metric to understand<br />
the energy performance of a multifamily<br />
housing property compared to<br />
similar properties nationwide. Using<br />
the ENERGY STAR score, owners and<br />
managers of multifamily buildings can<br />
The U.S. Environmental Protection<br />
Agency has unveiled<br />
a 1-100 ENERGY STAR<br />
scoring system for multifamily<br />
housing properties,<br />
which provides a simple<br />
metric to understand<br />
the energy performance<br />
of a multifamily<br />
housing property<br />
compared to similar<br />
properties nationwide.<br />
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State of the art equipment for more refined application<br />
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lined<br />
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quickly understand how their portfolios<br />
are performing and which properties<br />
to target for cost-saving improvements.<br />
Just as with office buildings, a<br />
score of 50 is median, and a score of 75<br />
or higher means a property is among<br />
the top quartile of energy performers<br />
and may be eligible for ENERGY STAR<br />
certification. The ENERGY STAR score<br />
for multifamily housing is based on<br />
data compiled through the Fannie Mae<br />
Multifamily Energy and Water Market<br />
Research Survey. At press time, the EPA<br />
planned to recognize the first group<br />
of existing ENERGY STAR-certified<br />
multifamily properties with a national<br />
press release this fall. B<br />
12 THE BOMA MAGAZINE NOVEMBER | DECEMBER 2014
NOT ONLY DOES A TRANE ® WATER-COOLED VRF SYSTEM WORK MORE EFFICIENTLY USING LESS ENERGY, it also plays nice with Mother Nature.<br />
Using water as the energy exchange medium, the system may utilize stable ground temperatures to provide simultaneous heating and<br />
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High-performance, variable-speed compressors deliver industry-leading efficiency ratings of up to 30.1 IEER and 27.4 SCHE while providing<br />
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Ready to boost your efficiency Scan the code or visit Trane.com/VRF to see more.<br />
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is a world leader in creating and sustaining safe, comfortable and effi cient environments. © 2014 Ingersoll-Rand Company.
IN THE STATES<br />
BY SCOTT A. MORRIS<br />
PILOT BUILDING RE-TUNING TRAINING<br />
SESSIONS OFFERED<br />
In partnership with the U.S. Department<br />
of Energy and the Consortium of<br />
Building Energy Innovation (CBEI), BOMA<br />
International has created<br />
two free pilot training<br />
sessions on building<br />
re-tuning, a no- to lowcapital<br />
cost systematic<br />
approach to identifying<br />
and correcting building<br />
operational problems<br />
that lead to energy<br />
waste. The process includes<br />
small repairs, such as replacing<br />
faulty sensors or caulking openings<br />
in the building envelope, as well<br />
as such adjustments as timing<br />
thermostats for actual occupancy<br />
patterns, which can lead to a<br />
reduction of five to 20 percent<br />
in a building’s overall energy<br />
consumption. Rather than retrocommissioning<br />
a building every<br />
few years, a building operator can<br />
re-tune the building regularly<br />
throughout the year, reducing<br />
“drift” of the building and<br />
maintaining ongoing energy<br />
savings.<br />
The first pilot session was held<br />
in Milwaukee on October 29-30 in<br />
Rather than<br />
retro-commissioning<br />
a building<br />
every few<br />
years, a building<br />
operator can retune<br />
the building regularly<br />
throughout the<br />
year, reducing “drift”<br />
of the building and<br />
maintaining ongoing<br />
energy savings.<br />
partnership with BOMA/Wisconsin, and the second two-day<br />
session is scheduled to be held in partnership with BOMA/<br />
San Diego in late February 2015. Each training session is<br />
Introducing a new line of<br />
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For more information:<br />
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14 BOMA MAGAZINE NOVEMBER | DECEMBER 2014
designed to be an in-depth technical<br />
course ideally suited for individuals<br />
directly responsible for the ongoing<br />
and hands-on operation of a building<br />
or portfolio of properties. The sessions<br />
have been planned as “train-thetrainer”<br />
programs, meaning many session<br />
attendees not only will be able to<br />
utilize the skills and knowledge learned<br />
in their own buildings, but they also<br />
will be able to conduct their own training<br />
sessions on building re-tuning.<br />
BOMA International’s hope is<br />
that, once both pilot sessions are<br />
completed and the curriculum<br />
is fine-tuned and finalized, this<br />
program can be deployed through<br />
BOMA’s network of local associations<br />
across the country. For more<br />
information, contact BOMA International’s<br />
Director of State and<br />
Local Affairs Scott Morris at<br />
smorris@boma.org.<br />
nd ½ wide by<br />
height.<br />
CALIFORNIA GOVERNOR<br />
SIGNS MANDATORY SICK<br />
LEAVE LEGISLATION<br />
In September, Governor Jerry<br />
Brown of California signed Assembly<br />
Bill 1522, also known as the<br />
“Healthy Workplaces, Healthy<br />
Families Act of 2014.” The bill<br />
requires nearly all California<br />
employers to provide a minimum<br />
of three paid sick days per year to<br />
workers who meet certain requirements.<br />
The bill goes into effect on<br />
July 1, 2015, and<br />
The new<br />
statewide<br />
sick leave<br />
guarantee<br />
affects nearly<br />
40 percent<br />
of California’s<br />
workforce,<br />
roughly 6.5<br />
million people<br />
who currently<br />
are not paid if<br />
they stay home<br />
when sick.<br />
it will be the<br />
nation’s largest<br />
expansion of<br />
this employee<br />
benefit.<br />
California is<br />
the second state<br />
in the nation,<br />
following Connecticut,<br />
to<br />
enact a statewide<br />
sick leave<br />
guarantee.<br />
The new law<br />
affects nearly<br />
40 percent of<br />
California’s workforce, roughly 6.5 million<br />
people who currently are not paid<br />
if they stay home when sick.<br />
BOMA California opposed this bill,<br />
stating that “it would add to the already<br />
growing number of costs for California<br />
businesses by requiring both small<br />
and large employers to provide their<br />
employees with mandatory, protected,<br />
paid sick leave.” BOMA California<br />
added that the expansion of sick leave<br />
to all employees—including temporary,<br />
seasonal and part-time employees—<br />
will create a huge burden on employers<br />
in the commercial real estate industry.<br />
BOMA California joined the California<br />
Chamber of Commerce, the<br />
California State Council of the Society<br />
of Human Resources Management and<br />
many other business groups in unsuccessfully,<br />
but very diligently, opposing<br />
this legislation. B<br />
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BOMA MAGAZINE 15
Carrier<br />
10:34 AM<br />
UP TO CODE<br />
BY RON BURTON<br />
CONSOLIDATION<br />
OF GREEN CODE<br />
DEVELOPMENT<br />
The International Code Council (ICC)<br />
and ASHRAE (formerly the American<br />
Society of Heating, Refrigerating and<br />
Air Conditioning Engineers), developers<br />
of the two current national model green<br />
building codes and standards for commercial<br />
buildings, have announced they<br />
will cooperate in developing a single<br />
document in the future.<br />
BOMA International, which had urged both organizations<br />
to merge their efforts on green codes for some time,<br />
congratulates ICC and ASHRAE, as well as the other organizations<br />
that were a part of the effort to reach this agreement:<br />
the U.S. Green Building Council (USGBC), the American<br />
Institute of Architects (AIA) and the Illuminating Engineering<br />
Society of North America (IESNA). Details of this<br />
cooperative agreement will be finalized soon, but the intent<br />
is for ICC to continue developing the administrative provisions<br />
in the joint code with ASHRAE, taking responsibility<br />
for the development of the technical content spearheaded by<br />
the Standard 189.1 development committee.<br />
BOMA International holds an organizational voting membership<br />
on the ASHRAE 189.1 committee and will continue<br />
its efforts to ensure the concerns of the commercial real<br />
estate industry are addressed. The USGBC also intends to<br />
recognize the joint document as part of the base requirements<br />
in the development of the LEED program. It is anticipated<br />
that the joint code will roll out as the 2018 edition of<br />
the International Green Construction Code (IgCC).<br />
1<br />
1<br />
Carrier<br />
10:34 AM<br />
TENANT REQUESTS<br />
All Properties<br />
HVAC<br />
9550 Warner Ave<br />
East Tower - 01<br />
1329765 | DUE Sept 15, 2014 04:26 PM<br />
HVAC<br />
9550 Warner Ave<br />
East Tower - 01 - 101<br />
1509163 | DUE Sept 24, 2014 12:52 PM<br />
Date<br />
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TENANT REQUESTS<br />
5<br />
3<br />
1<br />
Electrical<br />
1800 Commerce Court<br />
South Building - Main Lobby<br />
1535269 | DUE Sept 17, 2014 09:21 AM<br />
HVAC<br />
9550 Warner Ave<br />
East Tower - 01 - Men’s Washroom<br />
1329765 | DUE Sept 17, 2014 12:26 PM<br />
Locks<br />
1800 Commerce Court<br />
South Building - Main Lobby<br />
37177314 | DUE Sept 18, 2014<br />
3<br />
1<br />
5<br />
3<br />
1<br />
SORT<br />
Property<br />
BY Select<br />
Access Card - Activation<br />
650 Fifth Ave<br />
General Building - Inside<br />
37457663 | DUE SEPT 15, 2014<br />
HVAC - Too Cold<br />
650 Fifth Ave<br />
01 South - 165<br />
37534107 | DUE SEPT 15, 2014<br />
Light Bulbs & Ballasts<br />
650 Fifth Ave<br />
North Tower - 712<br />
3758885 | DUE SEPT 18, 2014<br />
Loading Dock/Service Elevator<br />
650 Fifth Ave<br />
Garage - Main Level<br />
37457663 | DUE SEPT 18, 2014<br />
Locks<br />
1800 Commerce Court<br />
South Building - Main Lobby<br />
37177314 | DUE SEPT 29, 2014<br />
PM<br />
Induction CPM<br />
9550 Warner Ave<br />
1 East Tower - Other<br />
1625257 | DUE Sept 15, 2014<br />
Equipment<br />
Name<br />
Induction Unit<br />
System HVAC<br />
Make<br />
Worthington<br />
Model W-438944<br />
Asset/Tag # A19384<br />
Serial<br />
FSB36LRFABSAAA1<br />
Details Static Pressure at<br />
Nozzle: .5” : 92<br />
UNITS EACH<br />
FLOOR 2-49<br />
EXCEPT MACHINE<br />
FLOORS<br />
10:34 AM 3G<br />
Work Order # 1022 Top of page<br />
HVAC - Too Hot<br />
Bottom of page<br />
Rosseau Park Place Task 1<br />
Rosseau Park North Accept<br />
02<br />
Reject<br />
202<br />
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Delayed<br />
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Priority: 5<br />
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NORTH CAROLINA ENERGY<br />
CODE LEGISLATION<br />
REFLECTS TREND<br />
Recently introduced legislation in the<br />
North Carolina General Assembly<br />
would allow for an alternate path for<br />
energy-conservation code compliance<br />
for alterations and additions to<br />
commercial buildings. This alternative<br />
would allow the use of the 2009<br />
North Carolina Energy Conservation<br />
Code, in lieu of the current 2012 edition,<br />
and would apply to buildings<br />
that received a certificate of occupancy<br />
prior to January 1, 2012. The<br />
legislation reflects concerns that<br />
the imposition of the much more<br />
stringent 2012 code requirements<br />
can be prohibitively expensive for<br />
projects in many existing buildings—<br />
sentiments that have been echoed<br />
in a number of major jurisdictions<br />
throughout the country. This also<br />
parallels concerns expressed by<br />
numerous municipalities and states<br />
in the development of national<br />
model energy codes by the International<br />
Code Council (the International<br />
Energy Conservation Code<br />
[IECC]) and ASHRAE (Standard<br />
90.1) that these codes increasingly<br />
represent a set of “stretch” requirements<br />
that are more akin to what is<br />
being considered for green building<br />
and other above-code programs.<br />
an online resource to assist its local<br />
associations and members in becoming<br />
active in the state and local code-adoption<br />
process—the Codes Development<br />
and Adoption Toolkit, which is available<br />
at www.boma.org/CodesToolkit.<br />
The toolkit includes a wealth of materials<br />
to assist with building professionals’<br />
efforts to effectively represent the<br />
interests of the commercial real estate<br />
industry in their specific areas, including<br />
information on understanding<br />
the adoption process, how to organize<br />
efforts, a list of key code officials in<br />
the area and suggested amendments<br />
to deal with problem areas in the new<br />
codes. Publications outlining the major<br />
changes in the 2012 and 2015 codes<br />
also are available from ICC at<br />
shop.iccsafe.org.<br />
For any questions, please contact<br />
BOMA International’s Director of<br />
Codes and Standards Kevin Fry at<br />
kfry@boma.org. B<br />
idea: Sealants and<br />
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STATE AND LOCAL<br />
ADOPTION OF 2015<br />
ICC CODES<br />
A number of municipalities and states<br />
have begun the process of adopting<br />
the latest edition of the International<br />
Codes, the 2015 family of ICC<br />
model codes. While some jurisdictions<br />
adopted the 2012 codes, most<br />
currently utilize the 2009 editions,<br />
so consideration of the 2015 editions<br />
will involve changes spanning<br />
two code-development cycles<br />
in most areas. Virtually all state and<br />
local adoption procedures incorporate<br />
modifications to the model<br />
codes through an adoption process<br />
that is open to public comment and<br />
participation.<br />
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BOMA MAGAZINE 17
GET TO KNOW...<br />
LACEY H.C. WILLARD, ESQ., RPA<br />
Lacey Willard is a director in CBRE’s<br />
Strategic Accounts division and is<br />
based out of Tampa, Florida. She recently<br />
completed a term as president of BOMA/Greater Tampa Bay<br />
and currently serves as president of BOMA Florida and on<br />
the Board of Directors for the BOMA Southern Region. Willard<br />
also has served as vice chair of BOMA International’s<br />
State Government Affairs Committee and co-chair of BOMA<br />
International’s annual conference<br />
Career Day. She was elected<br />
to BOMA International’s Executive<br />
Committee in June. Prior to working<br />
at CBRE, Willard served as contracting<br />
officer and senior property<br />
manager for the U.S. General Services<br />
Administration (GSA).<br />
How did you get your start<br />
in commercial real estate<br />
When I was an undergraduate<br />
student at Purdue University,<br />
I majored in political science and<br />
psychology, and I was very involved<br />
in student government. The dean<br />
EXECUTIVE COMMITTEE MEMBER,<br />
who supervised the student government<br />
program received a call<br />
WORK-LIFE INTEGRATION<br />
ENTHUSIAST<br />
from a GSA recruiter, and he sent<br />
my résumé along. As someone<br />
interested in government, a job with the agency that makes<br />
all of the real estate space decisions for the federal government<br />
seemed like the perfect fit.<br />
During your time with the GSA, you won an<br />
International TOBY ® Award, right<br />
Yes! While at the GSA, I managed eight U.S. courthouses<br />
in addition to overseeing federal government leases. In<br />
2006, one of these courthouses, the U.S. Courthouse in Fort<br />
Myers, Florida, won an International TOBY Award in the<br />
Government Building category. There’s a wonderful story<br />
behind the win. When the TOBY Awards judges visited the<br />
courthouse for the official tour, our tour guide was a U.S.<br />
Marshal with a great sense of humor who decided he would<br />
lock all of the TOBY judges in the courthouse holding cells.<br />
I thought to myself, “Well, there goes any chance we have of<br />
winning,” but the tour must have made quite an impression<br />
because we did take home the TOBY Award in the end!<br />
After working for the GSA, you joined the<br />
team at CBRE. Tell us about that.<br />
For the past several years, I had coordinated the receivership<br />
and distressed asset portfolio management program<br />
for CBRE in Florida. I had just graduated from Stetson<br />
University’s joint law degree and MBA program in the<br />
midst of the market crash and CBRE needed someone who<br />
understood both commercial real estate operations and<br />
the legal side of things. It just so happened that my skillset<br />
matched this very niche area. However, I always knew there<br />
was a limited shelf life for this particular program, which<br />
coincided with improving market fundamentals to the point<br />
where instances of foreclosures decreased. Recently, CBRE<br />
picked up a unique national assignment—a 41.2 millionsquare-foot<br />
portfolio that is one of the largest third-party<br />
property management assignments in the U.S. commercial<br />
real estate industry. I’ve been thrilled to transition into a<br />
new role at CBRE within our Strategic Accounts division<br />
working on this national assignment.<br />
You’ve been involved with BOMA International’s<br />
State Government Affairs Committee<br />
for many years. What is the biggest legislative<br />
issue facing Florida right now<br />
We currently are fighting a $2 billion sales tax on commercial<br />
leases here. Florida is the only state to impose this<br />
tax, but I learned that Arizona had phased out a similar<br />
sales tax about 10 years ago. Through BOMA connections,<br />
I was able to get in touch with the former head of the<br />
Arizona Department of Revenue, who just so happened to<br />
be a BOMA member, and we were able to have a very valuable<br />
conversation with him that really has helped inform<br />
our efforts here in Florida. This collaboration through the<br />
BOMA network has just been so beneficial, and there’s<br />
definitely a camaraderie among advocacy folks. It has been<br />
great to be able to reach out to my counterparts in other<br />
BOMA state and local advocacy groups on these issues<br />
because we know the impact these issues have—not just on<br />
bottom lines, but on the viability of the entire commercial<br />
real estate industry.<br />
What is something most people don’t know<br />
about you<br />
Well, attendees at recent BOMA conferences may already<br />
know this, but I have two little girls—a two-year-old and<br />
a four-year-old—and they travel with me to almost every<br />
BOMA event I attend. In fact, I flew with my youngest<br />
daughter all the way to Hawaii for the 2013 Winter Business<br />
Meeting when she was only a few months old. I’m a<br />
big believer in the concept of work-life integration, not the<br />
typical notion of work-life balance. My daughters have a lot<br />
of fun tagging along with me to the different meetings—and<br />
they just might end up becoming the industry’s youngest<br />
property managers! B<br />
18 BOMA MAGAZINE NOVEMBER | DECEMBER 2014
Building Performance<br />
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• Safety walkway pads and strips<br />
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• UnaClad metal roof and<br />
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• Red Shield warranties and<br />
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firestonebpco.com/bpuonline<br />
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NEWS & NOTES<br />
REITS OUTPERFORM<br />
IN PENSION FUNDS<br />
A<br />
new study that analyzed data from<br />
more than 300 pension funds found<br />
listed equity real estate investment trusts<br />
(REITs) to be the top-performing asset<br />
class overall. While private equity had a<br />
higher gross return, on average, than<br />
listed REITs, the high fees associated<br />
with private equity gave REITs a greater<br />
realized net return.<br />
The study was conducted by CEM Benchmarking Inc. and<br />
Runs in:<br />
analyzed the period between 1998<br />
and 2011. During that time, listed<br />
equity REITs delivered higher<br />
net total returns than any other<br />
alternative asset class, driven by<br />
high and stable dividend payouts,<br />
long-term capital appreciation<br />
and a significantly lower<br />
fee structure compared to<br />
private equity and private real<br />
estate funds.<br />
Pension plans included in the<br />
study increased their investments<br />
Mar/Apr, July/Aug, Nov/Dec<br />
During the study’s<br />
time frame, listed<br />
equity REITs<br />
delivered higher<br />
net total returns<br />
Boma<br />
than any other<br />
Salsbury alternative Industries asset<br />
class.<br />
in alternative assets, including real estate, by nearly 400<br />
percent, on average, over the study’s time frame. Despite this,<br />
the study concluded that further increasing the allocations<br />
to long-duration fixed income, listed equity REITs and other<br />
real assets would have had the largest positive impacts on<br />
plan performance.<br />
The complete study can be found on www.reit.com.<br />
20 BOMA MAGAZINE NOVEMBER | DECEMBER 2014<br />
1/2 Page Horizontal
SURVEY SAYS TENANTS HAVE LOW<br />
TOLERANCE FOR PESTS<br />
Half of all<br />
tenants will start<br />
looking for a new<br />
space after<br />
multiple pest<br />
sightings.<br />
Pests are a common issue in offices and<br />
a source of anxiety for office managers,<br />
according to survey findings released by pest<br />
control leader Orkin and BOMA International.<br />
The survey,<br />
which polled office,<br />
building and facility<br />
managers in a<br />
variety of property<br />
types, revealed that<br />
89 percent of office<br />
tenants have seen<br />
at least one pest in<br />
the past 12 months. When it comes to reporting<br />
pest sightings, almost one-half of office tenants<br />
will notify building management after a single<br />
pest sighting, and that number jumps up to 83<br />
percent by the time the second sighting occurs.<br />
Although it is likely that office tenants expect to<br />
see pests on occasion, the study shows that half<br />
will start looking for a new space after multiple<br />
pest sightings.<br />
Read the full report at bit.ly/1w5LzuS.<br />
BOMA MOURNS PASSING<br />
OF HENRY PALM<br />
It is with sadness that we note the peaceful passing of BOMA Life<br />
Member Henry “Hank” Palm, RPA, on September 1, 2014.<br />
Hank became a founding member of BOMA/<br />
Greater Hartford while working as the director of the<br />
Real Estate Division of Travelers Insurance Company,<br />
where he enjoyed a 32-year career until his retirement.<br />
He was an early member of BOMA International’s<br />
National Advisory Council, and he also was active on<br />
many BOMA committees centered on advocacy and<br />
building and facility management.<br />
Hank joined the BOMI International (then known as the Building<br />
Owners and Managers Institute International) Board of Trustees in<br />
1982, was elected secretary/treasurer in 1984 and progressed to vice<br />
chairman in 1986. He was elected chairman in June 1988 for a twoyear<br />
term. Following his chairmanship, he led the Nominating Committee.<br />
The BOMI Board of Trustees honored his 10-year tenure with<br />
a “Life Director” title following his retirement from the Board.<br />
Prior to joining Travelers, Hank had a 20-year career as a U.S.<br />
Naval civil engineer in various domestic and overseas locations, and<br />
he retired with the rank of Lieutenant Commander. B<br />
BOMA MAGAZINE 21
LEGAL-EASE<br />
BY KURT R. ANDERSON, ESQ., AND EDWARD I. LEEDS, ESQ.<br />
COMPLYING WITH<br />
THE EMPLOYER<br />
MANDATE UNDER<br />
THE AFFORDABLE<br />
CARE ACT<br />
Beginning in 2015, many employers,<br />
including many commercial real<br />
estate ownership and management<br />
companies, will need to comply with<br />
one of the most significant healthcare<br />
reforms introduced by the Affordable<br />
Care Act (ACA): the employer mandate.<br />
Generally speaking, the employer<br />
mandate requires “large employers”<br />
to offer adequate, affordable group<br />
health coverage to full-time employees<br />
or pay an assessment under the<br />
Internal Revenue Code. While this<br />
new requirement can be complicated,<br />
employers will need to address certain<br />
basic questions, as follow.<br />
Does the employer mandate apply to my<br />
company<br />
The employer mandate applies to “large” employers that<br />
employ 50 [1] full-time employees. Closely related companies<br />
will typically be treated as a single employer.<br />
An employee is full time if he or she worked, on average,<br />
at least 30 hours per week during the preceding calendar<br />
year. Solely for determining whether an employer is subject<br />
to the mandate, the hours worked by part-time employees<br />
are converted to “full-time equivalent employees.”<br />
Which employees must be offered<br />
coverage<br />
To determine who must be offered group health coverage at<br />
your company, consider that:<br />
• Only full-time employees must be offered coverage. The<br />
mandate does not apply to part-time employees (those<br />
working, on average, fewer than 30 hours per week).<br />
• The mandate requires coverage for “common-law employees.”<br />
There is no definitive test for determining if an<br />
individual is a common-law employee or independent<br />
contractor, but you should evaluate the degree of control<br />
your company exercises over the individual’s activities.<br />
• If your company uses a temp agency, professional<br />
employer organization or other staffing firm to engage<br />
workers, it may be difficult to determine whether those<br />
workers are your company’s common-law employees. As<br />
described in the regulations, you may address this situation<br />
by introducing appropriate terms into your company’s<br />
staffing firm contracts.<br />
• Beginning in 2016, coverage also must be offered to<br />
dependents of full-time employees. Your company is<br />
not required to pay any portion of the cost of dependent<br />
coverage.<br />
What must my company do to avoid paying<br />
an assessment<br />
If your company is large, there are two different tests it must<br />
meet to avoid paying an assessment.<br />
• Under the first test, your company must offer at least 95<br />
22 BOMA MAGAZINE NOVEMBER | DECEMBER 2014
percent of its full-time employees the opportunity to enroll in<br />
“minimum essential coverage.” [2] Most insured and all selffunded<br />
group health coverage will qualify as minimum essential<br />
health coverage.<br />
• Under the second test, your company must offer each of its<br />
full-time employees coverage that meets certain standards for<br />
value and affordability. Coverage will be deemed “affordable”<br />
if an employee contributes no more than 9.5 percent of his or<br />
her household income toward the cost of coverage. Regulations<br />
provide special rules and certain safe harbors for determining<br />
affordability.<br />
SPOT-ON<br />
HEAT<br />
What if my company fails to meet the tests under<br />
the employer mandate<br />
The assessment imposed depends on whether your company fails<br />
the first test or the second.<br />
• For 2015, the assessment for failing the first test can be severe<br />
because it is based on the total number of your company’s fulltime<br />
employees, whether or not they are offered coverage. The<br />
penalty is determined each month and will equal $173.33 times<br />
the number of full-time employees (minus 30). The penalty<br />
applies only if at least one of your full-time employees gets<br />
government-subsidized individual coverage through an ACA<br />
marketplace. An employee who is not offered medical coverage<br />
will often qualify for a subsidy.<br />
• For 2015, the monthly assessment for failing the second test<br />
is based on the number of full-time employees who are not<br />
offered affordable coverage of appropriate value and who actually<br />
obtain subsidized coverage through an ACA marketplace<br />
times $260.<br />
How does my company notify the government<br />
about its compliance<br />
In a process designed to be similar to the process for reporting<br />
income on IRS Form W-2, employers must provide information<br />
about their compliance with the employer mandate. If your<br />
company employs more than 50 full-time employees or full-time<br />
equivalents, it will need to distribute IRS Form 1095-C to employees<br />
and then provide that information, with a transmittal form<br />
(IRS Form 1094-C), to the IRS. The first of these forms must be<br />
filed in early 2016 to report on the 2015 year. You should consider<br />
how to capture information needed to meet the reporting requirements<br />
well in advance. B<br />
ABOUT THE AUTHORS: Kurt R. Anderson and Edward I. Leeds<br />
are employee benefits lawyers in the Philadelphia office of Ballard<br />
Spahr LLP. Learn more at www.ballardspahr.com.<br />
800.367.8675<br />
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[1]<br />
For 2015, employers with at least 50 but fewer than 100 full-time employees may obtain<br />
an exemption from the mandate.<br />
[2]<br />
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employees.<br />
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IG<br />
IG<br />
ATA<br />
REWARDS<br />
BY PHIL MOBLEY<br />
Using Analytics<br />
to Change the<br />
Way Commercial<br />
Properties Operate<br />
Big data is here, and it is only getting bigger. According to a recent<br />
report from commercial real estate giant JLL, entitled Data-centric<br />
CRE: A competitive imperative, the total amount of available digital<br />
data is expected to grow tenfold by 2020. Within the realm of commercial<br />
real estate, data collection is advancing on multiple fronts, creating weighty<br />
implications for building owners and managers in their quest to deliver an excellent<br />
working environment.<br />
It is not only the volume of data that is transforming commercial real estate. The<br />
increasing immediacy and accessibility of data—not to mention the changing definition<br />
of what information constitutes “data” in the first place—has contributed to the<br />
aura of its expansiveness. This might seem overwhelming, but harnessed properly, the<br />
data explosion can help property management teams perform better and property<br />
systems operate more efficiently. It can even change the way buildings are used.<br />
BLOCKING BETTER, TACKLING FASTER<br />
As senior vice president and leader of Cushman & Wakefield | Thalhimer’s threestate<br />
property management operation, Curtis Mummau is focused on a differentiated<br />
24 BOMA MAGAZINE NOVEMBER | DECEMBER 2014
service offering. “The vision I’ve always<br />
had, from pagers and bag phones to<br />
smartphones and tablets, is to escape<br />
commoditization,” says Mummau, when<br />
explaining his viewpoint of digital information<br />
management. His latest initiative<br />
is real-time, two-way data access for his<br />
teams in the field. “We’re going to be rolling<br />
out tablets to our teams later this year.<br />
We aren’t trying to take our people out of<br />
the process; on the contrary, we want to<br />
make them more efficient.”<br />
Mummau’s team relies on a platform<br />
built by Building Engines, a provider of<br />
web- and mobile-based property management<br />
software solutions. The software<br />
can capture and link data in four main<br />
categories: tenant service (work orders,<br />
resource scheduling, handbooks and<br />
documents); equipment (maintenance<br />
manuals, service records and projecttracking<br />
documentation); risk management<br />
(visitor access, fire and life safety,<br />
incident tracking and insurance information);<br />
and communications (emergency<br />
bulletins and building status). “There<br />
has been a progression, even in the last<br />
year, in terms of the amount of data and<br />
the ability of our people to access it in<br />
real-time,” explains Mummau. “A building<br />
engineer can glance at a tablet and<br />
know everything he or she needs to know<br />
before a meeting.”<br />
The ability to view and analyze data in<br />
the field is only the beginning of better<br />
building operations. Mummau views his<br />
property teams as crucially valuable for<br />
the data they produce at the properties,<br />
and a mobile application facilitates their<br />
ability to capitalize on this data immediately.<br />
As an example, Mummau describes<br />
a basic app-based inspection form with a<br />
series of “yes/no” questions for a property<br />
manager or engineer: “Does the front<br />
entrance look presentable” “Is the lobby<br />
area clean” “Are the elevators in working<br />
order” If the answer is “yes,” then the<br />
team has a status report with minimal<br />
effort. If it is “no,” the app is programmed<br />
to ask a series of follow-up questions<br />
that, depending on the answer, can automatically<br />
generate a work order, contact<br />
a vendor or escalate an issue to an owner<br />
or asset manager. The linked, mobileaccessible<br />
platform enables a consistent<br />
timeliness that would have been impossible<br />
even a few years ago. For his part,<br />
Mummau also envisions eventually<br />
granting tenants a level of access to selfreport<br />
issues from a mobile platform.<br />
THE NEW BENCHMARKING<br />
The utility of mobile-enabled data entry<br />
does not end at the property. The bigger<br />
the data set, the more valuable it is as<br />
an entity unto itself. For Scott Sidman,<br />
senior vice president at Building Engines,<br />
unlocking this value is a strategic<br />
initiative.<br />
Sidman emphasizes something<br />
familiar to many real estate practitioners:<br />
benchmarking. He recommends<br />
that clients take a three-pronged<br />
approach to benchmarking operational<br />
performance. First is the internal target<br />
or standard that management and<br />
engineering teams are taught. Second is<br />
an intra-portfolio comparison of property<br />
and team performance. Third—<br />
and most critically from a competitive<br />
standpoint—is a benchmark to similar<br />
buildings in the marketplace by using<br />
resources like BOMA International’s<br />
annual Experience Exchange Report®<br />
(EER) for expenses (eer.boma.org) or<br />
digital platforms like the one offered<br />
by Building Engines for operational<br />
efficiency.<br />
Building Engines is also investing in a<br />
newer, less traditional approach to data<br />
mining. Inputs, such as response times,<br />
completion times and customer satisfaction<br />
ratings, are what Sidman calls<br />
“structured” data. They are predefined<br />
concepts and can be captured and stored<br />
in a standardized format. “Unstructured”<br />
data, on the other hand, is everything<br />
else: text comments, for example, or the<br />
soup of operational metrics spit out by<br />
networked systems and devices (the<br />
so-called “Internet of Things,” as referenced<br />
in JLL’s report). “Without some<br />
high-level analytics, this information<br />
is just noise,” says Sidman. “It’s a little<br />
overwhelming to a lot of real estate firms<br />
right now. Deriving meaning from the<br />
patterns in unstructured data requires<br />
developing hypotheses and testing theories.”<br />
Though not easy to analyze, Sidman<br />
argues that it is worthwhile: “This<br />
ONCE A<br />
MAINTENANCE<br />
TEAM<br />
UNDERSTANDS<br />
THAT ANALYTICS<br />
ALLOW THEM TO<br />
THINK IN TERMS<br />
OF ROOT CAUSES<br />
AND IDENTIFY<br />
SOLUTIONS<br />
USING<br />
PROGRAMMING,<br />
SEQUENCING<br />
AND CONTROLS,<br />
IT IS NOT<br />
UNCOMMON<br />
TO REALIZE<br />
OPERATIONAL<br />
SAVINGS OF UP<br />
TO 30 PERCENT.<br />
BOMA MAGAZINE 25
is how you know if your tenants are really satisfied or if<br />
your building is really operating optimally.” Armed with<br />
this degree of understanding from data, management<br />
teams can offer better service.<br />
OPTIMIZING TO THE RIGHT DRIVER<br />
“There’s a huge gap between saying ‘We’re going to save<br />
20 percent in operating expenses by the year 2020!’, and<br />
actually developing an action plan to get there.” So says<br />
Jim Meacham, principal at Altura Associates, an energy<br />
management and sustainability consultancy. His firm<br />
helps real estate organizations “get there” by using data<br />
they may not even realize they have. “To drive savings<br />
here, commercial real estate companies don’t necessarily<br />
need more data. They instead need better ways to make<br />
decisions with the data that already exists.”<br />
There’s No Room for Guesswork...<br />
As the rise in industry “big data” shows, there’s no room for guesswork in any<br />
facet of commercial real estate. This is doubly true, however, when it comes<br />
to understanding the critical wants, needs and expectations of your office tenants.<br />
But how can you really know what they want<br />
Based on the results of a global survey of office tenants, BOMA<br />
International’s What Office Tenants Want contains valuable, quantifiable<br />
data about what tenants truly value most in a property and what their<br />
collective feedback means for future trends in commercial real estate.<br />
Covering issues from sustainability and maintenance practices to<br />
building amenities and services, this comprehensive research report takes<br />
the guesswork out of the equation with the information you need to foster<br />
tenant relationships today—and position your property for tenant-driven<br />
success in the future.<br />
Order your copy now at store.boma.org.<br />
Used well, modern building automation systems offer<br />
the data necessary to isolate, diagnose and repair quickly<br />
the kinds of problems that only recently would have<br />
confounded even the best engineers for months. “The<br />
opportunity is huge,” Meacham says, “but there are so<br />
many different levels to these systems. It really requires an<br />
analytics platform to sort through it all.”<br />
Meacham walks through a simple example involving<br />
one of the highest-profile organs in a building: the<br />
chiller plant. “A chiller plant doesn’t have a lot of moving<br />
parts, so optimizing it at the plant level is fairly simple,”<br />
explains Meacham. “In the past, that is how everyone did<br />
it. The problem is that it may be serving several hundred<br />
individual zones, and that is what is generating demand.”<br />
Sifting through data on hundreds of climate control zones<br />
is next to impossible for a building engineer, but advanced<br />
analytics render it feasible.<br />
Suppose, suggests Meacham, that one of the zones is<br />
starved for air because of a malfunctioning damper. As<br />
a result, the tenants in that zone adjust the thermostat,<br />
making the “optimized” system work harder than it needs<br />
to. This is obviously inefficient, and the double whammy<br />
is that the tenants are still uncomfortable. “That damper<br />
issue is really hard for an engineer to find,” comments<br />
Meacham. “But the data is there, and analytics can find it.<br />
Then the real, underlying issue can be addressed.”<br />
According to Meacham, the payoff is immediate.<br />
“It’s usually not about equipment upgrades; it’s usually<br />
about controls,” he says. Once the maintenance team<br />
understands that analytics allow them to think in terms<br />
of root causes and identify solutions using programming,<br />
sequencing and controls, it is not uncommon to realize<br />
operational savings of up to 30 percent. And, since it is<br />
increasingly rare that building systems lack the datatracking<br />
capability necessary for this process, the value is<br />
particularly high for Class B and C buildings that may not<br />
have the largest management teams or operating budgets.<br />
Not only is “big data” here, it has been democratized.<br />
REPROGRAMMING SPACE USE<br />
As occupiers shift their thinking about real estate from<br />
efficiency to effectiveness, data analysis can have a profound<br />
impact on how building owners and managers serve<br />
them. “Office space densification was an exercise in cost<br />
savings, but there were crimes committed against productivity<br />
in the process,” notes Bernice Boucher, managing<br />
director and head of Workplace Strategy in the Americas<br />
for JLL. “The tenants that owners and managers want to<br />
attract are looking for better ways to engage their space.”<br />
This means looking at real estate not just as a cost, but as<br />
a facilitator of employee attraction, retention, collaboration<br />
and innovation.<br />
Addressing this need properly requires more than just a<br />
26 22 BOMA MAGAZINE NOVEMBER JULY | AUGUST | DECEMBER 2013 2014
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DATA IS<br />
GROWING,<br />
FROM ITS<br />
COLLECTION<br />
SOURCES<br />
TO ITS<br />
APPLICATIONS.<br />
BUT THE END<br />
GOAL OF<br />
IMPROVING<br />
THE CUSTOMER<br />
EXPERIENCE IS<br />
THE CONSTANT.<br />
few interviews with corporate real estate<br />
executives. The right solution depends on<br />
figuring out how individual workers actually<br />
use space every day. “We talk about<br />
three metrics in an office space,” explains<br />
Boucher. “‘Capacity’ is the number of seats.<br />
‘Occupancy’ is the number assigned. The<br />
key metric, though, is ‘utilization,’ or what<br />
space is being used right now.”<br />
Data from the Internet of Things now<br />
offers an unprecedented ability to focus<br />
on this third metric. Keycards capture<br />
the number of workers in a suite, and<br />
motion detectors can determine when<br />
they are at their desks. Heat indicators<br />
can approximate how many people are in<br />
a conference room at a given time. One<br />
of Boucher’s colleagues has even seen a<br />
carpet with embedded sensors that capture<br />
foot traffic. Individually, these items<br />
offer convenience and the efficiency of<br />
fast-reacting light switches and thermostats.<br />
But their collective potential is far<br />
more when combined with a robust data<br />
warehouse—and advanced analytics.<br />
Whether through hiring, outsourcing<br />
or creating alliances, companies like JLL<br />
are scrambling to plug the analytics gap<br />
in their capabilities, competing for the<br />
best and brightest data scientists with the<br />
likes of hedge funds, technology firms<br />
and pharmaceutical companies. Only<br />
then can they take full advantage of the<br />
data, answering more detailed questions<br />
about the space they serve: How much of<br />
each different type of space do tenants<br />
really need When and where exactly<br />
do they need it With enough data history,<br />
they can build predictive models of<br />
utilization and program building systems<br />
accordingly. For example, the HVAC system<br />
can control the climate of a conference<br />
room better if it “knows” there will<br />
be 25 people in the room every second<br />
Tuesday of the month at noon.<br />
Gathering and analyzing individualized<br />
data on such a scale is powerful, but<br />
it also raises privacy concerns for some<br />
workers. Boucher stresses that utilization<br />
data, while highly detailed and personalized,<br />
is also anonymous from the moment<br />
of its collection. “We don’t need to know<br />
which bodies are moving around to track<br />
utilization,” she explains. Thus, personal<br />
identifiers are either scrubbed or not collected<br />
in the first place. In many cases,<br />
workers can also opt out of some data<br />
collection initiatives, though they are<br />
encouraged to participate, since the end<br />
goal is to improve the professional ecosystem<br />
in which they work.<br />
ALL ABOUT THE CUSTOMER<br />
Data is growing, from its collection sources<br />
to its applications, but the end goal of<br />
improving the customer experience is the<br />
constant. As Sidman says, “You can measure<br />
response time and completion time<br />
directly, and you can benchmark that. But<br />
the ultimate measure of quality is the tenant’s<br />
satisfaction.”<br />
Meacham agrees. “Saving $50,000 on<br />
expenses is great, but a satisfied tenant is<br />
worth 10 times that amount.” One of his<br />
favorite stories is of a tenant who finally<br />
experienced relief from a too-hot office<br />
after analytics revealed the real problem.<br />
“They were so happy that they actually<br />
held a ‘Turning Off the Fan’ ceremony in<br />
the suite,” he recalls.<br />
Without “big data,” perhaps this tenant<br />
would have defected after years of<br />
living with a band-aid solution. In this<br />
situation and thousands like it, building<br />
owners and managers now have another<br />
tool to deploy in satisfying their customers.<br />
The challenges are real, but the<br />
rewards will be as big as the data that<br />
produced them. B<br />
ABOUT THE AUTHOR: Phil Mobley is<br />
a frequent contributor to BOMA Magazine.<br />
As a vice president at Kingsley Associates,<br />
he co-managed BOMA International’s<br />
Experience Exchange Report® (EER) for<br />
five years and led BOMA International’s<br />
2013 global office tenant survey, What<br />
Office Tenants Want. He is now principal of<br />
Koine Communications, a content strategy<br />
and development firm that serves the<br />
commercial real estate industry. He can be<br />
reached at phil@koinecommunications.com.<br />
28 22 BOMA MAGAZINE NOVEMBER JULY | AUGUST | DECEMBER 2013 2014
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40<br />
MAXIMIZE<br />
YOUR<br />
ESCALATION<br />
INCOME<br />
BY WILLIAM H. BROWNFIELD, CRE, CCIM, AND LAWRENCE M. MAYERHOFER, CPA<br />
FIGURE 1<br />
Operating expense escalations are often treated<br />
like a departmental hot potato by office building<br />
executives and owners. Fortunately, property<br />
managers can educate owners and other<br />
executives about the importance of escalations<br />
by explaining that expense recoveries are usually the second largest<br />
income source for most office buildings, lagging only base rent.<br />
Review the four important concepts outlined below to maximize<br />
escalation income due from your tenants. The escalation processes<br />
you establish should both help you bill tenants and help you monitor<br />
any leakage that might occur. The content and concepts that<br />
follow relate to typical multi-tenant office buildings.<br />
Expense Ratio & Potential<br />
Escalation Income<br />
60+<br />
(NNN Lease, Up to 40%)<br />
40%<br />
60%<br />
n Potential Escalation Income<br />
n Base Rent & Other Income<br />
1ESCALATION INCOME IS 10 TO 50<br />
PERCENT OF REVENUE<br />
With a Base Year lease structure and an average term<br />
of five years, escalation income will amount to approximately<br />
10 to 15 percent of gross revenues, depending on<br />
local inflation in labor costs, operating<br />
costs, property taxes and so on.<br />
Base Year leases are designed to shift<br />
operational cost increases (inflation)<br />
to the tenants receiving those<br />
services, so that the landlord’s net<br />
income agreed to during lease negotiations<br />
is preserved. What is your<br />
escalation income as a share of total<br />
income If you are billing escalations<br />
properly, you might be surprised at<br />
how high the percentage is.<br />
With triple net (NNN) leases, the<br />
mutual intent is for the tenants to<br />
collectively reimburse the landlord<br />
for all operating expenses and<br />
taxes and approved capital expenditures<br />
(assuming a fully occupied<br />
building), starting at the beginning of each lease term and continuing<br />
until each lease expires. Take a look at your property’s annual<br />
budget and divide the expenses by total income (excluding escalation<br />
reimbursements). The product of that calculation is known as the<br />
“expense ratio,” and expense ratios for stabilized office buildings in<br />
most markets are often 40 to 50 percent of total income. That’s a huge<br />
portion of a building’s income and value (see Figure 1, below, left).<br />
2MOST ESCALATION INVOICES HAVE<br />
ERRORS<br />
Why Because the methodology and formulas used<br />
for billings are often inconsistent with what the<br />
lease requires. Having looked at escalation billings<br />
for several thousand buildings over the years, the authors have seen<br />
that most billings had errors—some small and some large, some<br />
which benefited the landlord and others that benefitted the tenants.<br />
If you’re with a small company, these comments might resonate<br />
strongly, because smaller property management and accounting<br />
staffs are frequently stuck with homegrown Excel schedules that<br />
haven’t been tested for years and can have corrupted formulas.<br />
But even large national real estate investment trusts (REITs) can<br />
and do have problems with errors, because the escalation modules<br />
included in popular accounting software packages are not flexible<br />
enough to accommodate every type of lease provision. Grossup<br />
methodology, expense caps and combined-versus-separated<br />
expenses and property provisions don’t always match up well with<br />
standard off-the-shelf software capabilities.<br />
So, what should you do about these problems Talk to your software<br />
provider about making enhancements and improvements. If<br />
that doesn’t work, look for better software, because it’s out there.<br />
3LANDLORDS NEVER RECOVER 100<br />
PERCENT OF OPERATING EXPENSES<br />
Vacancies, lease expirations, type of lease, rollovers,<br />
expense stops and caps will prevent a multi-tenant<br />
building’s landlord from recovering all escalatable<br />
30 BOMA MAGAZINE NOVEMBER | DECEMBER 2014
A Guide to Understanding, Preparing and<br />
Grossing Up Expense Escalations<br />
THird EdiTiOn<br />
William H. Brownfield, CRE, CCIM<br />
Lawrence Mayerhofer, CPA<br />
FIGURE 2<br />
Base Year Components<br />
50+30+20=<br />
n CapEx Amortization<br />
n Base Year Taxes<br />
n Base Year Expenses<br />
If the CapEx Amortization expires before tenant<br />
leases expire, their Base Years will have been<br />
temporarily inflated and future expenses could<br />
be below their Base Year amounts, thereby<br />
reducing a landlord’s recovery of expenses.<br />
operating costs, especially as<br />
Base Years get changed for<br />
existing tenants. Are there ways<br />
to mitigate the leakage Yes.<br />
Stagger lease expirations when<br />
appropriate, create a schedule<br />
that shows when each lease<br />
rolls and then lengthen leases<br />
currently under negotiation<br />
by several months or a year<br />
to push them into less volatile<br />
years. Just because most leases<br />
are usually three-year or fiveyear<br />
terms doesn’t mean that<br />
tenants are locked in to those<br />
time frames. Think of ways to<br />
incentivize them to add time to<br />
the lease term.<br />
Do the math for your buildings.<br />
Calculate the percentage<br />
of ex penses you actually<br />
recover each year, and track it<br />
to see if the techniques mentioned<br />
above help to increase<br />
your recovery percentages.<br />
Finally, avoid creating “Base<br />
Year Inflation” that will erode<br />
your recoveries (see Figure 2, above). A common error made in most<br />
office lease documents is to combine approved capital amortizations<br />
within a tenant’s Base Year and inflate that amount temporarily<br />
until the capital expenditures (CapEx) amortization burns off,<br />
resulting in no future recoveries by the landlord. This can lead to a<br />
massive hidden leakage of expense recoveries. The lease’s definition<br />
of escalatable capital expenditures should be done in a separate,<br />
freestanding section, so that it does not get merged into how<br />
Base Years for operating expenses are. A simple workaround is also<br />
available: Treat your cost-saving CapEx like your code-required<br />
CapEx; and for Base Year leases, only escalate those jobs which<br />
are placed in service after lease commencement. This topic is more<br />
fully discussed in BOMA International’s newly revised publication<br />
The Escalation Handbook for Office Buildings (available at<br />
store.boma.org).<br />
4LANDLORDS MAKE TWO BIG<br />
MISTAKES WITH CAPITAL<br />
AMORTIZATIONS<br />
First, landlords often assume they’ll recover 100<br />
percent of capital expenditures and don’t question<br />
if that’s true. Landlords generally approve cost-saving capital costs<br />
because most leases say this type of capital expenditure is recoverable<br />
by amortizing it over a payback period. However, capital amortizations<br />
can and do have the same leakage as operating expenses,<br />
and for the same reasons. An analysis presented in The Escalation<br />
Handbook for Office Buildings (Chapter Six, Exhibit 6-3) shows that<br />
a hypothetical 100 percent leased building with 20 percent of leases<br />
expiring each year only recovers 40 percent of each dollar spent on a<br />
capital expenditure amortized over five years (see Figure 3, below).<br />
Such a low recovery should limit capital expenditures considerably.<br />
Second, landlords rarely charge interest on escalatable capital<br />
expenditures, even though most leases permit it. Why Because<br />
most property managers and accountants don’t pick up on this<br />
obscure, minor point found deep in the lease. They miss the opportunity<br />
to earn a return on newly invested capital. How much Over<br />
five years, a seven percent rate compounds to 18.8 percent of the<br />
original investment.<br />
FIGURE 3<br />
100+16+12+8+4<br />
$1.00<br />
$0.80<br />
$0.60<br />
$0.40<br />
$0.20<br />
$<br />
Tenants benefit when they incentivize landlords to reduce<br />
operating costs by agreeing to pay interest on new capital dollars<br />
invested. Most cost-saving CapEx jobs are big-ticket items either<br />
financed or paid for upfront as a capital investment by the landlord.<br />
With a financing charge included, the landlord wins by getting a<br />
return on newly invested capital. Once the amortization is complete,<br />
the tenant wins due to reduced operating expenses.<br />
Understand these escalation concepts to enhance your building’s<br />
cash flow. Use the information above to answer two important<br />
questions when budgeting and/or reconciling last year’s escalation<br />
billings:<br />
• What is the percentage of annual total expenses that are actually<br />
reimbursed by tenants<br />
• What is the corresponding leakage that is not reimbursed, and<br />
how can I reduce it B<br />
The Escalation Handbook<br />
for Office Buildings<br />
$1.00<br />
CapEx Recoveries<br />
n For Each $1.00 of CapEx Spent<br />
n CapEx Recovered = ~ $0.40 Max<br />
0.16<br />
0.12<br />
0.08<br />
0.04<br />
0 0 0 0<br />
Base Year Year 2 Year 3 Year 4 Year 5<br />
ABOUT THE AUTHORS: Brownfield & Mayerhofer,<br />
Inc., provides solutions for operating expense escalations<br />
and offers consulting, training, software and dispute<br />
resolution services. Bill Brownfield and Larry Mayerhofer<br />
are the authors of The Escalation Handbook for<br />
Office Buildings (Third Edition), published by BOMA<br />
International and available at store.boma.org, and ALPHA Office<br />
Escalations (AOE) software, available at www.EscalationAdvisors.com.<br />
AOE automatically will calculate and prepare tenant billings for your<br />
buildings and determine reimbursement and leakage percentages.<br />
BOMA MAGAZINE 31
LOW-RISE<br />
ELEVATORS:<br />
Myth and Reality<br />
BY SASHA BAILEY, LEED AP BD+C<br />
Elevators in low-rise buildings have become<br />
more prevalent as the commercial real<br />
estate industry has adapted to comply with<br />
building codes under the Americans with<br />
Disabilities Act (ADA). For a century, the<br />
hydraulic elevator’s reliability and longevity made it the<br />
workhorse of the vertical transportation industry, especially<br />
for low-rise applications. Hydraulic elevators move weight<br />
efficiently through the simple<br />
displacement of fluid and have<br />
few moving parts. They are easy<br />
to maintain, and their major<br />
components can run for years<br />
without needing to be replaced.<br />
However, as the green building<br />
movement gained popularity<br />
in the commercial real estate<br />
industry, the hydraulic elevator<br />
fell out of favor, due to high<br />
energy usage and its reliance<br />
on petroleum-based hydraulic<br />
fluid. As a result, traction elevators,<br />
once reserved for high-rise<br />
buildings, are now being installed<br />
in buildings where they only<br />
need to travel a few feet.<br />
IMAGE: COURTESY OF THYSSENKRUPP ELEVATOR AMERICAS<br />
Traction elevators can offer a number of benefits, including<br />
improved ride quality and, in some cases, regenerative-drive<br />
technology that offers energy savings. Some traction elevators<br />
also do not even require a separate machine room to house the<br />
elevator mechanics that operate the equipment, adding to their<br />
popularity. The machine room-less (MRL) option appeals to<br />
architects who can use the extra space in the building footprint<br />
design. When using a machine room-less elevator, contractors<br />
don’t need to feed power, HVAC or ventilation to a separate<br />
elevator space; building owners also do not have to pay to heat<br />
and cool that same space. In addition, they offer an alternative<br />
to using the petroleum-based hydraulic fluid to operate.<br />
Before selecting elevator equipment for a low-rise application,<br />
however, it is important to understand the differences in<br />
maintenance needs of both traction and hydraulic elevators and<br />
take into consideration the total costs of installing, operating<br />
and maintaining each elevator type over its lifetime. Maintaining<br />
certain traction elevator models can cost almost as much as<br />
the initial purchase and installation. A three-stop traction MRL<br />
elevators requires an average of $173,000 in maintenance over<br />
25 years, compared to $91,000 to maintain the same hydraulic<br />
MRL elevator. This difference is easily overlooked in the initial<br />
cost comparison.<br />
Moreover, surprisingly, even older models of low-rise hydraulic<br />
elevators do not require significantly more energy than<br />
similar traction units in low-rise buildings. Neither traction nor<br />
32 BOMA MAGAZINE NOVEMBER | DECEMBER 2014
hydraulic elevators require much energy when traveling only a<br />
few stories. A 2,500-pound elevator traveling a single floor (12<br />
feet) at 100 feet per minute that operates 100 runs a day does not<br />
even use $600 worth of energy in an entire year. Assuming the<br />
hydraulic uses more energy than traction, there may be a differential<br />
of perhaps just $150 a year in energy cost. That extra $150<br />
a year would not even cover one month of maintenance on most<br />
traction MRL elevators. At low heights, the difference between<br />
the energy consumption of the two types of two- to three-stop<br />
elevators is negligible.<br />
Furthermore, in response to the growing demand for green<br />
products, there are now hydraulic elevators specifically designed<br />
for low-rise applications that use canola-based hydraulic fluid<br />
that is both recyclable and biodegradable in place of petroleumbased<br />
fluid. Testing on elevators that use this fluid has shown an<br />
improvement in elevator performance and the ability for operation<br />
over a broader temperature range than those hydraulic elevators<br />
using traditional petroleum fluid, making these models a<br />
more attractive and cost-effective option than they once were.<br />
As the green building movement has expanded, so have<br />
expectations for manufacturers to provide data on the true cost<br />
and impact of their products. Savvy property professionals can<br />
investigate whether manufacturers have performed life-cycle<br />
analysis and life-cycle costing (LCC) studies on low-rise elevators<br />
to help customers understand their economic and environmental<br />
impacts. A life-cycle assessment (LCA) is a scientific<br />
method for measuring the environmental footprint of materials,<br />
products and services over their entire lifetime. An environmental<br />
product declaration (EPD) is third-party-verified<br />
information, based on life-cycle analysis data from studies<br />
according to the ISO 14040, a family of standards related to<br />
environmental management. Life-cycle costing takes that LCA<br />
one step further to look at the direct monetary costs involved<br />
with a product or service over its entire lifetime.<br />
Elevators have a long life span and are a major financial<br />
investment. In order to make an educated decision about<br />
purchasing the right elevator for the right project, property<br />
professionals can use a manufacturer’s LCA and LCC documentation<br />
that makes the long-term costs and environmental<br />
advantages transparent. The LCA illustrates the impact that<br />
extraction, manufacturing, installing, servicing, modernizing<br />
and end-of-life disposal or re-use have on the environment.<br />
The EPD is also helpful for anyone striving to meet the<br />
requirements of green building rating systems, like the U.S.<br />
Green Building Council’s Leadership in Energy and Environmental<br />
Design (LEED). Responsible manufacturers work to<br />
help consumers make the most informed decision possible<br />
by providing transparent information on their products and<br />
objective data on their long-term costs.<br />
When making a decision about what type of elevator to<br />
install in a low-rise building, consider the total costs of installing,<br />
operating and maintaining an elevator over the long term.<br />
With the availability of plant-based hydraulic fluid and energy<br />
consumption relatively even with traction elevators, hydraulic<br />
elevators are a greener option than they once were. And,<br />
when it comes to maintenance costs, the hydraulic elevator can<br />
be the best choice for low-rise projects. It is possible to meet<br />
ADA requirements, achieve your energy goals and serve your<br />
tenants well, while still<br />
choosing a cost-efficient<br />
option. B<br />
Before selecting an<br />
elevator type for a<br />
low-rise application,<br />
it is important to understand<br />
the differences in maintenance<br />
needs of both traction and<br />
hydraulic elevators and take<br />
into consideration the total<br />
costs of installing, operating<br />
and maintaining each elevator<br />
type over its lifetime.<br />
ABOUT THE<br />
AUTHOR: Sasha<br />
Bailey, LEED AP BD+C,<br />
is strategic communications<br />
manager for<br />
the Business Unit of<br />
ThyssenKrupp Elevator<br />
Americas. Contact her at<br />
Sasha.Bailey<br />
@thyssenkrupp.com.<br />
Visit www.thyssen<br />
kruppelevator.com/<br />
sustain.asp for more<br />
information about<br />
ThyssenKrupp’s sustainable<br />
design solutions.<br />
BOMA MAGAZINE 33
CREATING A BETTER<br />
Workplace<br />
Mars Drinks global headquarters in West Chester, Pennsylvania.<br />
BY JESSICA BATES<br />
Just as building owners and managers continually<br />
strive to keep their tenants satisfied, tenants themselves<br />
constantly are looking for innovative ways<br />
to foster employee satisfaction while increasing<br />
productivity. More and more companies are finding<br />
that the physical spaces in which their employees<br />
work can have a dramatic effect on everything from their creativity<br />
to their health.<br />
“It is a travesty how often people don’t feel happy or have a<br />
sense of well-being at work,” says Tracy Brower, PhD, author of<br />
Bring Work to Life by Bringing Life to Work and the director of<br />
Human Dynamics of Work for office furniture supplier Herman<br />
Miller. “When companies support and engage employees, these<br />
companies see more employee productivity, higher employee<br />
retention rates and a whole host of other benefits.” Design experts<br />
have begun exploring how our surroundings can affect our behavior,<br />
and office spaces are no exception. According to Brower, companies<br />
can reap dramatic results by creating office layouts that<br />
encourage innovation and engagement.<br />
One such company is Mars Drinks, a segment of Mars, Incorporated,<br />
that offers coffee and other hot beverage solutions to<br />
workplaces worldwide. Recently, the<br />
Mars Drinks global headquarters in<br />
West Chester, Pennsylvania, were redesigned<br />
with the help of Herman Miller<br />
to inspire happier and more productive<br />
employees. The new space includes a<br />
variety of work areas to meet different<br />
employee needs. Much of the office<br />
space has been kept open to promote<br />
communication between workers, but<br />
when employees need time for quiet work or private conversations,<br />
special “huddle rooms” are available. Dynamic coffee lounges and<br />
so-called “social kitchens” have been designed to allow coworkers<br />
and company leaders alike to recharge and converse. By creating<br />
inviting break areas, Mars Drinks encourages its employees to stay<br />
on-site for coffee breaks and lunch, thereby creating more opportunities<br />
for collaboration and connection.<br />
Frank LaRusso, vice president of Business Development for Mars<br />
Drinks, says the decision to focus on company culture was a simple<br />
one. “When companies look at the value of employee health and<br />
well-being, they should be inspired to do something.” As our<br />
society becomes increasingly aware of the negative impacts that<br />
poor office culture and even sitting for long periods of time can<br />
have on our health, LaRusso believes it is important for employers<br />
to take proactive measures to mitigate these effects. “An office<br />
space should be highly energetic and highly inspirational, helping<br />
companies create more innovation, better health and greater<br />
happiness for their employees.”<br />
However, companies need not knock down every wall and<br />
construct entirely open office spaces in order to create what Herman<br />
Miller terms a “Living Office”—a workplace that continuously<br />
evolves for greater prosperity. In fact, Brower points out that some<br />
companies have over-compensated, creating more open spaces and<br />
collaboration at the expense of privacy and contemplative time. The<br />
most successful workplaces accommodate a variety of work activities<br />
and characters, a concept reflected in the redesigned offices of Mars<br />
Drinks. “No matter our style, work preferences or job function, there<br />
will be times when we need to connect with others and there will be<br />
times when we need to work in a more solitary space. The key is for<br />
companies to provide options,” Brower explains.<br />
Both Brower and LaRusso believe that well-designed offices<br />
will become more prevalent as the benefits become better known.<br />
As pioneering employers realize increasing economic benefits from<br />
happier and healthier employees, others will follow similar workplace<br />
strategies.<br />
But the best employers will always see room for improvement.<br />
“Companies should be continuously striving to improve office spaces,<br />
rather than just modernizing once every 10 or 20 years and wiping<br />
their brow,” says Brower. “Work and workers are always changing, so<br />
companies should always be listening to what employees need.”<br />
Brower’s advice for companies looking to improve their space<br />
“Start by identifying the purpose that your organization is trying to<br />
fulfill, then really look at the work activities that need to be supported,”<br />
says Brower. “Finally, think about the settings that will best<br />
encourage these activities and create workplace landscapes accordingly.”<br />
Building owners and managers also should keep this advice in<br />
mind as they continue to look for ways to attract and retain tenants.<br />
As seasoned property professionals know, an office space truly isn’t<br />
just a place to work. B<br />
34 BOMA MAGAZINE NOVEMBER | DECEMBER 2014
SPECIAL ADVERTISING SECTION<br />
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BUILDING ENGINES<br />
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36 BOMA MAGAZINE NOVEMBER | DECEMBER 2014
SPECIAL ADVERTISING SECTION<br />
SUPPLIER SHOWCASE PRODUCTS & SERVICES<br />
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ARCHITECTURAL BIRD CONTROL<br />
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BOMA MAGAZINE 37
SPECIAL ADVERTISING SECTION<br />
SUPPLIER SHOWCASE PRODUCTS & SERVICES<br />
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38 BOMA MAGAZINE NOVEMBER | DECEMBER 2014
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TRENDS, STATS & FACTS<br />
BOMEX ® 2014:<br />
HIGHLIGHTS FROM<br />
WINNIPEG<br />
Members of the commercial real estate<br />
industry gathered in Winnipeg, Manitoba,<br />
from September 9-11, 2014, to attend<br />
BOMEX ® 2014, BOMA Canada’s national<br />
commercial real estate conference. Among<br />
the attendees were BOMA International Chair John Oliver<br />
and President Henry Chamberlain, who were hosted by<br />
BOMA Canada Chair Mike Bishop and President & CEO<br />
Benjamin Shinewald.<br />
BOMEX 2014 began with the BOMEX Golf Classic at the<br />
Pine Ridge Golf Course, while non-golfers enjoyed an alternative<br />
excursion to Winnipeg’s Assiniboine Park for a tour of<br />
its “Journey to Churchill” arctic exhibition at the Assiniboine<br />
Park Zoo. Delegates gathered that evening to officially kick<br />
BOMA International President Henry Chamberlain (left) and Chair John<br />
Oliver with a winner from BOMA Canada’s TOBY ® Awards.<br />
off the conference with a welcome reception at Manitoba<br />
Hydro Place, headquarters of electric power and natural gas<br />
utility Manitoba Hydro and the only office tower in Canada<br />
to receive the LEED Platinum rating.<br />
True to the conference theme of “Unlock Your Potential,”<br />
BOMEX offered three educational tracks with sessions on<br />
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40 BOMA MAGAZINE NOVEMBER | DECEMBER 2014
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TRENDS, STATS & FACTS<br />
BOMEX 2014’s<br />
charitable<br />
partner, Habitat<br />
for Humanity<br />
Manitoba, was the<br />
beneficiary of more<br />
than $6,000.<br />
time, wellness and human resources. The BOMEX 2014<br />
trade show, presented in partnership with the Manitoba<br />
Building Expo, boasted more than 170 exhibitors showcasing<br />
the latest products and technologies for commercial<br />
properties and offered a terrific networking opportunity<br />
for property professionals. The two-day conference also<br />
featured a number of excellent speakers, beginning with<br />
an inspiring presentation by Gail Asper of the Canadian<br />
Museum for Human Rights, which opened in downtown<br />
Winnipeg this year.<br />
Delegates and guests were treated to their own private<br />
concert on Wednesday night with rock ‘n’ roll superstar<br />
Randy Bachman of Bachman-Turner Overdrive fame during<br />
“A Night in Manitoba.” Food stations and live music from the<br />
Justin Lacroix Band set the stage for the legendary rocker,<br />
whose energy had RBC Convention Centre Winnipeg<br />
visitors singing and dancing the night away.<br />
Funds were raised throughout the night in support<br />
of BOMEX 2014 charitable partner Habitat<br />
for Humanity Manitoba, which was the beneficiary<br />
of the more than $6,000 collected.<br />
The grand finale of the conference was the<br />
National Awards Gala, held in the historic Fort<br />
Gary Hotel on Thursday night, where BOMA<br />
Canada’s The Outstanding Building of the Year®<br />
(TOBY®), Pinnacle, Earth and Chairman’s Awards were<br />
presented during a James Bond-themed black tie affair.<br />
The evening’s most prestigious honor, the BOMA Canada<br />
Chairman’s Award, was bestowed upon Keith Major, senior<br />
vice president of Property Management for Bentall Kennedy<br />
(Canada) LP and a member of BOMA International’s<br />
Executive Committee. Major was recognized for his leadership<br />
and outstanding contributions<br />
to the success of BOMA<br />
Canada and the commercial real<br />
estate industry at large. Attendees<br />
of the gala also took time<br />
to acknowledge the upcoming<br />
retirement of Bill Partridge,<br />
chief staff officer (CSO) of<br />
BOMA/Calgary and the driving<br />
force behind many major<br />
industry initiatives over the past<br />
34 years, for his dedication and<br />
Keith Major accepts the<br />
prestigious Chairman’s Award.<br />
service.<br />
BOMEX 2015 will take place<br />
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GREEN SCENE<br />
BY KATIE ABBOTT<br />
MAINTAINING AN EFFECTIVE<br />
RECYCLING SYSTEM<br />
A well-developed recycling<br />
system can help increase<br />
tenant satisfaction and<br />
cultivate tenant retention,<br />
which are always high priorities<br />
for property managers.<br />
In fact, according to BOMA<br />
International’s recent office tenant<br />
survey What Office Tenants Want, 66<br />
percent of tenants surveyed indicated<br />
that environmentally sustainable building<br />
operations are either “Important”<br />
or “Very Important” to them. However,<br />
once implemented, how can you ensure<br />
that a recycling system is effectively<br />
maintained over time<br />
Following are four simple tips for<br />
sustaining a successful recycling program<br />
in your building.<br />
1. EDUCATE. Posters and labels that<br />
clearly identify the waste and recycling<br />
streams are key.<br />
• Ensure each receptacle throughout<br />
the building includes a visual clue,<br />
like a label or poster. This will help<br />
tenants understand what can and<br />
cannot be tossed into each container.<br />
Replace peeling or ripped labels<br />
periodically to maintain a high-end<br />
aesthetic within your building.<br />
• Make sure every tenant has reference<br />
sheets that outline the recycling<br />
program. These can be helpful to<br />
new employees or guests.<br />
• Host a meeting to provide tenants with<br />
recycling tips. This will keep recycling<br />
top of mind and provide a forum for<br />
face-to-face tenant interaction.<br />
2. TRAIN. The janitorial staff in<br />
your building is critical to a successful<br />
recycling program.<br />
• Ensure the janitorial staff has the<br />
right equipment for transporting<br />
multiple waste streams throughout<br />
the building in an efficient manner.<br />
• Provide the janitorial staff with<br />
the same educational tools as the<br />
tenants to explain the reasoning<br />
behind the implementation of a<br />
recycling program.<br />
3. MEASURE. Waste audits are<br />
helpful in understanding the current<br />
recycling rate.<br />
• Conduct a waste audit once per<br />
quarter to maintain a consistent<br />
measurement. By comparing the<br />
results from quarter to quarter,<br />
and then year to year, you will<br />
have an accurate understanding of<br />
building recycling performance.<br />
• Encourage tenants to help with the<br />
waste audit. This will again allow<br />
face-to-face interaction with tenants<br />
and help them take a more<br />
active role in the recycling process.<br />
4. REASSESS. Use the results of<br />
the waste audits to pinpoint areas of<br />
improvement.<br />
• If the recycling rate for a particular<br />
tenant or building floor is less<br />
than stellar, host an individual<br />
education session with the tenant<br />
or tenants to reenergize their recycling<br />
efforts.<br />
• The waste audit may uncover a<br />
common recycling mistake, like<br />
recyclable paper in a landfill<br />
receptacle. Send a reminder e-mail<br />
to tenants informing them of the<br />
focus area and what should be<br />
tossed in the recycling bin.<br />
• If your building’s recycling rate is<br />
consistently over 50 percent, consider<br />
taking your recycling system<br />
to the next level and implementing<br />
an organic waste recycling<br />
program.<br />
These tips not only will ensure that<br />
your recycling program supports the<br />
sustainability efforts in your building,<br />
but they also will go a long way towards<br />
keeping your tenants engaged. B<br />
ABOUT THE AUTHOR: Katie<br />
Abbott is brand manager, Recycling<br />
for Rubbermaid Commercial Products<br />
(www.rubbermaidcommercial.com),<br />
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BOMA MAGAZINE 45
HEALTHCARE PULSE<br />
BY JOHN B. MUGFORD<br />
Non-traditional<br />
tenants are<br />
especially<br />
welcomed in<br />
certain types<br />
of facilities,<br />
including<br />
medical malls,<br />
where primarycare<br />
doctors,<br />
a variety of<br />
specialists, labs<br />
and other health<br />
services are<br />
housed together<br />
to allow patients<br />
to take care of<br />
several appointments<br />
in one<br />
visit.<br />
NON-TRADITIONAL<br />
TENANTS FIND<br />
SPACE IN MEDICAL<br />
OFFICE BUILDINGS<br />
Even though medical office buildings (MOBs)<br />
are one of the hottest real estate investments<br />
in the country, filling every space in<br />
every MOB is not always a slam dunk.<br />
The fact is that, as many independent physicians and group<br />
practices are being gobbled up by large health systems, the<br />
pool of tenants that could potentially fill remaining MOB<br />
spaces is dwindling. Perhaps this is why the U.S. national<br />
vacancy rate for MOBs has languished above 12.25 percent<br />
over the last three years, according to Colliers International.<br />
So what’s a medical office building owner to do with vacant<br />
spaces as the pool of traditional, potential users is shrinking<br />
For some owners, the answer lies with “non-traditional”<br />
MOB tenants, or those that do not provide<br />
primary care; obstetrics; ear, nose and throat (ENT);<br />
or any number of typical outpatient services. Most<br />
landlords prefer non-traditional tenants that are<br />
medical- or wellness-related and can create synergies<br />
with traditional providers in their building. These<br />
can include telemedicine firms, mental health clinics,<br />
radiology reading centers, wellness clubs, bioscience<br />
incubators, health food stores and eyeglass or medical<br />
product retailers, among others.<br />
While most non-traditional tenants cannot afford<br />
the rents in newer and more expensive Class A MOBs,<br />
some are landing spaces in buildings that are Class<br />
B or lower, according to Robert J. King, president of<br />
Florida medical brokerage firm RJ King Associates.<br />
Non-traditional tenants are especially welcomed in<br />
certain types of facilities, including medical malls,<br />
where primary-care doctors, a variety of specialists,<br />
labs and other health services are housed together<br />
to allow patients to take care of several appointments<br />
in one visit.<br />
“These facilities need optometrists, health food stores and<br />
pharmacies because they provide convenience,” says Megan<br />
Sherwood, executive vice president of Brokerage Services for<br />
Plaza Companies, a healthcare real estate firm in Arizona.<br />
Plaza Companies has landed a few non-traditional tenants<br />
over the years, including a telemedicine firm, Imaging Advantage,<br />
at Paradise Valley Medical Plaza on the campus of Paradise<br />
Valley Hospital in Phoenix. The firm staffs radiologists to<br />
read images for smaller providers that cannot staff radiologists<br />
around the clock.<br />
As far as Seavest Healthcare Properties is concerned,<br />
another good location for non-traditional MOB tenants is a<br />
medical building that has been converted from a former big<br />
box store or corporate headquarters. Portions of such adaptive<br />
re-use projects can be redeveloped with higher-end finishes<br />
needed by medical practices, while other spaces can be<br />
built out for non-traditional users.<br />
That’s exactly what Seavest and KIRCO Health Partners<br />
did after acquiring a vacant three-story, 140,000-square-foot<br />
office building in Dearborn, Michigan, in recent years. About<br />
75,000 square feet is home to services of the Henry Ford<br />
Health System, while other areas include an optometry and<br />
ophthalmology clinic and retail store, a retail pharmacy and<br />
a fitness center. “More and more health systems find they<br />
can save costs, differentiate themselves in the market and<br />
access a larger patient base by offering a full range of services<br />
located in patients’ neighborhoods,” says Jonathan Winer,<br />
senior managing director and CIO of Seavest.<br />
As MOBs evolve in today’s highly technical environment, a<br />
number of landlords are sure to start mixing medical research<br />
with patient care in their buildings. The 340,000-square-foot<br />
Conventus building currently under construction on the<br />
Buffalo Niagara Medical Campus in Buffalo, New York, is a<br />
prime example. Ciminelli Real Estate’s building will be home<br />
to a 50,000-square-foot space occupied by Albany Molecular<br />
Research Inc., as well as other potential medical research<br />
firms. The building also will feature a new use for traditional<br />
MOB space: an admissions and pre-operative area for the<br />
surgery center next door in the John R. Oishei Children’s Hospital.<br />
A skybridge will link the spaces.<br />
“The tenant roster at Conventus evolved, in large part,<br />
due to the project’s location on and connectivity to the<br />
Buffalo Niagara Medical Campus,” explains Jay Miele,<br />
managing director with Hammond Hanlon Camp in New<br />
York, which landed Seavest as a financial partner in the<br />
project. The building’s proximity to several hospitals,<br />
research institutes and a new medical school is why the<br />
tenant roster is much more wide-ranging than “your classic<br />
medical office building,” Miele says. B<br />
ABOUT THE AUTHOR: John B. Mugford is editor of<br />
Healthcare Real Estate Insights magazine at Wolf Marketing &<br />
Media LLC. Visit www.wolfmediausa.com.<br />
46 BOMA MAGAZINE NOVEMBER | DECEMBER 2014
2014 MeMbership Directory<br />
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Insight: The Commercial Real Estate<br />
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BOMA Views newsletter<br />
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Online Buyers’ Guide<br />
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Online Directory & Buyers' Guide<br />
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BOMA/NY Facts eNewsletter<br />
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48 BOMA MAGAZINE NOVEMBER | DECEMBER 2014
ADVERTISING INDEX<br />
COMPANY<br />
PAGE NO.<br />
AAON................................................................. Cov 4<br />
ABM-OneSource...................................................... 37<br />
Advanced Egress Solutions Inc. .............................. 42<br />
AGF Manufacturing Inc. .......................................... 45<br />
Allegion...................................................................... 4<br />
American Anchor....................................................... 3<br />
Angus Systems Group............................................. 16<br />
Aquatherm............................................................... 49<br />
Automatic Building Controls LLC.............................. 37<br />
Avigilon Corp. ......................................................... 41<br />
Bartlett Tree Experts................................................. 49<br />
BCS-Business Credentialing Services....................... 38<br />
Belco Pipe Restoration............................................. 12<br />
BITZER US Inc. ....................................................... 38<br />
Bluebeam Software Inc. .......................................... 35<br />
BOMA International....................................... 39, Cov 3<br />
BOMI International..................................................... 8<br />
Building Engines Inc. ............................................... 36<br />
Cambridge Engineering Inc. .................................... 38<br />
Cambridge Sound Management............................... 36<br />
Chem Link............................................................... 17<br />
Chicago Faucets........................................................ 9<br />
Cintas Corporation..................................................... 7<br />
COIT Cleaning & Restoration Services...................... 42<br />
Directory Solutions Inc.-TouchSource ...................... 37<br />
EHC Global Handrail Co. ......................................... 36<br />
Eklund’s Inc. ........................................................... 10<br />
Energetic Lighting.................................................... 49<br />
EPL Energy Profiles Ltd. .......................................... 38<br />
Firestone Building Products...................................... 19<br />
GeoPal Solutions..................................................... 36<br />
Graybar Electric Co. ................................................ 36<br />
HUB Zeag Canada Ltd. ........................................... 40<br />
Huguenot Laboratories............................................ 37<br />
IAPMO Hydronics Industry Alliance........................... 11<br />
Kenall Manufacturing............................................... 38<br />
KONE Inc. .............................................................. 21<br />
Light Efficient Design...........................................27, 38<br />
Naylor LLC.............................................................. 47<br />
Nixalite of America................................................... 37<br />
One Call Now.......................................................... 29<br />
Onset Computer Corporation................................... 36<br />
Orion Energy Systems.............................................. 14<br />
Orkin Pest Control...................................Bellyband, 44<br />
Potter Electric Signal Company LLC......................... 38<br />
Reliable Paving........................................................ 40<br />
Roland Engineering Services.................................... 42<br />
Salsbury Industries................................................... 20<br />
Sanitaire.................................................................. 37<br />
SCA Tissue North America.................................. Cov 2<br />
Security Door Controls............................................. 36<br />
Shortridge Instruments Inc. ..................................... 48<br />
Spot Coolers......................................................23, 38<br />
Sunbelt Rentals........................................................ 37<br />
Trane-VRF............................................................... 13<br />
Trane Horizon ........................................................ 43<br />
Vertical Assessment Associates............................... 37<br />
VP Buildings............................................................ 15<br />
Wooster Products Inc. ............................................ 36<br />
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BOMA MAGAZINE 49
EYE ON EDUCATION<br />
BY MARISSA MITZNER, LEED GREEN ASSOCIATE<br />
• How an asset manager uses a 10-year discounted cash<br />
flow to create a pro-forma, and how the asset manager is<br />
then held accountable to achieve the returns that were<br />
anticipated in the pro-forma; and<br />
• The different lease structures (gross, net and hybrid).<br />
ON-DEMAND<br />
WEBINAR HIGHLIGHTS<br />
SUCCESSFUL<br />
LEASE NEGOTIATION<br />
TACTICS<br />
If the three most important things in real<br />
estate are “location, location, location,”<br />
then the three most important things in<br />
asset management are “value, value,<br />
value.” Asset managers are under increasing pressure<br />
to maximize the value of the properties in their portfolios.<br />
Creating asset value can be an uphill battle in a good market,<br />
but when an asset manager has to contend with a sluggish<br />
economic recovery, tenants who have been reluctant to<br />
hire employees despite record profits, the rise in office<br />
densification and an inability to increase rental rates in the<br />
face of climbing operating expenses, lease negotiations can<br />
be a real challenge.<br />
One of BOMA International’s most recent live webinars—<br />
now available for on-demand viewing—is based on its Lease<br />
Analysis, Valuation, Negotiation and Approval course, the first<br />
offering in BOMA’s new Asset Management Course Series.<br />
Titled “You CAN Always Get What You Want: The Basics of<br />
Lease Negotiation,” the webinar offers an overview of basic<br />
leasing principles, examines how to effectively negotiate<br />
a lease or lease renewal and presents ideas for creating<br />
value for the owner of a commercial property. It is facilitated<br />
by Marc Fischer, BOMA Fellow, CCIM, CPM, RPA, LEED<br />
Green Associate, a long-time commercial real estate practitioner<br />
and one of the authors of the Asset Management<br />
Course Series.<br />
The webinar is divided into three major sections:<br />
1. AN OVERVIEW OF BASIC LEASING<br />
PRINCIPLES, INCLUDING:<br />
• How the economic concepts of scarcity, purchasing power,<br />
utility and demand impact asset value;<br />
• How economic, environmental, governmental and societal<br />
forces can influence asset value;<br />
2. AN INTRODUCTION TO THE FUNDAMENTAL<br />
STRATEGIES OF NEGOTIATION, INCLUDING:<br />
• The concepts of win-win, win-lose and lose-lose<br />
situations;<br />
• How to prepare for a negotiation by planning your position<br />
and understanding what your counterpart’s position<br />
is likely to be;<br />
• How to set the stage for the negotiation to conclude in<br />
your favor;<br />
• Negotiating tactics to use, and how to spot and overcome<br />
the same tactics from your counterpart; and<br />
• How to follow through once the negotiation has ended.<br />
3. A DISCUSSION OF LEASE CLAUSES THAT<br />
ARE USUALLY SUBJECT TO NEGOTIATION,<br />
WHICH INCLUDE:<br />
• Occupancy costs, free rent, tenant improvements, building<br />
improvements, leasing commissions, repair and maintenance<br />
responsibilities, operating expense reconciliations,<br />
insurance and indemnification.<br />
This and other informative on-demand webinars are<br />
now available online, providing property professionals the<br />
opportunity to access industry knowledge any time from the<br />
comfort of a computer or mobile device. BOMA’s on-demand<br />
webinars cover a wide range of topics, including: building<br />
operations and management; building codes and standards;<br />
finance and asset management; leadership; medical office<br />
buildings and healthcare facilities; industrial property management;<br />
sustainability and energy management; and tenant<br />
relations and retention. For more information, visit BOMA<br />
International’s Webinar Portal, which can be accessed at<br />
webinars.boma.org. B<br />
Interested in taking your understanding of asset management<br />
to the next level Lease Analysis, Valuation,<br />
Negotiation and Approval, the first course in BOMA International’s<br />
new Asset Management Course Series, is an indepth<br />
look into the leasing and valuation aspects of asset<br />
management. It is designed to help property managers<br />
better understand the function of the asset manager in<br />
order to be a more valuable member of the commercial<br />
property team. The course is offered through BOMA’s<br />
local associations and is taught in an interactive classroom<br />
setting where participants engage with one another<br />
and the instructor. To learn more about the course, visit<br />
www.boma.org/education or contact BOMA International’s<br />
Director of Education Catie Slye at cslye@boma.org.<br />
50 BOMA MAGAZINE NOVEMBER | DECEMBER 2014
ESCALATIONS SEASON<br />
IS COMING.<br />
ARE YOU READY<br />
Escalations are a fact of life for commercial real estate<br />
professionals—and getting them right is critical to<br />
maintaining the profitability of your building and solid<br />
relationships with your tenants. BOMA International offers<br />
the only step-by-step guide you need to better navigate the<br />
gross-up process of your property expenses.<br />
ORDER THE INDUSTRY’S DEFINITIVE GUIDE TO PREPARING<br />
ESCALATION BILLINGS TODAY AT STORE.BOMA.ORG<br />
ESCALATIONS<br />
MADE EASY<br />
BOMA’s newly released<br />
third edition of The<br />
Escalation Handbook for<br />
Office Buildings cuts<br />
through the complex<br />
concepts to provide the<br />
industry-accepted<br />
methodology for preparing<br />
escalation billings.<br />
The new edition tackles<br />
the latest issues facing<br />
property managers with an<br />
emphasis that escalations<br />
are a partnership between<br />
landlord and tenant. It<br />
includes an informative<br />
Q&A section, plus three<br />
new chapters on expense<br />
caps, managing an<br />
escalation audit and<br />
escalating building rating<br />
system costs.
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