The BOMA Magazine - January/February 2010

January/february 2010

Experience the Power of the BOMA Network

Plus:Building Engineers—Beyond the Boiler Room

2009 in Review

Health Reform and Healthcare Real Estate

Protecting your Building’s Most Important Assets

Tenant Retention

January/February 2010 BOMA 3

January/February 2010 Volume 6, No. 1

For advertising rates and information, contact Paul Hagen at Stamats Business Media 866-965-4205.

2017

23

DEPARTMENTS

Volume 6, No. 1 The BOMA Magazine Janu-ary/February 2010, (ISSN 1532-4346), Copy-right 2010. The BOMA Magazine is published bimonthly in January/February; March/April; May/June; July/August; September/October; and November/December by the Building Owners and Managers Association (BOMA) International, 1101 15th St., NW, Suite 800, Washington, D.C. 20005; Telephone 202-326-6300; Fax 202-326-6377; www.boma.org. Periodicals Postage paid at Washington, D.C. and additional mailing offices.

POSTMASTER: Send address changes to: The BOMA Magazine, Attn: List Department, 1101 15th St., NW, Suite 800, Washington, D.C. 20005. Undeliverable U.S. copies should be sent to: The BOMA Magazine, Attn: List Department, 1101 15th St., NW, Suite 800, Washington, D.C. 20005. Return undeliverable Canadian addresses to: PO Box 875, STN A, Windsor, ON N9A 6P2.

Tenant RetentionLaura HorsleyWhat are you doing to protect your building’s most important assets?

Special Feature: 2009 Year in ReviewLindsay TiffanySupporting commercial real estate during the worst recession in decades; it was a year to remember.

4 MESSAGE FROM THE CHAIROpportunities Ahead.

6 LEGISLATIVE UPDATEClimate change and carried interest news; plus, survival strategies from the NAC/ROC Conference.

8 STATE & LOCAL UPDATEThe issues you need to pay attention to in 2010.

10 CODES & STANDARDS UPDATEICC Codes Hearings wrap-up—what happened and what’s ahead for owners and managers; green building code news; BOMA’s Ron Burton recognized.

12 LEADING THE WAYKarrie S. McCampbell—BOMA leader extraordinaire, intrepid chef.

13 AROUND THE INDUSTRYBOMA says goodbye to a great leader; PBS gets a new assistant commissioner; Real Estate Roundtable releases its Sentiment Index for 4Q09.

28 GREEN SCENEKelly F. DukeThe versatile green roof—make it pretty, make it functional, make it work for you.

29 TRENDS TRACKERRecovery may be in sight for the construction industry, but is the office market keeping pace?

30 RESEARCH CORNERCracking the NOI equation: Strategies for asset value enhancement.

31 EYE ON EDUCATIONDanny ProskyHealthcare reform and healthcare real estate: What’s the prognosis?

32 TRADE TOOLSCase study: Learn how Pacific Medical Buildings streamlined its procurement and accounts payable process.

33 BUYERS’ GUIDECheck out the latest industry products and services.

34 CONFERENCE CONNECTIONInnovation and cost savings frame offerings at The Every Building Show.

Beyond the Boiler RoomRay CongdonLooking for energy management success? Look to your building engineer.

Connect with BOMA

Join BOMA on Facebook

Join BOMA on LinkedIn

See BOMA on YouTube: www.youtube.com/bomainternational

Follow BOMA on Twitter:

BOMA Chair Jim Peck @ JimPeckBOMA

BOMA President Henry Chamberlain @ HenryBOMA

BOMA Vice President Lisa Prats @ LisaPratsBOMA

4 BOMA January/February 2010

Message froM the Chair

Publisher: Lisa M. Prats, CAE

editor: Laura Horsley

associate editor: Lindsay Tiffany

Contributing editors: Karen W. Penafiel, CAE, Ronald Burton, James Cox, Lorie Damon, Ph.D

Designer: Amy Belice

Published by: Building Owners and Managers Association (BOMA) International

BOMA International OfficersChair and Chief elected officer James A. Peck, RPA, FMACB Richard Ellis Albuquerque, N.M.

Chair-electRay H. Mackey, Jr., RPA, CPM, CCIMStream Realty Partners, LP Dallas, Texas

Vice Chair Boyd R. Zoccola Hokanson Companies, Inc. Indianapolis, Ind.

secretary/treasurer Kent Gibson, CPMZions Securities Corporation Salt Lake City, Utah

President and Chief operating officer Henry H. Chamberlain, CAE, APRBOMA International Washington, D.C.

The cost for The BOMA Magazine is $75 a year for subscribers and $50 a year for BOMA International members.

Publication of advertising should not be deemed as endorsement by BOMA International. The publisher reserves the right in its sole and absolute discretion to reject any advertisement at any time submitted by any party. Material contained herein does not neces-sarily reflect the opinion of BOMA International, its members or its staff.

James A. Peck, RPA, FMA

Chair and Chief Elected Officer

Opportunities AheadThere’s a lot of discussion of late about strategies to enhance asset value.

Reducing operating expenses, finding new revenue streams or even just holding onto current revenue is more important, and more challenging, than ever.

This issue’s feature

story, Asset Revival,

page 17, examines the

way owners and man-

agers are creating value

in their buildings by

looking at where it all

begins and ends—with

our tenant customers.

Learn how a blend of

innovation and back-

to-basics helps ensure

tenants are happy—

and staying put.

Success in today’s marketplace, and

keeping your tenants in your buildings,

is really about having access to the tools

to ensure your building is a prime asset.

As we begin a new year, BOMA is dedi-

cated to making sure that you have those

tools. In 2009, property professionals

from across the country turned to the

BOMA 360 Performance Program to help

differentiate their buildings in the mar-

ket. Behringer Harvard recently had its

Bank of America building in Charlotte

designated and Jason Mattox, Behring-

er’s chief administrative officer, noted:

“The BOMA 360 designation is a badge

of honor that exemplifies best practices

and creates a wonderful goal for other

properties in our portfolio. It proves we

are way above the mark.” Discover more

about the program at www.boma.org/GetInvolved/BOMA360.

It doesn’t stop there. BOMA’s educa-

tional offerings and research tools are

also helping commercial real estate pro-

fessionals navigate a difficult market. The

new online Experience Exchange Report

(EER) allows you to fine-tune your analy-

sis of your asset’s efficiencies by drilling

down into the line item detail of every

income or expense measure. Be sure to

participate in the 2010 EER Survey at

www.bomaeer.com. It’s easy, and it’s

how we ensure you have the best and

most comprehensive data.

BOMA will continue to set new stan-

dards in the coming year. The recent

release of the Gross Areas of a Building:

Methods of Measurement and the highly

anticipated new office standard, Office

Buildings: Standard Methods of Measure-

ment and Calculating Rentable Area, are

already helping BOMA members do their

jobs better. Watch this column for more

standards to be released in 2010.

Recovery will be slow and the year ahead

will probably hold many of the challenges

of the past year. But the smartest way to

take advantage of opportunities is by join-

ing the industry’s best business network at

the industry’s most important gathering,

the BOMA International Conference and

The Every Building Show, June 27-29 at the

Long Beach Convention & Entertainment

Center in Los Angeles County, Calif. This

is the one conference that commercial real

estate professionals have included in their

2010 budgets because it’s the industry’s

premier education and networking event,

with the collective brain trust to solve just

about any problem. We’ve retooled this

year’s conference, giving you access to the

same great content through a more effi-

cient schedule. Go to www.bomacon vention.org to learn more.

Finally, as we put together our strategies

for recovery, let’s not forget that what hap-

pens on Capitol Hill and in city halls across

the country will have a significant impact

on how successful we are. At press time,

the House had passed a bill that would

almost double the tax on carried interest.

In a couple weeks, BOMA members will be

bringing this and other issues straight to

Capitol Hill legislators during the National

Issues Conference. We need your support.

Thank you for your continued

commitment.

Call for Nominations: Vice Chair and Executive Committee Members

BOMA International’s Nominating Com-mittee is seeking candidates for the posi-tion of vice chair and for five members of the Executive Committee to the Board of Governors. For further information, con-tact Ann Coslett at [email protected].


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legislative UPDate

OVER THE SUMMER, the House of Representatives passed a broad climate change and energy bill. In the Senate on September 30, Barbara Boxer (D-Calif.), chair of the Environment & Public Works Committee, and John Kerry (D-Mass.) introduced S. 1733, the Clean Energy Jobs and American Power Act. While 2009 came to a close without Senate floor action, progress was made in the committees and the Senate hopes to bring it to a vote during the first quar-ter of 2010.

Both bills include a section on strengthening energy-efficiency require-ments in building codes, and, while BOMA International is supportive of the current code development process, we oppose the federal preemption of the voluntary, consensus-driven codes development process proposed in the legislation. BOMA International is a vot-ing representative on the ASHRAE 90.1 committee, and we believe the current process works well without the Depart-ment of Energy or Environmental Pro-tection Agency playing a larger role to set arbitrary efficiency targets or develop a national building code. BOMA will con-tinue to communicate to Congress that the current codes development process works, and the country would be better served by focusing resources on helping state and local governments train codes officials and enforce existing building

Climate Change Action Postponed to 2010

codes. Both bills also include an incen-tive program for retrofitting buildings, which we strongly support.

Tell Your Senators to Oppose a Tax Increase on ‘Carried Interest’

In December, the U.S. House of Rep-resentatives voted 241-181 in favor of tax legislation that extends $31 billion in expiring tax cuts, including a one-year extension of the BOMA International-supported 15-year leasehold improve-ment depreciation timeline that was set to expire at the end of 2009 at press time. Unfortunately, to partially offset the cost of these tax breaks, the bill also includes a tax increase on the “carried interest” of a partnership, increasing the tax from the 15-percent capital gains rate to that of ordinary income (almost 40 percent). During floor debate, House Republi-cans focused on the negative impact this would have on the commercial real estate industry and job creation.

The bill now heads to the Senate, and, at press time, it was expected to have a difficult time getting through with car-ried interest included as a revenue raiser. BOMA will remain vigilant in opposition of this tax increase, while at the same time working to find a way to extend the 15-year depreciation timeline for lease-hold improvements.

Contact your Senators today and tell

them to oppose increasing the tax on carried interest. Visit BOMA’s Legislative Action Center at http://capwiz.com/boma.

PAC at WorkWith the 2010 elections less than a

year away, campaigns are getting into full swing, and BOMAPAC is continuing its rapid pace of supporting members of Congress who support the real estate industry. This, of course, wouldn’t be possible without the generous support of the BOMA membership! With your help, we have made recent contribu-tions to the following real estate leaders on Capitol Hill:

U.S. Senate• BobCorker(R-Tenn.)servesonthe

Banking, Housing, & Urban Affairs Committee and the Energy & Natu-ral Resources Committee.

• ChuckGrassley(R-Iowa)istheRank-ing Minority Member of the Finance Committee.

• JohnnyIsakson(R-Ga.)isco-chairofthe Senate Real Estate Caucus and a long-time real estate professional.

• Harry Reid (D-Nev.) is the SenateMajority Leader.

• ChuckSchumer(D-N.Y.)sitsontheSenate Finance Committee, which oversees the nation’s tax, trade, social security and healthcare legislation.

• RichardShelby(R-Ala.)istherankingmember of the Banking, Housing, & Urban Affairs Committee.

U.S. House of Representatives• SpencerBachus(R-Ala.)istheRank-

ing Minority Member of the Financial Services Committee.

• DaveCamp(R-Mich.) istheRank-ing Minority Member of the Ways & Means Committee.

• Eric Cantor (R-Va.) is the HouseMinority Whip.

• JamesClyburn(D-S.C.)istheHouseMajority Whip.

• Geoff Davis (R-Ky.) serves on theWays & Means Committee and holds a leadership role within the Republi-can Conference as a Deputy Whip.

• JimMatheson(D-Utah)sitsontheHouse Energy and Commerce Com-mittee and successfully passed an amendment to the energy and cli-mate change legislation on the House


floor on our behalf to temper the most onerous provision in the advanced energy codes section of the bill.

• RichardNeal(D-Mass.)co-chairstheCongressional Real Estate Caucus and is a member of the Ways & Means Committee.

• CliffStearns(R-Fla.)sitsontheHouseEnergy and Commerce Committee.

Survival Strategies and Reluctant Market Top NAC/ROC Fall Agenda

BOMA International’s National Advi-sory Council (NAC) and Regional Own-ers Council (ROC) convened in Chicago on Oct. 29-30 to converse with experts, share thoughts on marketplace trends and commiserate with industry col-leagues and peers. The National Advisory Council is made up of senior executives from the nation’s largest companies that own and manage commercial real estate and is chaired by John Oliver, manag-ing director, Wells Real Estate Funds. The Regional Owners Council is com-prised of owners and equity partners of single or regional market commercial real estate and is co-chaired by Shelley Bade, principal, SL Bade & Associates, LLC, and Larry Soehren, vice president and COO, Kiemle & Hagood Co.

It’s Nice to be Relevant Again“When you buy low and sell high,

property management professionals are not really needed,” echoed several attendees. “It’s nice to be relevant again.” The “basics” of good management, skilled managers and cost containment/reduction practices are more important than ever in this economy.

It’s Not All Bad News; the Economy IS Recovering

Bob Bach, senior vice president and chiefeconomistforGrubb&Ellis,pre-dicts a slow recovery from the recession but believes the jobless recovery will not be as long as the last one because com-panies will have to staff up quickly after massive layoffs. He sees improvement for commercial real estate by the end of 2010 but with negligible growth until 2011. He also warned that a “double dip” recession like we experienced in the late ’70s/early ’80s is possible. Apartments will lead the recovery sequence followed by industrial, retail and finally office. Although vacancy rates continue to rise

in all four sectors, this increase is slow-ing down, indicating that the economy is improving. For the office market, he predicts that vacancies will peak the first half of 2011.

Bach also reported that leasing activ-ity is still decreasing for office and indus-trial, but average lease terms are starting to lengthen because there are good deals to be had. Rental rates are still coming down and sublease space is increasing, although slowing down. As for invest-ments, transaction volume is at an all-time low and cap rates are going up. Five hundred billion dollars ($500 billion) in CRE loans per year are maturing, but this will start to gradually decline. A surge of distressed assets will hit the market in 2010 and many will be snapped up by offshore investors.

What are the Dollars Chasing?NAC Chair John Oliver, Jim Postweiler,

managing director of Jones Lang LaSalle, and Nick Stolatis, director of Asset Man-agement for TIAA-CREF, led a panel dis-cussion on where the dollars are, and what is needed for deals to be done. Postweiler observed that investment and sales activity is slow and the CMBS market has long dried up, but the mar-ket is beginning to improve. The mind-set now is to try to work things out with lenders vs. foreclosure, which is different than what happened in the ’90s. Stolatis agreed, quipping “a rolling loan gathers no loss.” The panel concluded that com-mercial real estate has lost value, but the big question remains by how much? And how long can/should we hang on?

Survival Strategies: Sticking to Our Knitting

Sam Delisi, senior managing director, CB Richard Ellis, and Joe Magdziarz, vice president of the Appraisal Institute, were featured in a Survival Strategies panel. Delisi reported that CBRE’s first focus is on taking care of existing clients, “stick-ing to our knitting” and paying attention to the basics. He said CBRE is focused on training its people to understand what is going on in the marketplace and pre-dicted they will be well-positioned when the market bounces back. Magdziarz reported that the Appraisal Institute is spending time getting its members up to speed on distressed assets and the value of green, whether it includes cer-tification or merely good property man-agement practices that can yield just as much value, if not more.

Green Proving GroundSpeaking of green, Bob Peck, commis-

sionerofGSA’sPublicBuildingsService,describedhowtheGSAisimplementingsustainable practices in its buildings to evaluate what works and what does not. For example, there is no air condition-ing in the San Francisco Federal Build-ing because there are only a couple of days per year that it gets hot enough to need it. President Obama has challenged GSAtoachieveazerocarbonfootprintin government buildings by 2020. BOMA planstoworkcloselywithGSAtotakethis knowledge and disseminate it to the private sector.

For more information about membership in NAC or ROC, contact Karen Penafiel [email protected] or Pat Areno [email protected].

During the NAC/ROC meeting, Bob Bach, senior vice president and chief economist for Grubb & Ellis, warned of a possible “double dip” recession.


state & local update

COMMERCIAL REAL ESTATE’S ADVO-CATES will need to be even more engaged in 2010, as policymakers will face tough challenges at the state and local levels. The national economy may be stabilizing, but state and municipal economies are still reeling from the recession. While the economy will be on the top of lawmakers’ to-do lists, they will also be dealing with many other issues impacting the commercial real estate industry. Here is a look at those issues:

Budget Issues—Budgets dominated the political landscape in state capitals and city halls across the country in 2009 and will continue to do so in 2010. Accord-ing to a report from the National Gover-nors Association and the National Asso-ciation of State Budget Officers, states reduced General Fund expenditures by 4.8 percent and expect to reduce FY 2010

General Fund expenditures by at least four percent. Similarly, the economic downturn greatly impacted the fiscal soundness of the nation’s cities. The National League of Cities reported that cities faced a 2.9-percent budget deficit in 2009 due to a decline in tax revenues. As state and local revenue collections typically lag behind a national economic recovery, revenues will remain depressed throughout fiscal year 2010 and into fis-cal years 2011 and 2012.

This need to generate revenue will create a flurry of activity on the tax front at the state and local levels. To fill these gaps, lawmakers will be forced to make tough decisions either by cutting deep into sacred programs or dramatically increasing taxes. Business interests will be the hardest hit. California’s real estate advocates will face three state-wide bal-lot measures this fall that will enact split roll property taxes and change the way commercial properties are taxed in the state.

telecommunIcatIons—Mandatory access legislation has the potential to resurface in 2010. State-level legislative forced access attempts became less fre-quent in the last few years due to a move to the regulatory arena. Ohio’s real estate community was put on notice last fall when a carrier of last resort bill (COLR) was introduced. Senate Bill 162 exempts an incumbent local exchange carrier from providing basic local exchange service or any service to occupants of multi-tenant real estate where the real estate owner takes action to benefit

challenges abound for cRe advocates at the state and local levels

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another service provider. The real estate community opposes any expansion of COLR relief as the telecommunications marketplace is clearly working. While this may be an isolated occurrence, com-mercial real estate advocates should monitor their legislatures for similar developments.

eneRgy peRfoRmance BenchmaRkIng—State and local governments are mov-ing to require commercial building owners to use the U.S. EPA’s ENERGY STAR® Portfolio Manager rating system to benchmark their building’s energy performance.

At press time, the City of Seattle was considering an ordinance that would establish a standard for regular energy-performance benchmarking, disclosure and reporting for commercial and multi-family buildings. Specifically, building owners will be required to benchmark the energy performance of each build-ing and provide the City with an energy benchmarking report. Building owners would also be required to release build-ing energy performance information,

upon request, to any current or prospec-tive tenant, buyer or lender involved with an application for financing or refi-nancing of the building. The proposed ordinance reinforces the requirements of a state law that mandated similar requirements using the Portfolio Man-ager rating system.

Many state and local governments have also pursued such requirements. California requires its utilities to provide energy data in a format that is compat-ible with EPA’s Portfolio Manager. It further requires building owners to dis-close benchmarking data to prospective

parties as part of the sale. Washington, D.C., now requires its commercial build-ings to benchmark energy performance using Portfolio Manager.

BOMA International does not advo-cate for mandates of any kind; however, we have consistently worked with EPA to educate our members on the value of benchmarking. For more information, please visit: www.boma.org/Train ingAndEducation/BEEP/Pages/estardates.aspx

fall electIons—The fall elections will be a significant focus for many state lawmakers. Voters in 37 states will go to the polls to elect governors next year. Democrats will defend 19 of those seats, while Republicans hope to hold onto 18. The Republican Party is also looking to recapture its lead in governorships, capi-talizing on their wins in New Jersey and Virginia in 2009. Forty-six (46) states will hold legislative elections. Nationwide, 1,155 state Senate seats and 4,598 state House seats will be up for grabs. Munici-pal and county governments will also hold elections.


Codes & standards update

BoMa successes at ICC public HearingsTHE FIRST STEP in the International Code Council’s 2009-2010 code devel-opment cycle—Public Hearings before the committees charged with recom-mending action on more than 3,000 code change proposals—was held in Baltimore, Md., from October 24 through November 11. BOMA’s code advocacy team was largely successful in

representing the interests of commercial real estate despite the growing influence of powerful groups lobbying for funda-mental and costly shifts in this country’s building regulations.

BOMA led critical efforts to keep a number of unnecessary and costly changes out of the ICC Codes, avert-ing regulatory requirements that would have cost BOMA members well over $7 billion. These avoided costs included proposed mandates for more passive fire protection systems, blast-resistant elevator and stair shaft walls, extensive retrofits of whole building electrical sys-tems, costly fire separation walls on all floors in virtually all tenant spaces and retroactive installation of sprinklers in existing buildings.

BOMA also secured modifications to many code changes recommended for approval to mitigate the excessive cost of new requirements for rooftop vegeta-tion areas or “green roofs,” emergency responder radio frequency systems in existing buildings and alternatives to mandatory installation of vestibules at all building entrances.

The U.S. Department of Energy (DOE) teamed with energy and environmen-tal groups and the ever-present product interest groups to push for significant increases in energy efficiency and the introduction of green/sustainable build-ing provisions. DOE’s goal of reaching 30-percent savings over the 2006 ICC Energy Conservation Code (IECC) will be realized if the majority of DOE’s major proposals recommended by the energy committee in Baltimore are approved by the ICC voting members later in 2010.

While BOMA supported many of DOE’s proposals, others negatively impacting existing building retrofits, tenant finish-out projects, upgrades to HVAC, lighting and window and door replacement earned BOMA’s opposition, as well as the opposition of many groups representing those who must pay for these measures. BOMA defeated other major new provisions that would require automatic lighting control on all circuits, extensive building commissioning prior to occupancy, the addition of an appen-dix including a “stretch” code far beyond IECC requirements and mandatory

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on-site renewable energy to satisfy five percent of building energy use for both new and existing buildings undergoing major renovations.

This code development cycle con-cludes in 2010 with final action hear-ings in May and October. BOMA con-tinues to work with its coalition part-ners and those with opposing views to reach compromises on many of the most troubling issues. Importantly, DOE and its allies have agreed to work with BOMA to resolve our concerns with the commercial building energy proposals before they are heard again in October. A detailed report of the results of the ICC hearings in Baltimore can be found on the BOMA Web site at www.boma.org.

189.1 Green Building Code Approved By ASHRAE

The American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) project committee developing the first green building code for commercial buildings—Standard 189.1—has now completed its work with

an overwhelming vote to approve the code for publication. The ASHRAE Board of Directors followed suit in December by giving final approval for the code to be published early in 2010.

The development of this green build-ing code—BSR/ASHRAE/IESNA/USGBC 189.1—is the culmination of an almost three-year effort, including a final year of multiple meetings and online work by the completely reformed project com-mittee empanelled late in 2008. The committee was reconstituted to include a more balanced representation of inter-ests, including two voting seats repre-senting real estate interests (BOMA and the National Multi Housing Council), as well as several practicing design engi-neers with direct building owner input. BOMA was able to gain compromises favoring the commercial real estate industry on many proposals that did not meet reasonable cost/benefit analysis or that posed irreconcilable implemen-tation challenges. BOMA is now work-ing with ASHRAE and others to support implementation of 189.1 for “green” proj-ects in local and state jurisdictions.

BOMA’s Ron Burton Receives NIBS Award

BOMA Vice President of Codes, Stan-dards & Regulatory Affairs Ron Burton was honored by the National Institute of Building Sciences (NIBS) with its 2009 Institute Member Award. Burton was cited for his “strong advocacy support-ing building professionals, his work to achieve high-performing buildings and his efforts to advance the understanding and use of high-performance standards to improve building delivery.” BOMA continues its long-standing NIBS mem-bership with seats on several NIBS com-mittees, and the participation of BOMA Past Chairman John Kelly on the NIBS Board of Directors. Learn more about NIBS and its programs and initiatives at www.nibs.org.

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leading the way

A SENIOR VICE PRESIDENT of the Cen-tral Region with Transwestern in Dallas, Karrie McCampbell provides leadership to management teams responsible for up to four million square feet of space. Her volunteer leadership work with BOMA on the local and national level would fill the rest of this page, but the very short list of her involvement includes serving on government affairs committees for BOMA/Dallas, Texas BOMA and BOMA International. She is immediate past president of BOMA/Dallas, second vice president of Texas BOMA and a current member of the Executive Committee of BOMA International.

you’ve held just about every volunteer position there is with BOMa/dallas and texas BOMa. what drives you to be such a dedicated ambassador for BOMa?

I’ve been a BOMA member for more than 22 years, and what has always impressed me is the quality of the people in the organization. It’s like having an immediate huge family. It’s just such a worthwhile organization that advances the knowledge base of the real estate manager.

One of my best experiences was co-chairing the committee to bring the BOMA International Conference to Dal-las in 2006. We worked very hard and received so many great compliments from BOMA folks from around the coun-try. We had a great Welcome Party at Gil-ley’s, and what we found is that you can do a great party and not break the bank. Chairing that committee really launched my involvement to the next level.

Karrie S. McCampbell, CPMBOMa leader extraordinaire, intrepid Chef

what advice do you have for other CRe women seeking leadership positions?

I don’t know if more women are com-ing into the industry or if more are just being recognized. If you work hard, have a passion for what you do and are com-mitted to your industry, you will be rec-ognized for your efforts. My advice for women, or men for that matter, is to get involved. Find your passion or interest and become the smartest person that you can on that subject and you will succeed. It’s also good to be a mentor for others coming up. My BOMA men-tor was C. J. Butler, a past president of BOMA/Dallas and, at the time, my boss. He would encourage us and say, “If I’m paying your dues, you have to get involved; you can’t just sit there.”

what are some of the challenges you are facing in this market?

Right now, the greatest challenge is declining capital. Our biggest hurdle this year has been creating a budget for each asset that provides a little bit of cash flow for the owner. Without cash flow, every-thing stops. We’ve had to get creative to save more money in the buildings. We might try to block bid contracts across the entire portfolio to realize savings in certain categories or get a new energy contract to help save money. Even the little things we do help. We challenged our engineers to see how much energy they can save. Just changing light bulbs in the common areas to save kilowatts helps.

what are some of the key advocacy issues and how do you work with legislators on the local level?

We are always trying to get more energy-efficiency incentives for our buildings. If you can tell your owner that your payback just went from four years to two years because of an incen-tive, that’s a nice carrot to dangle out there. Plus, if I can put a more efficient chiller in my building, then I’ve got all those people doing that work and that can only help the economy.

In Texas, a portion of BOMA’s mem-bership dollars supports a full-time lob-byist on Texas BOMA’s behalf. He keeps tabs on everything that goes on. Every bill submitted is reviewed by him and his team and he makes sure that nothing gets snuck in that might be harmful to building owners. That’s why I always tell people that their BOMA membership is so important, because it helps support that watchdog. Now we actually have legislators coming to us and asking for BOMA’s support.

we understand you are quite the chef and you love to entertain. what is your ideal dinner party—who is in attendance and what’s on the menu?

Everyone says they want Abe Lincoln or Elvis at their dinner party. Honestly, I don’t want any special guests. I love cooking for my dear friends and family or anybody that appreciates great food and wine. In the summertime, it’s about grilling; in the winter, I might cook a ten-derloin and lobster tails. My friends all say I make the best salad dressing, ever. It’s my grandmother’s recipe—a combo of garlic, sugar, salt, pepper and really good oil and balsamic vinegar. Bon Appetit!


Around the industry

BOMA AND THE GREATER SEATTLE AREA lost a beloved leader and friend this past November with the passing of Jack Dierdorff, BOMA International president from 1977 to 1979. Dierdorff was at the helm soon after BOMA Inter-national moved from Chicago to Washing-ton, D.C. The issues of the day included rent control and the energy crisis of the ’70s, and Dierdorff knew moving to D.C. would put BOMA in a position to be a critical voice representing commercial real estate before lawmakers. In a 2007 interview with The BOMA Magazine, Dier-dorff remarked on the move: “We smart-ened up and moved to D.C. to be closer to Congress.”

Professional competency was impor-tant to Dierdorff, and the Real Property Manager (RPA) designation was initi-ated during his term. He made a point to become an RPA himself to help make the Continued on page 14

BOMA Says Goodbye to a Great Leader

case to other industry professionals. He recalled, “I took the courses and qualified for the RPA, so when I went around and talked up the program I knew what I was talking about.”

Dierdorff was born in Wolf Point, Mont., in 1918, grew up in North Dakota and eventually moved to Seattle. He enlisted in the Army after Pearl Harbor was bombed and served his country in World War II. In the 1950s, he helped form University Properties, which later became Unico Properties. Later in his career, he helped form Sekotac Investments.

Jack’s history with BOMA is rich with accomplishments and in making a dif-ference in the lives and careers of so many people. He is survived by Wanda Dierdorff, his wife of 64 years. They have three sons, one daughter and nine grandchildren.

Remembrances may be sent to: 101 Club Founda-tion, PO Box 1709, Seattle, Wash. 98111-1709.

Jack Dierdorff, 1918-2009

BOMA International President, 1977-1979


Around the industry

ValleyCrest Honored for Landscape Projects

ValleyCrest Landscape Companies was hon-

ored with 14 landscape awards at the 40th annual

Green industry Conference awards presentation

and reception in Louisville, Ky., this past octo-

ber. ValleyCrest received a prestigious PLAnet

Judges Award, as well as 13 PLAnet environmental

improvement Awards from the Professional Land-

care network, a national landscape industry associa-

tion. An additional award was bestowed on Burton

s. sperber, ValleyCrest founder, chairman and co-

Ceo, who received Lawn & Landscape Magazine’s

2009 Leadership Award.

For more information, visit www.valleycrest.

com.

More Buildings Attain BoMA 360 stamp of excellence

In December, BOMA International announced the latest buildings to receive the BOMA 360 Performance Program designation, a groundbreaking new program designed to recognize commercial properties that demonstrate best practices in building operations and management. These new buildings join the growing number of best-in-class buildings to receive the BOMA 360 designation since its inception last spring.

“In this challenging market cycle, it’s more important than ever for property pro-fessionals to demonstrate to stakeholders and tenants that their assets are superior performers. The BOMA 360 Performance designation is a key indicator that speaks to a building’s excellence in operations and management,” remarks BOMA Inter-national Chair James A. Peck, RPA, FMA, senior director of asset services, CB Rich-ard Ellis. “These buildings join an elite group of designees from across the country that are established market leaders, and we’re very excited to confer this new class with the 360 designation.”

The BOMA 360 Performance Program is an online self-assessment that evaluates properties on six major areas of building management. The holistic nature of the BOMA 360 Performance Program means that every aspect of building performance is assessed and scores are based on how build-ings meet an extensive checklist of best practices. The pro-gram comes at a critical time, as building owners and manag-ers are looking to differentiate themselves from competition in a distressed market.

The new class of BOMA 360 buildings includes:

Roger Zino, president of ValleyCrest Landscape Maintenance, accepts the Judges Award.

R


171 17th Street in Atlantic StationAtlanta, Ga.

Owned by: Atlantic Office Acquisition Company, Inc.

Managed by: Carter & Associates

330 North WabashChicago, Ill.

Owned by: 330 N. Wabash Avenue, LLC

Managed by: Prime Group Realty Trust

400 & 450 N. Brand BoulevardGlendale, Calif.

Owned by: MetLife Real Estate Investments

Managed by: Cushman & Wakefield of California, Inc.

735 North Water StreetMilwaukee, Wis.

Owned by: Compass Properties, LLC

Managed by: Compass Properties, LLC

1300 Clay StreetOakland, Calif.

Owned by: OCC Venture, LLC

Managed by: Shorenstein Realty Services, L.P.

Accenture TowerMinneapolis, Minn.

Owned by: California State Teachers’ Retirement System

Managed by: CB Richard Ellis

Continental TowersRolling Meadows, Ill.

Owned by: Prime Group Realty Trust

Managed by: Prime Realty Group Management, L.L.C.

Granite TowerDenver, Colo.

Owned by: Cumberland Office Park, LLC

Managed by: Granite Properties, Inc.

Las Colinas Corporate CenterIrving, Texas

Owned by: Piedmont Office Realty Trust

Managed by: Piedmont Office Management

Marathon Oil TowerHouston, Texas

Owned by: Hanover Real Estate Partners

Managed by: Transwestern

One Newport PlaceNewport Beach, Calif.

Owned by: Met Life Insurance Company

Managed by: Cushman & Wakefield of CA, Inc.

Wachovia Financial CenterMiami, Fla.

Owned by: 200 South Biscayne TIC I & II, LLC

Managed by: Cushman & Wakefield of Florida, Inc.

For more information on the BOMA 360 Performance Program, visit www.boma.org/GetInvolved/BOMA360.

Melton Named Assistant Commissioner for Public Buildings by GSALawrence A. Melton has been selected as the U.S. General Services Administration´s assis-tant commissioner for the Public Buildings Service´s (PBS) Office of Facilities Manage-ment and Services Programs. In this position, Melton will oversee and manage PBS´s build-ing operations and tenant services. Melton has been acting in this position since January, and, during this time, he has led a nationwide effort to improve how GSA manages its 361 million-square-foot inventory and provides services to its one million tenants. Among Melton´s current priorities are the implemen-tation of a Smart Buildings initiative to improve performance across the GSA portfolio and a wellness strategy responding to the needs of building tenants.

Continued on page 16


Around the industry

RPA/FMA/SMA/SMT ACCELERATED COURSES

Jan 27, 2010 Asset ManagementFeb 24, 2010 Design, Operation & Maintenance Part I Mar 24, 2010 Budgeting & AccountingApr 14, 2010 Design, Operation & Maintenance IIJun 22, 2010 Ethics Is Good Business ShortCourseJul 28, 2010 Law & Risk ManagementAug 25, 2010 Real Estate Investment & FinanceSep 15, 2010 Technologies for Facilities ManagementSep 29, 2010 Fundamentals Of Real Property Administration Oct 13, 2010 Facilities Planning & Proj Mgmt Nov 3, 2010 Environmental Health & Safety Issues

Genea named one of America’s Most Promising by Forbes

Genea Energy, a clean tech company focused on optimiz-ing energy consumption and net operating income (NOI) for commercial office buildings, has been named by top business magazine Forbes to its America’s Most Promising Companies list for 2009. Genea’s Building Optimization Platform is the first to combine energy management with building automation, business process and portfolio-wide analytics for a fully inte-grated solution.

Genea and the 19 other businesses on the list are described by Forbes as “small, dynamic companies with the kind of growth potential that makes venture capitalists salivate.” The 20 compa-nies scored highest after undergoing an exhaustive examination by Forbes and experts hired by the magazine, and, therefore, have a better shot at raising capital than their peers, accord-ing to Forbes.

“For our company to be recognized like this is gratifying for our entire team and to me, on a personal level,” says Doug Sch-neider, Genea Energy’s chief executive officer. “Forbes saw in Genea a special potential for growth, and that just echoes what our management team has been saying all along. We have a very special business—we’re just beginning to see its potential, and that’s exciting.”

For more information about Genea Energy, visit www.genea energy.com.

RER Report: Sentiment is Up but Property Values Still FallingThe Real Estate Roundtable recently released its “Sentiment Index” for the fourth quarter of 2009. The report indicates that commercial real estate distress is far from over, with property values still falling and capital markets still extremely weak. An overwhelming majority of the 100-plus respondents in the Q4 survey said property values are down today vs. a year ago, although the percentage declined to 77 percent from 93 percent in the previous quarter. Respondents were far from optimistic about future valuations, with 71 percent saying they expected values to remain “about the same” or to erode even further in the next 12 months.

Despite the challenges still ahead, all three indices tracked by the survey—future conditions, overall conditions and current conditions—have risen considerably since the near-collapse of financial markets in Fall 2008. The overall index increased to 63, up 15 points from the previous quarter.

View the full survey at www.rer.org.

Shortridge_ad.indd 1 11/20/08 9:30:58 AM


TenanT ReTenTion and Leasing sTRaTegies Winter 2010

Practical industry intelligence for Commercial Real estateBoMa Kingsley RePoRT

Bo

Ma•K

ingsley RePo

RT

TenanT ReTenTion anD LeaSinG STRaTeGieS

“Back to Basics” is a message that has been repeated

often since the credit crisis came to a head in the fall

of 2008, dragging commercial real estate completely

and unequivocally into the worst recession since the

Great Depression. With lending and development com-

ing to a virtual dead stop, focus has moved away from

the quick flip and fat profit and zeroed in on the assets

themselves. today, reducing operating expenses, finding

new efficiencies and seeking out revenue opportuni-

ties—no matter how meager—is paramount. But the

most important “back to basics” message may be com-

ing from tenants and prospective tenants, and what’s at

stake may be the difference between an asset’s survival

and an asset’s revival.

Be Proactivethe economics of asset survival would seem pretty

straightforward: if you can increase revenue and

decrease expenses, you can survive most market cycles

… although the current cycle is challenging that prem-

ise. With landlords scrambling to keep their vacancy

rates under 15 or even 20 percent, it would seem that

tenant relations have never been more important.

the truth, however, is that the best run properties are

successful because tenant relations have always been

important, not just during a crisis.

Being proactive is key. Fixing a problem that a ten-

ant reports is great, but preventing that problem from

happening in the first place is even better. Glen Fernald,

managing senior vice president, director of manage-

ment services for transwestern’s Mid-atlantic Region,

explains how tenant councils help transwestern stay one

step ahead of potential problems. “We use the tenant

councils to meet with the tenants on a regular basis and

involve them in decisions involving the operations of

the building so that they are part of the process and the

solutions,” he says. “in this way, we avoid just respond-

ing when there’s a problem.”

tenant councils are also a great tool for managers who

want to be proactive but aren’t able to visit individual

tenants on a weekly basis to get a sense of how things are

going. “the councils can help supplement regular ten-

ant visits,” adds Fernald, who stresses that monthly or

semi-monthly tenant council meetings cannot replace

one-on-one interaction.

a program at cB Richard Ellis (cBRE), called “cBRE

@ Your service,” helps their managers take a very pro-

active approach towards anticipating a tenant’s needs

and helping them with any number of requests they

may have during their tenancy, which can range from

selecting interior landscape vendors to choosing an

office supply company. “the idea behind the program is

asset RevivalTenant Retention and Leasing Strategies for a Soft MarketBy Laura Horsley



TenanT ReTenTion anD LeaSinG STRaTeGieSB

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that tenants can access this information

with one call to the building manage-

ment and we will put them in touch with

appropriate companies who we have a

good relationship with, are adequately

insured and offer favorable pricing,”

explains tim Ballas, managing director

of asset services for cBRE in the san

Francisco Bay area.

there’s no charge for the “cBRE @

Your service” referral program and Bal-

las hopes the service ultimately serves

as a very tangible reminder to tenants

that cBRE and its clients will go the

extra mile for them, making it that much

harder to leave. “it gets to the heart of

the stickiness of a building,” explains

Ballas. “once tenants are in the space

and feel very well taken care of, they

won’t want to leave.”

eliminating the guesswork

a scientific way to gauge tenant hap-

piness is by conducting regular tenant

surveys across a broad range of man-

agement and operation areas. Patrick

Freeman, a senior vice president with

Wells Real Estate Funds, counts on ten-

ant surveys to give his company the

concrete benchmarks and metrics to

know exactly how they are performing in

areas important to their tenants, which

include Fortune 500 companies such as

coca-cola Enterprises, GE and Ernst &

Young. “We try to remove as much of the

vagueness from the process of tenant

retention as possible,” says Freeman.

“We do that by using kingsley and then

evolving our own metrics and studies

around the areas the survey results tell

us are important.”

For Freeman, key drivers of the sur-

vey come from the data the company

receives on responsiveness and pro-

active communication with tenants.

“kingsley helps us understand how we

communicate, with whom we commu-

nicate, how frequently we communicate

and what means we use to communi-

cate—those pieces are key to helping

us understand both what we are doing

and what we ought to be doing in that

critical area.”

in the area of responsiveness, Wells

has created metric tools based on data

available from angus management soft-

ware that allow the company to track

tenant work orders and tenant requests

around several defined metrics, such

as hot calls, cold calls, general HVac

calls, janitorial requests and plumbing

requests. this tool allows Wells to drill

deeper into the metric areas where they

receive their highest number of tenant

calls and requests.

Leasing strategiestenant retention is the ultimate goal,

but the other side of the tenant relations

equation, tenant loss, is a reality owners

and managers are struggling with across

the marketplace. the cost of vacant

space runs much higher than just lost

rent; there are also the brokers’ com-

missions, tenant improvement build-

outs and marketing costs associated

with empty space. the lost revenue and

myriad of costs associated with vacan-

cies make leasing strategies that much

more critical.

Having vacant space as market-ready

as possible so that a prospective ten-

ant or their broker can envision how the

space will lay out is a prerequisite and

just smart marketing. Ballas explains the

concept of “white boxing” that is often

used at cBRE properties: “We do a com-

plete demolition below the ceiling, with

the remaining walls and floors painted.

it’s a very clean, crisp look that allows

a prospective tenant to easily envision

a plan.”

Fernald also extols the importance

of keeping the property looking good,

which doesn’t have to require a big bud-

get. “it doesn’t take a lot of money to

assure that your vacant space is always

in show condition,” he notes. “Most ten-

ants will come in and want to reconfig-

ure the office, but it’s hard for them to

visualize what the space will look like

if you can’t show them a space that’s

built out to building standard. if, in an

industrial park, you have several vacan-

cies with 10 percent office build-out, in

at least on one of those spaces make a

point to paint, carpet, replace ceiling

tiles, etc., so you can show them what

it will look like.”

Fernald encourages someone from

the property management team to

accompany the leasing agent when a

space is being showed. “a colleague of

mine is fond of saying, ‘it’s the leasing

professional’s job to get them in the

space; it’s the management profession-

al’s opportunity to make them feel com-

fortable and explain how the space will

“if a tenant is asking me for help, what do i get as a landlord? Maybe i can get more term or some form of enhanced collateral on the lease.”Perry Schonfeld, Principal,

LBa Realty

“We don’t buy buildings, we buy tenants. although most owners and managers don’t have the luxury of choosing the perfect tenants, they certainly have a say when it comes to keeping them.”Patrick Freeman, SVP,

Wells Real estate Funds


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meet their needs.’” this strategy allows

prospective tenant to get a good sense

of the customer service they can expect

if they lease the space, and establishes a

positive rapport from the beginning. it

also doesn’t hurt to have management

personnel there from the beginning to

answer any questions that may arise.

soft Market Concessions—Bend without Breaking

Rent relief, expensive tenant improve-

ments, “blend and extend”—the softer

the market, the more tenants and pro-

spective tenants will be asking for con-

cessions. the conversation will come

up, but it is a dialogue that should never

be one-sided.

Perry schonfeld, principal with LBa

Realty in irvine, calif., explains that the

call for rent relief is a tricky one that

requires a clear set of rules. “if a tenant

is requesting rent relief, they are going to

have to answer some questions and be

transparent,” says schonfeld, who looks

at several variables, including whether

a tenant is current with rent payments,

is transparent with financial statements

and provides a pro forma for getting

back on track. Ultimately, the restruc-

ture has to be mutually beneficial. “it

has to be bilateral,” adds schonfeld. “if

a tenant is asking me for help, what do i

get as a landlord? Maybe i can get more

term or some form of enhanced collat-

eral on the lease.”

Fernald is seeing more emphasis on

extending existing leases—the classic

“blend and extend”—which can be ben-

eficial for both sides. “if a tenant is com-

ing up for renewal in the next year or

two or three, now might be a good time

for that tenant to approach the landlord,

or vice versa, to extend that to a 10-year

lease with some adjustments to rent,” he

suggests. another scenario Fernald is

seeing more often is where a tenant on

a short-term lease has more space than

needed. in these scenarios, a mutually

beneficial solution might be to reduce

the space and extend the lease.

tenant improvements (tis) are

especially tricky in this market where

a robust ti can make all the difference

in a prospective tenant’s willingness to

sign a lease, but availability of capital is

more of an issue than it has been in the

past. “Everybody is looking to minimize

how much capital gets deployed, and

that’s true on both sides of the equation,

for both the tenant and owner,” states

Ballas, who says “the ti question is not

necessarily a zero-sum game for ten-

ants, who usually need to contribute

something, especially if they relocate.”

Making tis work is a collaborative

process. From the owner and manage-

ment perspective, alternatives to expen-

sive tis might include using free rent as

an offset and/or being resourceful about

the design by involving the architect

early in the process to reuse existing ele-

ments rather than knocking everything

down and starting over.

sticky points in the ti process can

occur when tenant representative bro-

kers pursue ti dollars, which are not

required, as a value that the tenant

should receive. Ballas believes land-

lords need to stand firm in these situ-

ations and attempt to reach agreement

on the market value of the space first,

then negotiate tis needed from there.

“since the owner took the initial devel-

opment and leasing risk, the value of

not having to improve a particular space

belongs to them and shouldn’t be part

of the negotiation and given away. the

fact that we may not have to spend $50/

square foot to refit a space is the owner’s

benefit, not the tenant’s.”

Regarding the restructure of existing

leases requested by struggling tenants,

Ballas sees his clients pursuing a recap-

ture of unfavorable options contained

in leases as a trade for what the tenant

might be requesting on economics. “in

some cases, there may be an opportu-

nity to enhance the future value of the

building by voiding options that provide

for early termination or a renewal at a

reduced rate from the then current mar-

ket,” he explains.

the best way to avoid this debate alto-

gether is clearly to keep the tenants you

already have. Back to basics is more than

a return to the fundamentals of tenant

relations; it is about reassessing asset

value. consider the Wells’ approach to

buying a building: “We don’t buy build-

ings, we buy tenants,” says Freeman.

“although most owners and managers

don’t have the luxury of choosing the

perfect tenants, they certainly have a

say when it comes to keeping them.”

The BOMA•Kingsley REPORT is written and published in conjunction with Kingsley Associ-ates, www.kingsleyassociates.com.


Here’s a scene that is becoming more

and more common: As the property

manager of a downtown high-rise con-

cludes the financial briefing to the lead-

ership team, the building’s operating

engineer prepares to deliver the annual

energy results. The presentation opens

with a graph indicating the reduction in

kBTUs for the portfolio and the associ-

ated changes in the Energy Use Index

(EUI). This is followed by an overview of

the EPA ENERGY STAR® Portfolio Man-

ager score, accompanied by an updated

ASHRAE bEQ grade and finally the direct

impact on carbon emissions through

carbon accounting spreadsheets.

The leadership team is pleased

because they know these numbers

translate to a positive impact on the bot-

tom line, as well as increased marketing

opportunities and legislative compli-

ance. The building operating engineer

then gives a high-level overview of

the operational changes the engineer-

ing team accomplished to support the

numbers.

In my position as an engineering

director with the world’s largest com-

mercial real estate services firm, I am

tasked to provide much of the data iden-

tified above, and in conversations with

my peers, I am learning I’m not the only

one.

The Time is NowBy now, most of us are familiar with

the numbers: U.S. buildings consume

approximately 39 percent of primary

energy, which includes approximately

70 percent of the electricity generated

in the United States. In addition, build-

ings are responsible for approximately

38 percent of U.S. carbon dioxide

emissions. These statistics, coupled

with our national goals of striving for

reduced dependence on fossil fuels (as

well as increased awareness on climate

change), have catapulted our industry to

the center stage of energy management

and resource conservation.

On the legislative front, there have

been significant advances in energy

conservation, including building label-

ing and energy disclosure mandates

in buildings. Energy data disclosure

through the EPA ENERGY STAR Port-

folio Manager has been mandated in

California and Washington, D.C., as well

as other locations in the United States.

Both the U.S. House of Representa-

tives and Senate have been working on

energy legislation, and, in early 2009,

HR 2454, The America Clean Energy

and Security Act of 2009 (ACES), passed

in the House. In addition to requiring

more stringent energy codes and stan-

dards, ACES also provides for a national

building energy labeling program, offers

incentives for energy-efficiency retrofits

and establishes the groundwork toward

a federal cap-and-trade system. The

Senate has been working on their ver-

sion, which they hope to bring to the

Senate floor for a vote early in 2010.

Regardless of where you stand on these

issues, property professionals who begin

preparing now will position themselves

for success no matter what happens to

the legislation.

In his Presidential Address, Bill

Harrison, 2008-2009 president of the

American Society of Heating, Refriger-

ating and Air-Conditioning Engineers

(ASHRAE), recognized the significant

Building Engineers are the Keystone to Energy Management SuccessBy Ray Congdon, LEED-AP, FMA, OPMP

work in the design and construction of

high-performance buildings. He went

on to identify how future successes in

energy conservation in buildings will

come from experienced building opera-

tors. Harrison shared stories of buildings

he has visited across the country and

talked candidly about how discouraging

it was to encounter building equipment

being operated and maintained ineffi-

ciently. Specifically, he noted, “Improved

operations are always dependent on

improving the knowledge of the build-

ing operators, and development of the

basic information required for effec-

tive training has to be a high priority

for ASHRAE.”

The Benefits of Training and Designations

ASHRAE has already taken significant

steps in support of these goals. ASHRAE

Standard 180P, Standard Practice for

Inspection and Maintenance of Com-

mercial Building HVAC Systems, was

published late in 2008 and, at the same

time, ASHRAE introduced a new certifi-

cation, the Operations and Performance

Management Professional (OPMP). The

intent of the OPMP certification is to

identify operators who demonstrate a

comprehensive understanding of the

efficient operation and maintenance of

building systems. Property profession-

als seeking to provide increased opera-

tional value to their stakeholders can

rely on this designation to identify indi-

viduals well versed in efficient building

performance.

BOMA has also recognized the impact

that skilled operators can have on the

bottom line and supports that by dedi-

cating three of its “BOMA 7-Point Chal-

lenge” initiative points to building oper-

ations. Point three specifically addresses

training by stating: “Provide education

to your managers, engineers and oth-

ers involved in building operations

to ensure that equipment is properly

maintained and utilized.” Through this

In order to be successful in a sustainable world, the operating engineer must not only have extremely high technical skills, but must also know how to operate buildings efficiently and be able to analyze and report financial impacts resulting from their actions.

BEyond thE BoilEr rooM


Market Transformation initiative, BOMA

pledged to continue to develop educa-

tion programs for building owners and

managers, acknowledging “the result

could provide returns of up to a 30-per-

cent reduction in energy consumption

and costs.” BOMA International also

recently added an entire track of educa-

tion dedicated to building engineers to

the conference education programming

of the BOMA International Conference,

which will next be held in Los Angeles

County, Calif., in June.

Leading the way for building opera-

tor education, with an emphasis on

energy conservation, is the Building

Operator Certification (BOC) program.

The BOC began in the Pacific Northwest

in the 1990s and grew out of a popular

building operator training series. Cyn-

thia Putnam, project director with the

Northwest Energy Efficiency Coun-

cil (NEEC), explains: “The goal was to

improve the efficiency of the region’s

commercial building stock by training

the people who operate and maintain

them in energy-efficient technologies

and practices. The concept is simple:

Technologies save energy, and so do the

people who work with technologies,”

she says. There are two levels of edu-

cation through the BOC, with Level II

building on skills from Level I and also

providing advanced operating efficiency

curriculum. The BOC currently serves

more than 6,000 building operators in

22 states across the country.

A 2006 report published by the

American Council for an Energy Effi-

cient Economy, What Building Opera-

tors are Saying about BOC Training by

Marjorie McRae and Beatrice Mayo,

chronicles savings attributed to opera-

tors who achieved BOC certification.

Results were based on 13 operations

and maintenance measures for which

impact estimates were available. The

report indicates these operators were

able to conserve a minimum of .40 kWh

per square foot.

The Proof is in the Energy Savings

Several years ago, I accepted a posi-

tion as chief operating engineer for a

small portfolio of medical office build-

ings. Initial analysis of the buildings

indicated the prior operators lacked

the skill, motivation and/or resources

to efficiently maintain and operate

the facilities. Base-lining the facilities

in EPA ENERGY STAR Portfolio Man-

ager confirmed that analysis. We began

an aggressive two-year campaign to

increase efficient operations and main-

tenance of the facilities, and it was dur-

ing this time that a commitment was

made to provide operating engineer

education.

Over the two-year period, sig-

nificant work occurred, including

implementation of a new Computer-

ized Maintenance Management System

(CMMS), a service contract with the

controls contractor, financial invest-

ment in energy-reduction projects and

lease evaluation that led to utility sub-

metering for some tenants. As a result

of this focus on operations, energy con-

sumption was reduced, on average, by

more than 22 percent. One of the prop-

erties earned the EPA ENERGY STAR rat-

ing, and, during the same period, was

awarded the International TOBY Award

in its class, one of two properties that

earned a TOBY award.

In a presentation to the owner’s lead-

ership team, results of the initiative

revealed the operational improvements

yielded not only enough savings to pay

salary and burden for the entire oper-

ating engineer team, but also returned

additional run-rate savings.

As we continue down the path toward

environmental sustainability, legislative

mandates, building labeling require-

ments and increased operational cost-

savings directives, there should be no

doubt the keystone in this process will

be the building operating engineers.

The days of the operator adjusting

valves in the boiler room is history. In

order to be successful in a sustainable

world, the operating engineer must not

only have extremely high technical skills,

but must also know how to operate build-

ings efficiently and be able to analyze

and report financial impacts resulting

from their actions. Investing in training

on the efficient maintenance and oper-

ation of their buildings must be a top

priority for property professionals who

want to succeed in this new direction.

About the Author: Ray Congdon, LEED-AP, FMA, OPMP, is director-group health with CB Richard Ellis Global Corporate Services. He can be reached at [email protected].

Education and Certification Resources for Building EngineersBuilding operator Certification, www.theboc.info

operations and Performance Management Professional certification, AShrAE, www.ashrae.org

optimizing Building operations—tools for Building Engineers education track, 2010 BoMA international Conference, www.bomaconvention.org


NEW FEATURES INCLUDE:• A new Single Load Factor Method. This new calculation, “Method B,” applies

to the occupant area of each fl oor to determine the rentable area and is the same for all fl oors of a building, i.e., all tenants are allocated the same percentage for calculation of amenities and service areas.

• More options. Choose either the new Method B or the measurement methodology of the 1996 standard, referred to as “Legacy Method A.”

• Regional leasing practices. Allows for enclosure requirements and limited unenclosed circulation; i.e., walkways and outdoor lobbies. Great for tropical climates.

• Measurement clarity. Introduction of new terms to simplify and clarify the process of measurement, including a step-by-step sequence that includes boundary line defi nitions.

There’s a reason everyone calls it “The BOMA Standard.” In 1915 it was the fi rst fl oor measurement standard and today it still sets the standard for measuring offi ce space. Now BOMA International introduces the latest version of this landmark standard, Offi ce Buildings: Methods of Measurement and Calculating Rentable Area (2010).

THE BOMA STANDARD THE NEW OFFICE MEASUREMENT STANDARD IS HERE

O F F I C E B U I L D I N G S : S T A N D A R D M E T H O D S O F M E A S U R E M E N T A N D C A L C U L A T I N G R E N T A B L E A R E A ( 2 0 1 0 )

BOMA Sets the Standard. Order BOMA’s fl oor measurement standard, Offi ce Buildings: Methods of Measurement and Calculating Rentable Area (2010), or the other measurement standards from the BOMA family of standards–Gross Areas of a Building: Methods of Measurement (2009); Standard Methods for Measuring Floor Area in Industrial Buildings; and Unifi ed Approach for Measuring Offi ce Space: For Use in Facility and Property Management.

The interactive downloadable format includes hyperlinks, expanded defi nitions, and 45 full-color illustrations.

GET INTERACTIVE!

ORDER THE NEW OFFICE STANDARD TODAY AT

HTTP://SHOP.BOMA.ORG

NEW FEATURES INCLUDE:• A new Single Load Factor Method.

to the occupant area of each fl oor to determine the rentable area and is the same for all fl oors of a building, i.e., all tenants are allocated the same percentage for calculation of amenities and service areas.

• More options.of the 1996 standard, referred to as “Legacy Method A.”

• Regional leasing practices.unenclosed circulation; i.e., walkways and outdoor lobbies. Great for tropical climates.

• Measurement clarity.of measurement, including a step-by-step sequence that includes boundary line defi nitions.


2009 Year in Review

Supporting Commercial Real Estate in a Down Economy2009 was a challenging year for commercial real estate, as the credit crisis spread from the resi-dential real estate market to all sectors of the economy. The distressed market impacted nearly every facet of the industry; lending became harder to secure; the rise in unemployment brought a rise in vacancies along with it; and commercial real estate firms were forced to reassess their strategies for success. BOMA International committed its resources to advocating for critical policies on Capitol Hill and providing industry professionals with the tools and information to survive the downturn.

In 2008, BOMA International was one of the first real estate organiza-tions to testify before Congress on the effects of the credit crunch on com-mercial real estate. In March 2009, BOMA was called upon again to testify on the challenges of leasing and build-ing during an economic crisis. BOMA International 2008-2009 Chair Dick Purtell testified that the U.S. property market faced its worst liquidity chal-lenge since the Great Depression. “We are faced with the dual challenge of developing strategies to stop the down-ward spiral and restoring confidence in markets,” said Purtell.

Throughout the year, BOMA International continued to lobby with our association colleagues for financial solutions to restore credit capacity and liquidity to the marketplace. In August, the U.S. Treasury and the Federal Reserve extended the Term Asset-Backed Securities Loan Facility (TALF) for commercial mortgage-backed securities (CMBS), helping prevent defaults on economically viable commercial properties, increase the capacity of current holders of maturing mortgages to make additional loans and facilitate the sale of distressed properties.

BOMA also developed a platform of resources and information to help property professionals get through the downturn. BOMA debuted a series of Webinars over the course of the year aimed at helping commercial real estate professionals plot a successful course through the challenges of a distressed market. Webinars offered strategies for leasing, tenant relations and tenant reten-tion, which are crucial to preserving asset value. BOMA also continued to build out Rx Resource Exchange, a section of the BOMA Web site launched in 2008 featuring books, interactive tools, educational programming and career resources focused on weathering the recession.

BOMA International 2008-2009 Chair Dick Purtell testifies before Congress.

Social MediaBOMA brought up-to-the min-ute news and information on legislative, regulatory and codes activities; trends; and forecasts through its primary communica-tions vehicles, The BOMA Mag-azine and e-News. BOMA also joined the social media revolu-tion, utilizing innovative tools like YouTube, Facebook, LinkedIn and Twitter to reach the commercial real estate industry.

By Lindsay Tiffany


Join BOMA on Facebook

Join BOMA on LinkedIn

See BOMA on You-Tube: www.youtube.

com/bomainternational

Follow BOMA on Twitter:

BOMA Chair Jim Peck @ JimPeckBOMA

BOMA President Henry Chamberlain @ HenryBOMA

BOMA Vice President Lisa Prats @ LisaPratsBOMA

2009 BOMA Year in Review

Setting Industry StandardsBOMA continued to set the standard in 2009 by releasing two new building mea-surement standards, building on BOMA’s legacy as the go-to source when measur-ing space to calculate leases, allocate building expenses and compare occu-pancy. The release of the highly antici-pated Office Buildings: Standard Methods of Measurement & Calculating Rentable Area improved upon the 1996 version of the landmark floor measurement stan-dard, widely referred to as “The BOMA Standard.”

The new interactive publication has several key enhancements that simplify the methodologies, clarify gray areas and make it more user-friendly. The single biggest change to the standard is that it now includes two methods for calculat-ing rentable area. Method A, or the legacy method, allows users the option outlined in the 1996 standard. Method B, or the single load factor method, provides prop-erty professionals with a methodology that allows them to use a single load fac-tor for all floors of a building—something BOMA members asked for. The new office standard is a downloadable publi-cation featuring hyperlinks throughout the document’s text, expanded definitions and 45 full-color illustrations.

BOMA International also released Gross Areas of a Building: Methods of Mea-surement that provides a uniform basis for measuring both the construction gross area and the exterior gross area of office, retail, industrial, single- and multi-unit residential, hospitality, entertainment, public and institutional buildings. The Gross Areas Measurement Standard is also in an interactive downloadable for-mat featuring 37 illustrations and 19 defi-nitions of measurement terms.

Greening the Way and Being RecognizedRecognizing that sustainability and energy efficiency are cornerstones of excellence in property management, BOMA continued to lead the way in the green arena in 2009. In April, BOMA was honored by the Environmental Protection Agency (EPA) with a 2009 Climate Pro-tection Award, the EPA’s highest honor, recognizing exceptional leadership, out-standing innovation, personal dedication and technical achievements in protecting the climate. BOMA received the award for the success of several programs, includ-ing the BOMA Energy Efficiency Program (BEEP), the 7-Point Challenge, BOMA´s Green Lease Guide and the BOMA Energy Performance Contracting (BEPC) model. BOMA is the first real estate association in nine years to receive this honor.

The EPA honors didn’t stop there. BOMA also received the 2009 ENERGY STAR® Award for Sustained Excellence—the third consecutive year that BOMA was recognized by ENERGY STAR. BOMA is still the only commercial real estate asso-ciation to receive this honor.

BOMA also worked with government officials, commercial real estate execu-tives and other industry groups to launch the U.S. Department of Energy’s (DOE) Commercial Real Estate Energy Alliance (CREEA), a collaboration of commercial real estate owners and operators who have volunteered to work directly with each other and with DOE to create lasting change in the energy consumption of com-mercial buildings in the United States.

BOMA 360 Performance Program designees.

Pandemic PreparednessWhen the H1N1 virus (commonly referred to as “swine flu”) broke out in late spring, BOMA was at the ready to assist members with their pandemic prepared-ness. BOMA updated its pandemic pre-paredness Web site; reported extensively on H1N1 in The BOMA Magazine and other communications; and added new information to the pandemic flu brochure Pandemic Influenza: Are You Prepared?


[ i ]

o f f i c e b u i l d i n g s :

standard methods of measurement

and calculating rentable area

building owners and managers

association (boma) international

www.boma.org

Positioning You for Success: Now More than EverDespite the challenges posed by the recession, BOMA continued to roll out new programs and products to help prop-erty professionals survive the economic downturn and position them for success once market conditions improve. In May, BOMA launched the BOMA 360 Per-formance Program, a groundbreaking building designation program designed to recognize commercial properties that demonstrate best practices in building operations and management, while rein-forcing an asset’s value.

The 360 designation demonstrates to owners, tenants and prospective tenants that a building is managed to the highest standards of excellence. It also provides property management companies with a strategic tool to differentiate their assets, especially important in today’s distressed market.

For William F. Moebius, senior vice presi-dent and director of energy and sustain-able operations with Stream Realty Part-ners in Dallas, Texas, the stamp of excel-lence the designation implies is why his company chose to participate. “The most important benefit of the program is that buildings are recognized for incorporat-ing a very broad range of best practices. Owners and tenants can take comfort in the fact that the management team has excellent, industry-leading systems and practices in place.”

Albuquerque Mayor Martin Chávez, BOMA New Mexico President Leslie Yardman and BOMA International Chair Jim Peck.



The Power of the BOMA NetworkAs the industry faced growing economic turbulence in 2009, the importance of the BOMA network became clearer than ever. BOMA continued to expand the global base of that network by welcoming the British Council for Offices and the Property Council New Zea-land into the BOMA family. The year’s best networking and information-sharing event,

the BOMA International Conference, featured a program rich with strategies for weathering the credit crisis and leverag-ing existing opportunities. BOMA International President and COO Henry Chamberlain delivered the 2009 State of the Industry address, stressing the importance of exceptional build-ing management and operations to help counter the effects of the credit crisis. Renowned journalist Dr. Fareed Zakaria discussed the political, economic and technology transforma-tions that have redefined the global marketplace.

The industry’s premier education was presented in five strategic tracks, with more than 40 sessions. Top suppliers exhibited the latest products and services at The Office Building Show, featuring the Green Pavilion and ENERGY STAR Showcase of eco-friendly products. The industry acknowledged 14 properties as the best of the best in building operations and management internationally at The Office Building of the Year (TOBY) Awards. During the ceremony, James A. Peck, RPA, FMA, senior director in the Albu-querque office of CB Richard Ellis, was sworn in as 2009-2010 BOMA International chair (pictured above, left). Other 2009-2010 BOMA International officers elected include Ray H. Mackey, Jr., RPA, CPM, CCIM, as BOMA chair-elect; Boyd R. Zocolla as vice chair; and Kent C. Gibson, CPM, as secretary/treasurer.

Healthcare real estate professionals also leveraged the power of the BOMA net-work, as nearly 450 attendees gathered in Philadelphia for BOMA’s 2009 Medical Office Buildings and Healthcare Facilities (MOB) Conference. Thought leaders from healthcare real estate companies and hospital systems addressed key issues before the industry, such as the financial wherewithal of health systems, whether the “recession-proof” label many have given healthcare real estate is valid, “clinic” models for ambulatory care, emerging hospital-employed physician models, CMS reimbursements and the effects of potential healthcare reform under a new Administration and Congress.

A Growing Environmental Relationship with City Hall2009 was another important year for the 7-Point Challenge. A core goal of the chal-lenge is to decrease energy consumption by 30 percent across portfolios by 2012, as measured against an ENERGY STAR “average” building score of 50. Since its inception in 2007, the 7-Point Challenge has received widespread acceptance from the private sector, with more than 120 member companies and local associations representing more than two billion square feet of office space endorsing the Challenge. In 2009, BOMA strengthened its green outreach with cities and municipalities by bringing awareness to the role commercial real estate plays in reducing energy consumption. Several cities stepped up to endorse the Challenge, including Atlanta, Albuquerque, Orlando and Phoenix.

Not Your Father’s Benchmarking Tool— a New EERCommercial real estate’s premier income and expense reporting source, the Experi-ence Exchange Report (EER), underwent several major enhancements in 2009—thanks to collaboration between BOMA International and Kingsley Associates to produce the landmark benchmarking report. The EER transitioned from book and CD-ROM formats to a completely online interface, allowing users to cus-tomize data and query information more nimbly. The new search tools make it easy to generate reports and analyses, export data to Excel and create custom charts and graphs. The new EER features 15 million data points, reports for 100 markets and an all-market report for 27-plus markets.

CORNERSTONE PARTNERS

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LEADERSHIP CIRCLE PARTNERS

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SUPPORTING PARTNERS

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Thank You BOMA 2009 Partners



BOMA International’s advocacy and codes teams helped secure key legislative victories recently that are helping save commercial real estate industry billons:

Brownfields Remediation Tax IncentiveSigned into law by President Bush as part of the Emergency Economic Stabilization Act of 2008, the provision retroactively extended the Brownfields remediation deduction (expensing) for an additional two years. Savings to the industry = $600 million over two years.

Energy-Efficient Commercial BuildingsTax Deduction Legislation passed in 2008 extended tax deduc-tions for energy-efficient upgrades to commer-cial buildings first passed in the Energy Policy Act of 2005. The new legislation extends the deduction an additional five years through 2013. Savings to the industry = $887 million over five years.

Leasehold DepreciationAnother provision in the Emergency Economic Stabilization Act of 2008 included a retroactive extension of the 15-year depreciation timeline for leasehold or tenant improvements for an additional two years. Savings to the industry = $500 million over two years.

Additional Annual Construction Costs Avoided from Energy Code ChangesDuring the most recent ICC Codes Meeting, BOMA was successful in getting the proposed blanket 30-percent increase to the International Energy Conservation Code disapproved. Annual savings to the industry = $990 million.

Lost Lease Income AvoidedBillions in lost lease income were avoided with BOMA’s alternatives to NIST/World Trade Center proposals requesting additional elevators in the 2009 ICC Building Codes. Annual savings to the industry = $630 million.

Building Owners and Managers Association International, 1101 15th Street, NW, Suite 800, Washington, DC 20005, (202) 408-2662, www.boma.org

Showing YOU the Money The Bottom Line Benefits of Your BOMA Membership


The Voice of Commercial Real Estate on Capitol HillBOMA continued to serve as the voice of commercial real estate on Capitol Hill in 2009. In March, BOMA members brought commercial real estate’s critical message to lawmakers as part of BOMA’s National Issues Conference (NIC) in Washington, D.C. Attendees took part in more than 120 meetings with members of Congress and their staff as they outlined BOMA’s 2009 legislative agenda, including commercial real estate’s stake in issues such as leasehold depreciation, capital gains taxes, carried interest taxes, energy and climate change policy and “card check.” In addition to meetings on Capitol Hill, attendees heard from the second most powerful member of the House of Representatives, Majority Leader Steny Hoyer (D-Md.), as well as Reps. Mike Rogers (R-Mich.) and Steve Driehaus (D-Ohio).

In October, BOMA International and the National Real Estate Organizations (NREO) hosted the launch of the 111th Congress Senate Real Estate Caucus, with a special briefing focusing on the state of the real estate industry. Honorary Co-Hosts and Senate Real Estate Caucus Co-Chairs Sens. Ben Cardin (D-Md.) and Johnny Isakson (R-Ga.) gave the opening remarks, and BOMA International’s Henry Chamberlain moderated a dynamic panel discussion on the state of the real estate industry.

BOMAPAC is a keystone of BOMA’s legislative success in Washington. Funds raised through BOMAPAC help re-elect political candidates for federal office who know, understand and support real estate’s issues. In 2009, BOMA mem-bers raised more than $50,000 and supported 14 members of Congress so far in the 111th session.

BOMA President Henry Chamberlain, House of Representatives Majority Leader Steny Hoyer and BOMA Chair Dick Purtell at the National Issues Conference in March.

2009 was a difficult year for just about everyone in commercial real estate, and many of those challenges will carry over into 2010. The glimmer of recovery is before us, though, and we have the tools to take advantage of those green shoots.

The BOMA 360 Performance Program will continue to showcase operational excellence in best-in-class buildings across the marketplace, giving owners and managers a way to stand out from the crowd.

On the advocacy front, we have some tough tax battles ahead and each of us must show lawmakers that a healthy commercial real estate industry is the backbone of a strong economy.

We will continue to help property professionals stay competitive as they track build-ing performance through the new online EER.

Look for BOMA to continue to use social media tools like YouTube, Twitter, Face-book and LinkedIn as a means to engage BOMA members and industry professionals in the most important issue of the moment.

Looking Ahead


Put the power of the BOMA network to work for you.

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estate industry, in one location, made the

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AMB Property Corp.

Tukwila, WA

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Green Scene

THE BEAUTY OF A ROOFTOP GARDEN is hard to resist. Building owners look-ing to transform unused rooftop space into functional, visually impactful areas can expect added property value and aesthetic appeal from a green roof. As a result, rooftop gardens are being incor-porated into virtually every type of com-mercial structure.

From an environmental and build-ing maintenance standpoint, green roofs serve many functions. They moderate and detain stormwater runoff, supple-ment insulation to reduce heating and cooling costs and increase urban biodi-versity by adding habitats for birds and beneficial insects. Green roofs also miti-gate the broader problem of urban heat island effect, where high daytime ambi-ent air temperatures remain elevated after sunset due to accumulated heat radiating from dark and non-vegetated rooftops. The protective layer of a green roof can also extend the life of the water-proofing system by shielding it from the degrading effects of sunlight.

Eaton Vance, an investment manage-ment firm headquartered in Boston, Mass., was interested in the social and aesthetic appeal of a green roof. When its 310,000-square-foot office building underwent a full retrofit, the company added an outdoor entertaining space. The landscaped roof deck with 200 flow-ering perennial plants, a 350-square-foot blanket of blooming sedum and numer-ous potted planters filled with Skyline Honey Locust trees affords employees and visitors colorful foliage in an urban high-rise environment.

While the social and aesthetic ben-efits of green roofs can be obvious, many

A green roof with sedum and a drip irrigation system ensures water efficiency at the University of La Verne in California.

The Versatile Green roofBy Kelly F. Duke

are not intended for the general public. Often the purpose is to meet sustain-ability goals, such as reducing energy costs, improving air quality and conserv-ing water.

To reduce urban heat island effect, energy consumption and stormwater runoff, the University of La Verne in California selected GreenGrid®, a mod-ular green roof system manufactured by Weston Solutions, for a 700-square-foot green roof at its new campus cen-ter near Los Angeles. Pre-grown trays with drought-tolerant sedum varieties were installed along with a drip irriga-tion system to provide maximum water efficiency. Protecting the roofing mem-brane with a green roof has major long-term cost benefits; studies show that the lifetime of the waterproofing membrane can be doubled.

If installed on a new building, a green roof should be viewed as a part of the whole roofing system. For some roofing

system manufacturers, this integrated approach is a prerequisite to their war-ranty of the roofing installation. It is crit-ical that the installation and long-term growth and maintenance of the plant-ings do not compromise the waterproof-ing layer of the roof component.

An example of this is the U.S. Census Bureau headquarters in Suitland, Md., which includes 53,000 square feet of extensive green roof that was installed using American Hydrotech’s proprietary monolithic system. Adherence to the roofing manufacturer’s details and speci-fications was a prerequisite to American Hydrotech’s warranty of the green roof system. The roof areas are accessible only for maintenance purposes. This green roof detains a portion of every rain event as the primary source of water for the sedum plants. Excess water flows through the roof drain system and is collected along with other storm runoff into a retention pond, which supplies the on-site irrigation system.

Building owners or managers con-sidering a green roof should examine the site and the building as a whole to see where the environmental impact and life-cycle costs are located. Green Roofs for Healthy Cities (www.green roofs.org) offers an online calculator to help compare roofing alternatives and determine whether energy savings and reduced operating, maintenance, repair and replacement costs justify the initial cost of a green roof. Be sure to consult an experienced landscape contractor or landscape architect who can help iden-tify all of the variables that go into build-ing a green roof.

About the Author: Kelly F. Duke is vice presi-dent, pre-construction services for ValleyCrest Landscape Companies. He oversees the de-sign, installation and maintenance of many of the company’s green roof projects. He can be reached at [email protected].

Green roof Benefits•Offernewoutdooramenityspaceandaes-theticvalue

•Capture and direct rooftop stormwaterrunoff

•Supplementabuilding’sinsulation,reduc-ingheatingandcoolingcosts

•Moderateambientairtemperaturebeyondthebuildingtoreduceurbanheatislandeffect

• Improveairandwaterqualitybyfilteringandreducingpollutants

• Increasewildlifehabitatsandbiodiversityinurbansettings

•Respondtomarketdemandformoregreenspaceinurbanareas

TypesofGreenRoofsInTenSIve—accessible,park-likegardenswithconventionaltreesandplantsrequir-ingirrigationandongoingmaintenance

exTenSIve—involveablanketoflow-maintenanceplantslikesedum,succulents,ornamentalgrassesorgroundcoverandaretypicallynotaccessibletothegeneralpublic

SeMI-InTenSIve—acombinationofbothintensiveandextensivecomponents


TrendS TrAcker

AFTER TAKING A BATTERING from the “Great Recession” in 2009, the construc-tion industry will begin to see stabiliza-tion and early signs of recovery in 2010. Renowned economists and construction industry experts shared this modestly optimistic news as they addressed the crowd of AEC (architecture, engineer-ing and construction) industry execu-tives at McGraw-Hill Construction’s Outlook 2010 Executive Conference this past October in Washington, D.C. The conference program featured in-depth analyses from experts on the credit mar-ket, the effects of the financial stimu-lus, the building materials market and the general economic and construction industry forecasts for the coming year.

Robert Murray, vice president of eco-nomic affairs, McGraw-Hill Construc-tion, presented the 2010 Construction Outlook and projected that the industry will turn the corner in 2010. Construc-tion starts will rise by 11 percent in the coming year, following several years of contraction. In 2009, total construction starts were down 25 percent, follow-ing shortfalls of 13 percent in 2008 and seven percent in 2007, according to the McGraw-Hill report. Stabilization will be helped by the economic stimulus bill, the American Recovery and Reinvest-ment Act of 2009, of which $130 billion of the $787 billion is earmarked for con-struction projects. The stabilization of the financial sector will also aid recovery.

While the overall forecast for con-struction is positive, commercial build-ings will lag in recovery. According to the McGraw-Hill report, the commer-cial building sector dropped a staggering 54 percent in 2009, following a decline of 26 percent in 2008, bringing activ-ity down a total of 66 percent from the most recent market peak in 2007. Mur-ray predicted construction starts in the nonresidential building sector (which includes retail, office, hotel, manufac-turing, institutional, educational and healthcare facilities) will fall another

four percent in 2010. Healthcare facili-ties and institutional buildings are the only sectors expected to gain, by three and two percent, respectively.

The office building sector is expected to be particularly hard hit in 2010, facing a further decline of nine percent. Noted Murray, “The decline in employment numbers is a key indicator for com-mercial buildings, and the numbers indicate that demand for office space is down.” Murray also cited the ability to refinance the huge wave of commercial mortgages coming due in 2010 and 2011 will be paramount to a turnaround in the sector. Several experts agreed that, while stimulus dollars will bolster gains in public works and other institutional buildings, the stimulus will have little effect on the office market.

Congresswoman Eleanor Holmes Norton (D-D.C.) also spoke about the economic stimulus plan and the impor-tant role the U.S. General Services Administration (GSA) has to play in eco-nomic recovery. “By investing in infra-structure, we’re waking up a whole line of other players,” she said, noting that the stimulus will have a ripple effect on the AEC industry. She also emphasized the importance of smart growth: “We’ll have slower growth, but it will be sus-tainable and will be the kind of growth that made America a great power.”

Global Insight’s Principal of Industry Practices John Mothersole addressed recovery. He compared this recovery to the one in 1982, citing that interest rates and taxes are likely to rise, “presenting the recovery with challenging head-winds.” All experts agreed that recovery will take time to gain traction, many pre-dicting that it will be W-shaped rather than V-shaped, with a slight recovery and another drop off before returning to pre-recession conditions. Mothersole ended by noting that “we’re at the bottom of the worst post-World War II recession, and when you’re at the bottom, the only place to go is up, albeit slowly.”

Is it Working? Women Construction Executives Speak Out on the StimulusAt Howrey LLP’s Women in Construction con-ference last October, a panel of construction executives answered the question on every-one’s mind: Is the stimulus working?

“The effects have been minimal. We’re finding that, once the stimulus money is dispersed, there are only a handful of projects that would be attractive for us to pursue.”

–BarbaraWagner,esq.,ClarkConstructionGroup

“We’re seeing minimal to no impact, and the numbers don’t suggest that there’s any significant increase in construction jobs.”

–KayLantrip,SkanskaUSABuildingInc.

“No, it really isn’t creating any new opportunities in financ-ing projects. The problem is that there isn’t demand for new space—current rents in the commercial market aren’t high enough to incen-tivize developers to spend money. Jobs will create the demand we need.”

–KeliColby,BostonProperties

Construction Industry to Stabilize in 2010, Though Office Sector Lags


ReseaRch coRneR

Share Data. Improve Performance. Achieve Excellence.Sharing your data is a smart busi-

ness decision—and it’s easy. The 2010 Experience Exchange Re-

port (EER) survey opens January 18. Submit your data today at www.

bomaeer.com.

DRIVING VALUE IN A DOWN ECON-OMY is difficult, but in today’s market it is more important than ever. Asset value enhancement is a two-sided equa-tion: decreasing expenses and increas-ing income. Doing both as effectively as possible will maximize a building’s NOI and ultimately increase the value of the property. By now, most prop-erty managers have implemented lean operating and management practices, and have cut costs as much as possible. The income side of the equation is less straightforward, as increasing a build-ing’s revenue stream often requires stra-tegic capital expenditures and a creative approach. Here are some strategies for asset value enhancement.

Protecting the Asset’s Rent Stream

In today’s economic climate, under-standing the vulnerabilities in an asset’s rent stream is vital. As more and more tenants face financial distress, acting proactively can help property manag-ers mitigate their risk. Tim Ballas, man-aging director of asset services for the San Francisco Bay Area with CB Rich-ard Ellis, explains that CBRE has devel-oped a tool that assigns every tenant in their national portfolio with a risk rating. “To assign risk ratings, we ask ourselves four basic questions for every tenant in the building. What are the ten-ant’s current business prospects? What is their payment history? What is their source of funding? The fourth category is “other” information. This is often-times where the best information comes from because it’s based on an ongoing relationship the manager has with the tenant. It’s having a conversation and probing into their business model, not just walking around the space and see-ing how many empty cubes there are.”

Cracking the NOI Equation: Strategies for Asset Value Enhancement

Ballas notes that the rating tool is a great way to compare risk across mar-kets and share positive information with key stakeholders. “In the end, the rat-ings give the asset manager or whoever is closest to the asset some validation about what they might already intui-tively know about the tenants in the building. It also gives them an opportu-nity to provide ground-level intelligence to people down the line who are not as close to the property—maybe their boss who sits in another state, investors or other stakeholders.”

Smart Capital Improvements“You can’t increase revenue if you

don’t maintain your properties appropri-ately in a condition to attract and retain tenants,” notes Cathy Stephenson, LEED AP, senior vice president and national director of operations with Grubb & Ellis Management Services. One of Stephen-son’s asset managers developed a cre-ative low-cost, high-impact approach to capital expenditures: rotating and reusing commissioned artwork between buildings to make the spaces seem fresh. “You always want an identity for your building so that tenants feel that the building is recognized. Artwork, in par-ticular, can help to create the personality of the building. We can view artwork in one building, but it can take on a whole new life in another building as it’s rein-stalled or broken up and used in a com-pletely different, unanticipated way.”

Stephenson also stresses that building managers should spend money where the effects are most visible. In places that are less visible, oftentimes a coat of paint and new carpet are all that it takes to make the space rentable. “If there is a first-floor retail space that is very vis-ible, you want to do everything you can to make it look exciting and populated.

Maybe you have to bring in a short-term tenant to do that. But if you have some unusual space—maybe a back office space that doesn’t have a lot of appeal anyway—create a space without a lot of dollars that will attract smaller users or shared users. Go after tenant types you might not normally target. If it’s going to be vacant otherwise, any income is good income.”

New Revenue OpportunitiesStephenson is also capitalizing on

the opportunity to lease roof space to an unconventional tenant: solar energy providers. “One of the things we’re look-ing to do is to creatively use spaces in the building. In our big buildings, we’re leasing the rooftops to solar energy pro-viders who install solar panels there. The energy providers then sell off the elec-tricity or you can arrange to use it in your building.”

Perhaps the most important thing for enhancing asset value in a down econ-omy is creativity. Stephenson concludes: “In times like this, we really need to think outside of the box. We need to challenge ourselves to think about not just incre-mental change, but innovation that can spark the commercial real estate com-munity to find new ways to differenti-ate buildings, reduce costs and attract tenants who are looking for something a little bit different. Sometimes all it takes is an inspired manager.”

By Lindsay Tiffany


THROUGHOUT LAST SUMMER AND FALL, the U.S. Congress wrestled with healthcare reform. Healthcare systems, insurance companies and various healthcare workers—physicians, nurses and allied healthcare professionals—are watching as Congress continues to tackle this issue. Healthcare real estate practitioners are watching closely too, as any reform bill could have dramatic and sweeping impacts on not just how healthcare is delivered to patients, but in what types of facilities that care is provided and how they are developed, leased and managed.

Assessing the Primary SymptomsMost healthcare practitioners and healthcare real estate

experts agree that, regardless of what form “healthcare reform” takes, it’s likely going to create opportunities for those who develop, own, lease or manage healthcare real estate. And that’s good news, because healthcare real estate, like office, retail, industrial and other asset classes, has had a difficult year.

Most of the proposed reform plans aim to expand access to healthcare to more people, typically those who are currently uninsured. Increasing access to healthcare creates additional patients seeking healthcare services, and that creates additional demand for spaces in which to treat them. Because medical office buildings (MOBs) are typically much less expensive to develop and operate than hospitals themselves, most industry experts believe that even more procedures once performed exclusively in hospitals will be performed in MOBs.

Secondary SymptomsBut while the prognosis looks promising, a number of factors

could potentially complicate a speedy recovery for healthcare real estate. Two of the big issues are the cost of providing health-care services and who will bear those costs. By and large, the economics of operating a healthcare system hinge on what’s known as a “payor mix”—those who pay for healthcare proce-dures, such as insurance companies, patients and Centers for Medicare and Medicaid Services (CMS) reimbursements. For nearly 20 years, CMS reimbursements have failed to keep pace with actual healthcare costs. So, most not-for-profit healthcare organizations receive approximately 50 cents in CMS reim-bursements for every dollar they spend in providing care. Most of these systems’ operating margins are already thin, and if the reimbursement models change, they could significantly impact those systems’ financial health—which would, in turn, affect their ability to develop new MOBs.

Another key issue is physician and nursing shortages. For many years, healthcare systems have expressed concern that physicians, particularly primary care physicians and certain other specialists, are or will soon be in short supply, and the same worry has long been expressed for nurses. Any shortage of physicians or nurses will make it difficult to meet any increased demand for healthcare services. And, since physicians are the primary tenants of MOBs, physician shortages could well pre-sent challenges for real estate practitioners.

Many factors drive physician employment, and for the last

decade, real estate has played a key role in helping hospital sys-tems recruit and retain vital physician staff, particularly as phy-sicians’ incomes have been squeezed as they deal with shrinking CMS reimbursements. In many cases, hospitals have estab-lished joint ventures with physician practices to create clini-cal services (such as orthopedics, oncology or neuroscience), which serve as anchor tenants in MOBs. Such joint ventures have fueled very successful real estate enterprises for all par-ties—the healthcare system, the developer and the physicians. But, increasingly facing continued pressure on their CMS reimburse-ments and other ris-ing costs for practices (such as malpractice insurance), hospital executives report that many physicians are seeking to become employed by the hospi-tal system itself, rather than to remain in pri-vate practice. What this trend portends for healthcare real estate remains to be diagnosed. If all phy-sicians are employed by the hospital, then the hospital essentially becomes the primary tenant in its buildings. Depending on how rating agencies view long-term lease obligations (i.e., as implied debt payments), increasing the hospital tenancy may compli-cate the hospital’s analysis of the benefits of monetizing those MOB assets. The hospital’s analysis of the benefits of developing new MOBs also becomes more complex, as the hospital has to consider its cost of capital vs. the costs to lease and its capital availability for more mission-critical capital projects.

Like any complicated diagnosis, determining what impact treatment—i.e., healthcare reform—will have is not easy. Healthcare practitioners are watching and waiting to see what will come of proposed healthcare reforms, and once they know that, they’ll know whether the prognosis for healthcare real estate is as rosy as some have predicted.

about the author: Danny Prosky is execu-tive vice president of healthcare proper-ties for Grubb & Ellis Realty Investors and 2009-2010 co-chair of BOMA’s Medical Office Buildings and Healthcare Facilities Committee.

eYe on eDUcaTIon

Healthcare Reform and Healthcare Real Estate: What’s the Prognosis?By Danny Prosky

To learn more about healthcare re-form and its impacts on healthcare real estate, plan to attend BOMA’s Medical Office Buildings and Health-care Facilities Conference, May 5-7, 2010. To learn more, visit www.boma.org/TrainingAndEducation/MedicalOfficeBuildings.

View BOMA International’s Educa-tion Calendar and Event Calendar at www.boma.org, just click on “educa-tion” or “events.”


ADVERTISING INDEX

CompANy pAGE No.

WHEN MEDICAL PROPERTY DEVEL-OPMENT AND MANAGEMENT FIRM Pacific Medical Buildings LLC (PMB) was looking to streamline its procurement and accounts payable process, it turned to Yardi’s Procure-to-Pay™, which com-bines Yardi Voyager™, Yardi PAYscan™

and SiteStuff, Inc. Procure-to-Pay has helped cut by 40 percent the time PMB and its property management subsidiary company, PMB Real Estate Services LLC, spend processing invoices while reduc-ing the time and costs associated with procuring the company’s maintenance,

TRADE TooLS [SOFTWARE]

repair and operating supplies.As a Voyager client, PMB leverages

the property management and account-ing database’s integrity, workflow and automation as a foundation for the Procure-to-Pay process. The integration delivers electronic invoice processing and automated, customized approval workflow with Yardi PAYscan. By includ-ing SiteStuff, the process enables a full procure-to-pay solution, from creation of the purchase order to ordering the supplies and paying the invoice—with-out the need for file transfers, uploads or synchronizations.

SiteStuff, a wholly owned subsidiary of Yardi, provides commercial real estate clients, including PMB, an efficient way to order supplies via an online catalog. A purchase is initiated through SiteStuff, which sends an electronic invoice to PAYscan, which routes the invoice through an automated custom approval workflow. The process concludes with

payment of the vendor by electronic funds transfer, a step that PMB antici-pates implementing soon.

“Before we had this integration, we spent too much time on manual data entry and too much money sending invoices around our 10 office locations, and sometimes they got lost along the way,” says Ryan Ahlf, PMB’s controller. “Procure-to-Pay integrates with Voyager to centralize, streamline and expedite the process. Each approver can log in and see the invoice, and we can easily customize the approval workflow so each invoice goes only to the right peo-ple. As a result, we take 30- to 40-per-cent less time to process invoices than we used to, giving staff members more time for higher-value tasks. In addition, we saved a significant amount of money by eliminating invoice copying, storage and mailing, and by reducing invoice late fees. Procure-to-Pay’s automated process also makes us more efficient by sharply reducing opportunities for data entry errors, and it converts paper invoices from all of our vendors to elec-tronic images.”

pacific medical Buildings Enlists ‘procure-to-pay Solution’ to Save Time and money

Angus Systems Group ..................................................9

Bartlett Tree Experts .................................................... 8

BOMA Atlanta ........................................................... 16

BOMA International ....................................22, 27, Cov 3

Cree Inc—HQ ............................................................ 5

Dorlen Products ......................................................... 14

E-Mon, LLC .............................................................. 13

Jamestown Technologies .............................................. 10

MJM Communications ................................................ 14

MyOpenJobs.com (Facility Agent) .................................33

National Vending ......................................................... 11

New Jersey Sanitary Supply Association ........................... 10

NuTech National ........................................................ 15

Pro-Bel................................................................Cov 2

Proform ..................................................................... 8

SealMaster Corp—Thorworks ...................................... 32

Shortridge Instruments Inc............................................ 16

U.S. Lawns...........................................................Cov 4

Pacific Medical Buildings, including this property in Burbank, has implemented Yardi’s Procure-to-Pay.


BuyERS’ GuIDE

PRODUCT DETAILS

Kimberly-Clark Professional* Launches Luxury Touchless Skin Care SystemKimberly-Clark Professional* has introduced the Electronic Cassette Skin Care System, a touchless skin care system designed to provide the ultimate hand washing experience. The system is available with a complete line of Kleenex-brand luxury foam skin cleansers, including a fragrance- and dye-free Green Seal™-certified formulation, antibacterial, E-2 rated and instant hand sanitizers. It helps reduce cross contamination and the spread of germs via touchless dispensing and a sealed soap system that prevents contamination of the soap itself by bacteria, a problem associated with 25 percent of unsealed bulk soap systems.

For more information, visit www.kcprofessional.com

Schindler Boosts Elevator Efficiency with New PORT TechnologySchindler Elevator Corporation has boosted elevator efficiency and energy savings with the Personal Occupant Requirement Terminal (PORT), a groundbreaking new technology for building transportation. The intuitive system functions as a two-way communication interface between the occupants and the environment, learning and adapting to the specific traffic patterns of each tenant to provide unparalleled occupant service. With the ability to integrate seamlessly with any elevator system, regardless of original manufacturer, PORT gives building owners the opportunity to provide their tenants with greener, state-of-the art technology. The system is suitable for a variety of high- and mid-rise buildings.

For more information, visit www.schindler.com

Design Lighting Systems in Minutes with Lutron’s GRAFIK Eye® SoftwareLutron Electronics Co., Inc. has released the GRAFIK Eye QS Wireless Design Tool, a fully customizable preset light and shade control system that provides convenient control, energy savings and enhancement to a building’s aesthetic. The user-friendly, flash-based Design Tool allows users to design a lighting scheme and add components, including wireless controls, wireless occupancy/vacancy sensors, integration devices, window shade components, power modules and more. In addition, GRAFIK Eye QS Wireless is scalable, making it easy to add components and expand the system’s capabilities for a variety of applications.

For more information, visit www.lutron.com

Garland Offers Resilient Roof Walkway and Decking ProductsThe Garland Company, Inc. recently introduced the Dura-Walk® plaza deck system, a family of elastomeric covering products for roofing areas that are used for walkways, decking or vehicular traffic. The system provides a complete line of two-component, liquid-applied waterproofing membranes, along with a variety of support products, to properly handle specific roofing conditions. Dura-Walk surfaces are highly resilient and provide exceptional resistance to UV, ozone, chemical and temperature variations.

For more information, visit www.garlandco.com

West Chester’s New Lunar Foam Gloves Provide Protection and ComfortWest Chester Holdings has introduced Lunar Foam Nitrile gloves, which combine comfort and protection for a variety of commercial building maintenance uses. The new lunar foam coating technology gives the gloves extra grip on wet or oily materials and better surface adhesion on dry applications. Antibacterial surfactants prevent odors and bacteria from forming. The gloves include a knit wrist for wearer comfort and come in a full range of sizes to ensure a proper fit and optimal dexterity. They are machine washable and silicone free.

For more information, visit www.west-chester.net

Buyers’ Guide to Building products and Services


conference connection

EXHIBITORS AT THE EVERY BUILDING SHOW this June will offer an array of innovative products and services to help property professionals improve opera-tions and cut costs in 2010 and beyond. Here are a few highlights of what attend-ees can expect:

Prioritization PlanningValleyCrest will offer attendees something new through ValleyCrest’s Landscape Priori-tization Plan. The plan outlines cost-saving renovations that can help building owners and managers determine where to spend their money to get the maximum ROI on their landscaping improvements. “By pri-oritizing the approach we take to servicing the property, including things like updating the irrigation system, changing the plant material and even the frequency of work, we can help a client reduce costs and main-tain quality and aesthetics,” says Lorraine DiBacco, marketing manager with Valley-Crest Landscape Companies. “In these tough economic times, property managers and owners are faced with tough decisions on building services, such as trying to cut back on landscaping services while main-taining high tenant occupancy rates. High-quality landscape service drives property values and protects building owners’ and managers’ investments.”

Visit ValleyCrest in Booth #721 and at www.valleycrest.com

Roofing SolutionsIB Roof Systems will feature a variety of roofing solutions for tradeshow attendees, with a focus on the cost and energy savings that white reflective roofs provide. “We really want to help property professionals look at what impact roofing can have on a build-ing’s operations, besides keeping the water out,” says Jason Stanley, vice president of business development, IB Roof Systems. With that in mind, IB representatives will be briefing property professionals on the profound impact white reflective roofs can have on decreasing energy consumption and reducing the urban heat island effect—something increasingly important for attend-ees, as many municipalities are starting to mandate white roofing. Also on display will be a carbon- and energy-savings calculator that tabulates the cost and energy savings of an IB white reflective roof vs. a traditional asphalt roof.

Visit IB Roof Systems in Booth #847 and at www.ibroof.com

Eliminating the Element of Surprise (Costs)ThyssenKrupp Elevator plans to introduce tradeshow attendees to its new TKPlan, a detailed capital budget planning tool that will help clients better prepare for their vertical transportation capital expenditures. Explains ThyssenKrupp’s Director of Repair Devel-opment Stephanie Petkers: “By partnering with our clients and providing a consultative approach to upgrading, we’ll put them in the best position to weigh all their options in regards to their elevating equipment. We’ll discuss historical issues with elevators in their portfolios and also meet with them on a proactive basis to eliminate the blindsiding effect of unexpected elevator repairs and modernization.”

Visit ThyssenKrupp Elevator in Booth #816 and at www.thyssenkruppelevator.com

Number CrunchersKimberly-Clark Professional* will have a variety of health, hygiene and cleaning prod-ucts on display, with a new tool to help prop-erty professionals determine which products are right for their buildings. “We have devel-oped some simple Web-based tools to help building owners and facility managers com-pare environmental impacts and cost-saving potential between different alternatives. We recommend the solutions with the lowest total impact, not just those with the most recycled fiber content,” observes Kimberly-Clark Professional* Customer Marketing Manager Peter Leahy. Kimberly-Clark Pro-fessional* representatives will also be telling The Every Building Show attendees about their new Forest Stewardship Council chain-of-custody certification, which enables KC to support forest stewardship and continue to provide customers with a wide range of sustainable offerings

Visit Kimberly-Clark Professional* in Booth #708 and at www.kcprofess ional.com

Integration SensationTrane Commercial Systems, a division of Ingersoll Rand, will feature the strategic integration of Trane’s HVAC systems with Ingersoll Rand’s security systems. “This gives the building owner the opportunity to reduce installation and maintenance costs, while increasing functionality,” comments Trane’s Director of Strategic Relationships Scott Lenger. The integrated system works on a shared infrastructure, rather than hav-ing several low-voltage systems through-out the building, and features a singular user interface. The systems are also highly customizable, meaning customers pay for only what they need. “It’s also a benefit to property managers to have only one vendor and one point of contact for their HVAC and security systems. It really simplifies things for them,” adds Lenger.

Visit Trane in Booth #342 and at www.trane.com

Innovation and Cost Savings Frame Offerings at The Every Building ShowBy Lindsay Tiffany

Learn more about the

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Documents

The BOMA Magazine - January/February 2010