Office Space Survey Dec02

Office Space Survey

The findings of the first BOMA International COVID-19 Commercial Real Estate Impact Study reveal that the death of the office is greatly exaggerated. While many tenants are reassessing the use and the size of their physical offices, a strong majority (74%) see their in-person office space as vital to conducting successful business. The nationwide survey of more than 3,000 office space decisions-makers and influencers gauged tenant sentiments relating to COVID-19, including its impact on their business and their attitude towards the physical work environment and office space decisions going forward. It was conducted in September and October of 2020 in conjunction with Brightline Strategies, with a grant from Yardi. The study’s key findings include: 65% of commercial office decision-makers continue to see significant value in on-site business operations, particularly as it relates to collaboration, coaching and culture. The economic headwinds on office tenants are far reaching, with 33% of respondents saying they have experienced at least a 25% revenue decline since the onset of the pandemic. While a strong majority see office space as vital, 61% of respondents across all tenant sizes report they will reassess space needs. 78% approve of the response their current property owner/operator has implemented during COVID-19. 47% of all tenants say their landlord’s coronavirus response exclusively has made them more likely to renew. 77% are confident they understand how to reduce and manage risk in their physical office. At the outset of the survey, 55% of respondents said they plan to renew their leases, unsurprisingly lower than the Brightline Strategies six-year national index of 78%. However, renewal likelihood increases 11 points — rising to 66% — if properties implement operational changes including new services, features and physical spaces in response to the pandemic. This uptick indicates a true inflection point, showing that a change in operations helps assure and retain tenants. Maximization of fresh air is the “most important” measure for properties to adopt, according to tenants. Additionally, more than 40% of respondents indicated that they would pay supplementary fees for disinfecting stations and twice-daily full office disinfecting. The collective sentiment toward amenities is changing too. There is less focus on traditional built-ins, like onsite gyms and cafes. Almost half say they are seeing more value in personal relationships with their property management company/teams. “Our collective charge was to help owners and operators better understand, mitigate and proactively address emerging industry trends, shifts in workplace priorities and tenant preferences resulting from COVID-19, as well as changes in market attitudes towards the physical work environment and their impacts on office space decisions going forward,” said Robert Teel, vice president of global solutions, at Yardi. Although COVID-19 continues to be a disruptive force for the office sector and its tenants, the value of the office as a key ingredient of business success remains strong. “We have seen a steady and significant rebound in the perceived value and utility of physical office environments since the onset of the pandemic, with nearly 75% of all tenant decision-makers across the country affirming that in-person offices are operationally vital to their businesses, long-term growth and sustainability,” said Henry H. Chamberlain, APR, FASAE, CAE, president and COO of BOMA International. “As our ‘new normal’ emerges, we will become increasingly focused on the form and function of office environments in a post-pandemic world.” Explore more survey data in the BOMA International COVID-19 Commercial Real Estate Impact Study executive summary, including renewal forecasts and space reduction estimates by renewal horizon. Read the press...

Office Re-entry Nov12

Office Re-entry

The topic of safely re-entering the workplace has now been top of mind for over half a year. While some businesses are still closed and employees are working remotely, there are a growing number of offices who have decided to open their doors following local safety guidelines. On a recent BOMA webinar, a group of service providers ranging from software vendors to elevator engineers to wholesale suppliers discussed best practices for ensuring employee health and safety while successfully reopening their physical spaces. Brian Sutherland, Yardi industry principal, detailed some trends that Yardi has seen based off research from CommercialEdge: Office vacancy is currently at 10-15%. Since April, subleasing is up 35% as tenants try to either downsize or upsize for distancing purposes. New construction is down 40% from the previous year among office assets. Office demand is changing: f leasing terms, private office demand and suburban models are all growing. Rent is being paid, but physical occupancy is at risk: landlords are considering whether long-term leases are sustainable or whether tenants will not need the space they’re paying for. Only about 12% of New York City workers are back in office, as of latest estimates. There are specific questions to analyze when considering a move back into the office. Employees who want to confidently re-enter the workspace are asking how to accurately report health status updates and how to stay connected with colleagues. Office managers, on the other hand, are tasked with ensuring a safe and orderly re-entry while assessing how to limit available workspace to promote health and safety and follow guidelines. Landlords want to encourage tenants to return to the office, but they first need to understand their tenants’ use and occupancy of the space. In order to help answer some of...

ENERGY STAR Awards Oct09

ENERGY STAR Awards

In March, the U.S. Environmental Protection Agency awarded Yardi one of 191 ENERGY STAR® Awards for 2020 for national leadership in creating cost-saving energy efficient solutions. The company earned its second consecutive ENERGY STAR Partner of the Year Award, EPA’s highest level of recognition, for helping clients benchmark energy and water usage, widely promoting ENERGY STAR resources and earning ENERGY STAR certification for its corporate headquarters. And what did the other 190 award winners achieve? Their initiatives show that organizations in every sector of the economy – whether a real estate services leader, industry trade association, toothpaste manufacturer, baked goods pacesetter, top-tier university, venerable automobile manufacturer or aerospace behemoth – can find ways to protect the environment and save energy. Here’s a sampling of the most recent ENERGY STAR Award winners: Global commercial real estate services provider Cushman & Wakefield gave its tenants more than 20 presentations on implementing energy efficient practices and using ENERGY STAR-certified equipment. The company also trained vendors, brokers and building contractors in energy management goals and in using ENERGY STAR as a market differentiator. Cushman & Wakefield achieved ENERGY STAR certification for 130 buildings in 2019. BOMA International, a trade association for commercial real estate professionals, completed Year 2 of its W2 Challenge, an initiative to benchmark water use and waste output that was built with the support of a grant from Yardi. The organization also continued its ENERGY STAR-related education and recognition programs in 2019 and prominently featured ENERGY STAR in its videos, industry conferences, magazine, e-newsletters, webinars and social media. Bimbo Bakeries USA, whose brands include Thomas’, Sara Lee, Arnold and Entenmann’s, reduced energy use by 2.3% from the previous year and became the first major baking company to purchase renewable energy for 100% of its electricity...

5G Technology

What do we know about 5G connectivity at this stage in its development? First, we know it’s nowhere near the capacity it will have in the coming years. Second, we know that it will provide an incredible speed increase over 4G (potentially 100x faster downloads). Third, we can safely presume it will have a significant impact on commercial real estate. In a recent session at the 2020 Virtual BOMA Conference, Yardi solutions consultant David Franklin explained how 5G is already beginning to transform the industry and reshape communication standards. A world of new possibilities “The change to 5G will be as significant as the change from analog to digital,” Franklin said. While timing is still unpredictable, 5G will become ubiquitous. Existing cell towers may not have to be replaced and, while there will be millions of new towers that pop up, 5G connectivity will be available everywhere. This is due to the fact connection points will become easily installed anywhere from light poles to bus stops. The world of 5G connectivity will enable new apps and facilitate robotics and other AI and IoT enhancements. While 4G brought the capacity to video conference and download and upload at new speeds, 5G is going to top that by “connecting massive amounts of devices with very low latency,” Franklin explained. The progress made by 5G will empower a huge number of low-cost devices with low energy consumption related to IoT. The Internet of Things is already comprised of an extensive list of interconnected devices, but with 5G becoming more prevalent, this will enable more data collection, deeper data analysis, faster communication and, of course, new devices and tasks. Real estate operation already relies on IoT-related components such as thermostats, security cameras, lighting controls and energy conservation systems....

Leveraging Energy Data Jul31

Leveraging Energy Data

Kilroy Realty Corporation (NYSE: KRC) continues to normalize green leasing in-house and across the industry. The Los Angeles-based company builds each of its properties to a minimum of LEED Gold Certification and has won numerous awards for sustainability across its existing 13.9 million square foot portfolio. Sara Neff, MBA, LEED AP, Senior Vice President of Sustainability at KRC, is one of the thought leaders behind the innovative sustainability programs at KRC and in the commercial real estate industry. She’s been a driving force creating and deploying the BOMA W2 Challenge, a new initiative built with the support of a generous grant from Yardi, and in partnership with the BOMA Local Associations, that can lead to cost savings on water and waste for countless organizations. Neff spoke on the W2 Challenge and its benefits during a BOMA International webinar this summer with panelists from Yardi and LaSalle. The session “Reducing Water and Waste Starts with Data” explored how KRC and LaSalle have optimized the efficiency of their assets with the use of utility data analytics. The W2 program gives organizations the basic tools needed to do the same. Benefits of Benchmarking Benchmarking has helped KRC surge ahead of industry norms in several ways. Utility benchmarking is becoming more popular: state, regional, and local regulations are starting to require it, tenants are looking for more efficient buildings to lease, and investors are seeing the value and profitability. Reducing water, waste, electricity, carbon footprints, greenhouse gasses, and emissions is becoming more than environmental – it’s now political. And policies from city governments, like the NYC Mayor’s Carbon Challenge, and state legislators, like California’s Assembly Bill 802, are becoming more common across the U.S. and mean serious business. Noncompliant owners and buildings are fined or placed on a publicized list. By adopting resource tracking measures early on, the organization and its legal team are better prepared to comply to benchmarking requirements. Lenders also look at ENERGY STAR scores as a measure of how well a building is being operated, so even businesses in locations that do not require benchmarking benefit from doing so. Neff encourages companies to get started with benchmarking as soon as possible. “Investors are looking for data coverage and benchmarking. It’s better to at least have the data gathered and organized even if you can’t show mind-blowing results in the first years,” she says. Organizations can gain access to greater capital for growth by demonstrating that buildings are operated efficiently. Benchmarking can even effect occupancy rates and leasing rates. In LA, Neff explains, class B buildings with ENERGY STAR certifications lease at higher rates than class A buildings without certification. Certified buildings also experience higher occupancy rates. Energy benchmarking has become a critical component of growth because it can also lower overhead costs. Neff recalls how an exterior leak could have cost the company thousands. Neff says, “Benchmarking is how we found exterior leaks. We have really good detection systems in the interiors of our buildings. But boy, if you have a leak in the exterior, a drip irrigation line that’s buried, good luck figuring out that is happening! The only way to do that currently is through water benchmarking.” She continues, “We had a building that had a 25 percent increase in water that quarter compared to the previous year. It’s something that could’ve gone on for months and months. It’s not just the cost. It’s the damage to the area: the integrity of the foundation, the soil, the plants, and nobody knew.” KRC noticed a change in waste diversion at a different property. “One building dropped precipitously in its diversion but it was the same number of pickups,” Neff begins. “Nothing changed about the service schedule and we couldn’t figure out why the data was changing.” It turns out that the recycling was contaminated….with spaghetti. “A tenant would have regular spaghetti parties and dump the remains into the recycling...

BOMA W2 Challenge Jan19

BOMA W2 Challenge

A grant from Yardi is helping owners and managers of hundreds of properties improve water and waste management practices in a Water and Waste Challenge program sponsored by the Building Owners and Managers Association International. The W2 Challenge is a two-year initiative designed to benchmark water and waste consumption and associated costs, and then develop new best practices for improvement. This year is dedicated to establishing a baseline using ENERGY STAR® Portfolio Manager® and 2019 will be focused on implementing performance improvements. Seventeen hundred properties signed up for the program so far. “Owners, operators, tenants and investors all have a stake in maximizing a building’s performance, and interest in the program has exceeded all expectations. The W2 Challenge is a unique opportunity to gain full understanding of water consumption and waste management, and take the industry’s sustainability efforts to the next level,” said Ken Rosenfeld, director of state and local affairs for BOMA International. “The program’s tips, tools and resources can help participants compare their performance to that of their peers, identify opportunities for improvement and reduce operating costs. Participants will also earn recognition for their leadership on this issue, including visibility at a future BOMA International Conference & Expo, use of the program logo and the opportunity to be featured as success stories that will be published in BOMA publications.” The Yardi Smart Energy Suite provides tools that can help building owners and operators obtain maximum value from the W2 Challenge, starting with automated data capture. For example, Yardi Utility Expense Management captures cost and consumption data directly from utility company invoices and Yardi Utility Billing allows companies to recover utility costs directly from tenants through submeter installation, maintenance and data administration services. Once the data is easily captured, building operators use Yardi...

Creating Continuity Oct14

Creating Continuity

Assessing risk and planning ahead can help property managers and owners safeguard their assets, employees and tenants in the event of a disaster. Yardi® clients have an invaluable resource for creating and executing business continuity strategies—the procurement solution known as Yardi Marketplace™. Yardi Marketplace is a source for more than 1 million discounted MRO products and building supplies, including items for disaster preparation and recovery.  Yardi Marketplace is part of Yardi Procure to Pay™, a centralized procurement, invoice processing and vendor management platform. “Yardi recognizes the importance our clients place on having appropriate solutions in place.  Adequate disaster preparation includes having access to sufficient types and quantities of supplies before, during and after an event. We can help source those items quickly at competitive pricing,” said Tom Jennings, senior operations manager for Yardi Marketplace. The Yardi Marketplace team helps tailor emergency supplies and services to a client’s disaster and emergency planning program. After identifying potential threats at the local, regional and portfolio levels and establishing response plans, clients can stock the appropriate equipment and supplies from an online catalog.  A pre-approved personal shopping list makes purchasing the items fast and easy. Along with protecting assets and minimizing liability, adequate emergency planning is also critically important to attracting and retaining tenants.  Property managers can complement Yardi Marketplace’s resources with a handbook produced by BOMA International.  “Emergency Preparedness Guidebook: The Property Professional’s Resource for Developing Emergency Plans for Natural and Human-Based Threats” highlights the importance of emergency preparedness throughout the leasing process.  The guide, which covers emergency, evacuation and recovery plans, may be purchased at http://store.boma.org/products/emergency-preparedness-guidebook.  A list of “50 Items Every Emergency Tool Kit Should Have” is available here. The guide includes a checklist for disaster management that includes: Procedures for reporting an emergency Instructions...