Knowledge Leader
co ll iers i n ternatio nal propert y mag azine
Safety First:
Security for your Personal PC
Today’s Mortgage Crisis: Is History Repeating Itself?
Hotels:
The Cost of Free
Summer 2011
Fire Works Wolters Kluwer VP Chuck Keel’s workplace solutions are spreading like wildfire
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contents 4 Outlook 20/20
Yesterday’s science fiction is today’s technology. BY Heidi Stout Tretheway
6 Spotlight
Massive $34 million transaction; the state of big box retail; Q&A with Executive Vice President Avtar Bains.
10 B2B
A look at the cost of hotel freebies. BY Robert Mandelbaum
12 Working Space
An innovative company is opening the window to new sustainable strategies. By Teresa Kenney
14 Bank Notes
A long-forgotten 1944 report to Congress holds important lessons for today. BY KC Conway
16 Fire Works
Enthusiasm for Wolters Kluwer Vice President Chuck Keel’s workplace solutions is spreading like wildfire. By Cheryl Reid-Simons
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20 Value-Add
A forward-thinking cloud technology platform is helping companies keep track of their portfolios’ true value. BY Teresa Kenney
25 Raise the Roof
Sustainability starts at the top.
By Jeff Bond
31 Behind the Scenes
Canadian and U.S. business profiles.
36 Personal Biz
When it comes to your personal computer, safety first. by Jonathan Kay
38 Follow the Leader
One industry association is equipping highperforming professionals with valuable, online tools of the trade. by Linda Popovich
39 CSR
Where does technology go to die?
31 12
by Jessica Trupin
40 In Focus
Change your company’s attitude from “why we can’t” to “how we can.” by dOUG FRYE
www.knowledge-leader.com
Cover Photo by A aron Fedor
Colliers international Spring 2009
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Volume 5 u Number 2
From the Editors’ Desk None of us knows what’s coming next.
Knowledge Leader
co ll i ers i n t er n at i o n a l propert y m ag a z i n e
Executive Managing Editors David Bowden
Dylan Taylor
IN BETWEEN THE LINES
Fifty years ago, the IBM 1401 mainframe had just completed its first year of production, and was, by all standards, a runaway success. It’s easy to understand why: the switch from vacuum tubes to transistors made the 1401 compact; weighing in at a little more than 8,000 pounds, the computer and peripherals would barely fill your living room. It was a bargain, whether leased for $18,000 a month (in today’s dollars), or purchased outright for comfortably less than $1 million. And the 1401 was more flexible and powerful than the purpose-built plugboard systems that preceded it—the four kilobytes of magnetic core memory that most shipped with was plenty enough to store, say, the paragraph you’re reading right now. By 1965, over half the computers in the U.S. were IBM 1401s. Now, it’s pointless to compare the computing power of the 1401 with today’s computers, because the numbers quickly approach absurdity. (For instance, a 2GHz processor is approximately 2,300,000 percent faster.) And besides, the difference in specifications doesn’t allow for an apples-to-apples comparison. Imagine explaining to an IBM technician in the early 1960s that someday, the soft keyboard on a tiny, pocket-sized device would be preferred over a photocopier-sized card reader that could process a staggering 800 punch cards a minute. So it’s remarkable to learn that until the early 1980s, the majority of business computers had more in common with those IBM mainframes than the PCs that displaced them. And, in turn, the netbooks, tablet computers and smartphones of today make the desktop computers of 10 years ago look like relics.
Dylan Taylor and David Bowden Editor
Teresa Kenney Associate Editors
Christine Schultz, Lex Perry, Aaron Finkelstein Art Director
Amy Wallace Project Manager
Heidi Page Contributing writers
Jeff Bond, KC Conway, Aaron Finkelstein, Doug Frye, Jonathan Kay, Teresa Kenney, Robert Mandelbaum, Duncan Mayer, Linda Popovich, Chris Ransom, Cheryl Reid-Simons, Heidi Stout Tretheway, Jessica Trupin Proofreader
Amanda Castleman advertising sales
Esther Choi This magazine is published by Colliers International
With newer and faster devices appearing on the market seemingly every day, it’s important to remember that they’re just tools; it’s how we use them that makes the difference. If we’re distracted by all of the bells and whistles offered by the next big gadget, we may miss the opportunity to understand how new technology advances can help make our world— whether at work or at home—that much easier. In this issue, we examine the visionary ways in which our industry is employing technology. Features include: • • •
Our cover story profile of Chuck Keel, VP of real estate for Wolters Kluwer, who every day leverages his IT background to revolutionize the work environment; A look at how roofing pioneers Tecta America and EagleView are changing not only how we construct roofs, but how we view them; and A report on how Colliers Valuation is helping the FDIC take stock of the new normal in financial markets.
We hope this issue of Knowledge Leader opens doors for you, helping you see the gadgets around the corner, as well as sparking ideas for using technology in enterprising and innovative ways.
David Bowden Chief Executive Officer | Canada Colliers International 2
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Dylan Taylor Chief Executive Officer | USA Colliers International
To order more copies, learn about advertising options or subscribe to Knowledge Leader, visit Knowledge-leader.com.
Tiger Oak Publications 1518 First Avenue S., Suite 500 Seattle, WA 98134 Knowledge Leader is published three times annually by Tiger Oak Media, Inc., with offices at 1518 First Ave. S., Suite 500, Seattle, WA 98134; 206.284.1750. © Tiger Oak Media, Inc. All rights reserved. POSTMASTER: Send address changes to: Knowledge Leader, Colliers International, 601 Union Street, Suite 4800, Seattle, WA 98101. Publications Mail Agreement No. 40064408. Return Undeliverable Canadian Addresses to: Express Messenger International, P.O. Box 25058, London, ON N6C 6A8. Printed in USA.
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Outlook 20/20
h ot to pic s m a kin g h e a d lin es to day
The Future is Now Yesterday's science fiction is today's technology. By Heidi Stout Tretheway Think back when you were a kid, sitting in front of a boxy TV, munching cereal and watching The Jetsons cartoon on a Saturday morning. It all seemed absurd: moving walkways, vacuuming robots, mobile videophones, talking alarm clocks and news on the TeleViewer. Today, however, it seems quite prescient. There are moving walkways at the airport, Roomba robot vacuums, and iPhones with video chat. And not only can alarm clocks talk, but cars can too, giving you turn-by-turn directions to your destination. It’s hard to fathom, but the gadgets depicted in a cartoon made in the early '60s accurately foreshadowed much of today’s technology. So where are we headed to next? When it comes to having a thumb on the pulse of tomorrow's high tech innovations, forget George Jetson. Meet Veresh Sita.
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How New Technology Will Affect The Built Environment • Remote controls: Buildings will be monitored remotely, allowing property managers to view and control systems, such as lighting and heating, ventilation and air conditioning, even from thousands of miles away. • Connect everything: The first question a facility manager or purchasing agent should ask before upgrading is, “Can that device network?” Smart chips will be present in virtually everything, and those that can’t connect to a network wirelessly will soon become dinosaurs. • Flexible work stations: Workspaces will be more
As Colliers International’s chief information officer, Sita has seen what's on the technology horizon in the research labs of innovative companies, such as Microsoft and Cisco. Things that sound like science fiction will soon be everyday conveniences. “I promise you, this is going to happen,” Sita says, describing a light bulb that doubles as a projector—making a computer flat-screen all but irrelevant. “This technology already exists, and while it’s not quite ready for prime time, it will be part of your life in just a few years.” Sita sees data storage and access moving swiftly from server rooms into “the cloud”—that ephemeral storage hub that allows everyone to access everything from everywhere. Increasingly, technology leaders are building collaboration tools that don’t rely on a singular network. Instead, data may be a mash-up of multiple sources, tailored to an individual’s specific need.
NOW WHAT?
FOUR SIMPLE STRATEGIES TO STAY AHEAD OF THE NEW TECHNOLOGY WAVE
1. Get in the game. If you’re still using a cellphone rather than a smart mobile device, trade up now. It doesn’t matter so much which mobile device you buy as it matters that you get on a good mobile platform. If you have a mobile device released in the last 12 months, you’re good to go. 2. Get it in the cloud. No matter what application you purchase or develop, create it in the cloud. If you’re attached to a legacy application, draw a road map to put it into the cloud. 3. Mobilize everything. Ensure every application and byte of data you have is accessible from a mobile platform. What doesn’t go mobile will soon become irrelevant. 4. Keep up at home. The largest data growth areas for cloud data storage are photos and videos. Don't risk losing special memories stored on your laptop or hard drive. Move this data to the cloud.
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modular, with office configurations assembled and reassembled like Legos. Because networking is wireless, individuals will be able to move around workspaces and change configurations on the fly to meet the immediate needs of the team. The only limitation will be the layout of electrical grids. • Repurposing rooms: Just as law firms scaled back large libraries that took up lots of square footage when their content went digital, server rooms and data centers are moving toward obsolescence as data moves to the cloud. • Less baggage: Instead of dragging around your laptop, phone, external hard drive, notes and more, the only thing you’ll need to carry is your smart mobile. This will be powerful enough to meet your needs wherever you go and capable of plugging into docking stations to instantly create your customized computing environment.
“Fear holds us back from going allguns-blazing into the cloud,” Sita explains. But he says those who are the first to jump on the sharing bandwagon are likely to reap the most benefits. For example, online real estate marketplace Zillow was at first criticized for releasing too much information about residential home values. Now, it’s the norm for house-hunters to check Zillow before making a bid, creating a new industry with a new Veresh Sita market leader. “We are entering the era of participation, where everyone will contribute their data sets, and this collaboration will totally disrupt the market,” Sita says. “The sooner you embrace sharing and moving information into the public domain, the faster you’ll win.” These shifts in technology are ultimately redefining our lives and the purpose of built environments. Sita describes a Starbucks corporate strategy that defined home as the first place people go and work as the second. It's Starbucks’ intent to make its stores the third place where people gather and socialize. But when data lives in a cloud and everyone’s wireless, the meaning of "work" ultimately shifts. “Work is no longer where you go—it’s what you do,” Sita explains. “Everywhere will be the new second place, and the places you go for experiences, such as the ball park, will be blended into places you can work.” The convergence of technology makes this possible, as devices are folded into each other. Just as the mobile phone appropriated a large share of digital photography, tablets may take over for laptops and smart mobile devices will perform as many functions as a personal computer. “We will soon become device-agnostic,” Sita explains. “I don’t care if you have a Blackberry, a raspberry or any berry. Your smart mobile will allow you to personalize your environment and connect with anyone or anything, anywhere. It will also be smart enough to know when to act like a phone, or a computer, or a slate, or even a TV.” George Jetson would be proud. K L Colliers international summer 2011
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spot l ig h t the people, places
and events shaping the industry
>Market Watch
New Millenia
International Relationships Coordinate Massive $34 Million Sale.
The Corky McMillin Companies—a San Diego-based
real estate investment, land development and home-building company—has teamed up with Dallas-based land investment manager Stratford Land to bankroll a joint venture on the 210-acre Millenia mixed-use project in Chula Vista, Calif.’s Otay Ranch. The $34 million sale was facilitated by Colliers International, and sets in motion a 20-year development plan that will ultimately include up to 3,000 condominiums and townhomes and 3.5 million square feet for office, retail, civic and hospitality uses. “We couldn’t have asked for a better partner than Stratford Land to help us fulfill the dream and vision of Millenia, the heart of South County’s future,” says Scott McMillin, Corky McMillin board chairman. The successful union was negotiated by the Colliers team of Kelly Heed, vice chairman, Vancouver, British Columbia; Gunder Creager, senior vice president, San Diego region; Simon Lim, 6
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senior vice president, Vancouver and Rafael McCadden, industrial director, Mexico City. The joint effort spanned time zones, with Creager coordinating the deal in San Diego and marketing it throughout the U.S., Lim introducing the project to developers and investors in Canada, China and South East Asia, McCadden marketing it to developers in Latin America, and Heed managing the relationship with Corky McMillin and coordinating the overall effort. Todd Galarneau, McMillin’s project manager says, “Stratford Land shares our goal to have Millenia become a dynamic, mixeduse development with strong employment and civic components as well as a variety of housing types in a series of compact, walkable districts. Stratford Land also shares McMillin’s view that this forward-thinking project is poised to be among the early beneficiaries of a recovery in the national economy and regional real estate market.” For more information on the project, visit www.milleniasd.com. knowledge-leader.com
>Transactions of Note Colliers International’s recent retail report found that from 2008 through 2010, the overall U.S. retail vacancy rate rose from 6.8 percent to 11 percent, with much of that vacant square footage being big box retail, such as this vacant CompUSA store.
Boxed In
Newly released white paper examines the recession’s toll on big box retail space. Heading into the second half of 2011, retail is beginning to see some recovery, although
reminders of the recession’s toll still linger. A new report from Colliers International reveals that from 2008 through 2010, the overall U.S. retail vacancy rate rose from 6.8 percent to 11 percent, representing the return to the market of approximately 419 million square feet. While some of that vacant square footage came in the form of stores with small footprints, such as the approximately 1,100 closing Blockbuster Video locations, much of it was made up of shuttered big box retailers. Borders is working through the closure of 226 of its stores, with as many as 75 more on the way, and electronics retailer Best Buy, with a 16 percent quarterly drop knowledge-leader.com
in earnings, has hinted that it may close some under-performing locations as well. The report examines four recently bankrupted retail chains: Circuit City, Linens ‘n Things, Mervyns and Gottschalks. The four closed more than 1,200 locations and vacated an estimated 56 million total square feet. Research found that property owners with freestanding boxes were able to lease up a larger percentage of the vacated space compared with their multi-tenant counterparts, but this advantage was rather small across all locations. However, in the nation’s Sun Belt— the southern tier of the country, including but not limited to Arizona, Florida, Georgia, Louisiana, Mississippi, Texas and the southern portion of California—more than 60 percent of the freestanding spaces were re-tenanted, compared with just 45 percent of non-SunBelt freestanding boxes. On average, the report notes that centers where big box tenants comprised less than 40 percent of the total space tend to be less volatile in terms of average time to re-let vacant space. As big box retail’s share of these centers grew, so did the volatility in the likelihood of filling the vacancy and time required. This was consistent in both Sun-Belt and non-SunBelt markets. “The retail sector is absolutely on the rise, marked by a flight to quality,” says Mark Keschl, national director of retail for Colliers International. “The recent bankruptcies of these four retailers caused disruption, and there will likely be more pain along the way. But what we see here is that underlying retail real estate with good fundamentals continues to attract tenants. The location and size of those spaces have a nuanced effect on how quickly they re-let.” For more information on the white paper’s key findings, visit www.colliers.com/research. Colliers international Summer 2011
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spot l ig h t > Q&A
executive insight with:
Avtar Bains
Colliers International | Vancouver, British Columbia A 32-year veteran at Colliers International in Canada, Avtar Bains specializes in the sale of investment properties, with an emphasis on shopping centers and office buildings. He has completed in excess of $9 billion in transactions, making him the company’s all-time leading broker by revenue. Bains first stepped into the doors of Colliers as a summer student. Now, he is one of Canada’s leading commercial real estate brokers, having re-written the book on negotiating major office building and shopping center deals across Canada. One of Avtar’s differentiating factors is his commitment to providing his clients with “uncommon knowledge”: critical information on their properties or the real estate market at large they would not otherwise be able to obtain.
If you could have dinner with any public figure, who would it be and why?
owners living on either side of a one-mile stretch of Main Street. Another 10-hour assignment!
Fredrick Forsyth, best-selling author of novels, including The Day of the Jackal, The Odessa File and The Fourth Protocol. His novels incorporate meticulous research and technical details, woven together in compelling and believable stories. His ability to communicate a complicated story to a chap with a C+ average and make it comprehensible is a wonderful skill set and indeed a prerequisite in commercial real estate.
Who are your role models?
What was your first job?
Talking the talk is just not good enough; walking the walk is the prerequisite.
When I was 12 years old and in 7th grade, I was a newspaper delivery boy in Victoria. I received an A+ for customer service but a C+ for accounts receivable.
What was your first job at Colliers? The first job I had with Colliers (then Macaulay Nicolls Maitland) was working on the microfiche files in the reception area. I would sit in front of the screen for eight straight hours and, inevitably, a sales rep would come late in the day and ask for the names and property details of all 8
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Other than the obvious answer of my parents, I have three role models, in no particular order: Major General George Pearkes, former Lieutenant of British Columbia; author and mythologist Joseph Campbell; and developer and philanthropist Djavad Mowafaghian.
What advice would you give to someone entering the business?
What is your favorite business book? Dale Carnegie’s How to Win Friends and Influence People.
What do you see as new industry trends that clients or brokers should be aware of? A major trend occurring is the increased reliance on financial analysis/engineering as the primary yardstick in determining value.
Financial analysis alone would suggest that an identical asset bought and sold on the same day by ten different purchasers would have indistinguishable returns. The more likely scenario, however, would result in ten exceptionally different outcomes. As such, the primary focus should be the unique expertise that each purchaser offers the asset. What will ultimately determine the success of an investment is each purchaser’s ability to enhance or take advantage of the asset’s quality, location, physical attributes and relationship with existing or new tenants; manage turnover and debt; and sustain stable, recurring and growing cash flow. Each asset is unique and every candidate for ownership will realize both different outcomes and financial results. As such, the initial financial analysis should not be the key determinant, but rather a guidepost, among many other fundamental factors. The more sophisticated we get, the more we ignore the basic tenets of our business.
Any words to live by? Happy wife, happy life. K L
knowledge-leader.com
B2B
busin ess to b usin ess tips
Something for Nothing New Industry Trend Report Reveals the True Cost of Free Hotel Services. By Robert Mandelbaum
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While there may be “no such thing as a free
lunch,” as the saying goes, there are plenty of other freebies that hotels and resorts offer their guests, according to a recent report by Atlantabased PKF Hospitality Research. The research affiliate of PKF Consulting USA (a division of Colliers International) notes in its Trends in the Hotel Industry report that in 2009, hotels that routinely offer gratis services to their guests spent on average $723 per available room (PAR) for complimentary food, newspapers and cocktails. The firm culled the information from an analysis of room department expenditures for complimentary services and gifts (CSG) at 1,600 properties. Examples included newspapers, meals, manager’s receptions and fruit baskets. Not included in the expenditures reported are complimentary guest supplies— like in-room toiletries, writing materials, bottled water and coffee—or the cost of Internet access, or any associated labor costs, all of which would increase the average CSG spend. PKF Consulting’s research found that during the depths of the industry recession in 2009, expenditures for CSG were cut, along with most other operating expenses in the rooms department. From 2008 to 2009, CSG costs declined 6.4 percent in the study sample. However, when measured on a dollar per occupied room (POR) basis, CSG expenses actually increased 1.9 percent during the same period of time. In an effort to preserve rate integrity during the recession, value became a significant marketing factor for hotels. To retain market share and guest satisfaction, hotel managers steadfastly maintained the same level of CSG offered
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prior to the recession. In fact, most hotel companies raised their standards for complimentary breakfasts and cocktail receptions, the two largest components of CSG expenditure. All-suite, extended-stay, and limited-service hotels dominate the number of properties that offer complimentary breakfasts and cocktail receptions, although 18 percent of the properties in the survey sample are resorts and full-service operations. In fact, not including extended-stay properties, all-suite hotel managers spend the most on CSG: on average in 2009, $1,251 PAR or $5.16 POR. This equates to 3.5 percent of total revenue. The offering of a full hot breakfast buffet and evening manager’s reception contributes to the relatively high expenditures at these hotels. Somewhat surprising, perhaps, was the finding that the second greatest dollar amount of CSG among the different property types was spent at resort hotels. In 2009, CSG expenditures at these properties averaged $893 PAR and $4.27 POR. Luxury properties were harder hit by the recession, which might have forced managers to increase their value proposition by offering gratis food and beverages not typically comped at higher-end resorts. In aggregate, extended-stay hotel managers spent an average of $808 PAR on CSG, or 3.2 percent of total revenue. However, these figures vary depending on the market position of the extended-stay brand. For upper-tier extendedstay hotels that offer both a full, hot breakfast buffet and a manager’s reception, CSG costs averaged $956 PAR. For the lower-tier extended-stay properties that typically serve a continental-style breakfast, these expenditures averaged $192 PAR.
Limited-service hotels comprise the largest segment of property types that offer complimentary guest services. These operators generally provide a gratis breakfast but no cocktail reception. Accordingly, limited-service CSG costs averaged $532 PAR, the lowest level of expenditures across all property types. While managers at full-service hotels do not generally offer complimentary breakfasts and cocktails, they do operate concierge lounges that provide free food and beverages throughout the day. Among the full-service and convention hotels that reported CSG expenses in PKF’s Trends survey, the average expenditure was $557 PAR, or 1.2 percent of total revenue. Based on PKF’s December 2010 Hotel Horizons forecast, an estimated 30 percent of all hotel rooms occupied in the United States in 2010 were accommodated in the Midscale Without Food and Beverage and Upscale chain segments. These two segments are dominated by all-suite, limited-service, and extended-stay hotels, the property types in which complimentary services and gifts are typically found. In addition, these segments have historically demonstrated strong growth in demand. Hotel guests are increasingly expecting complimentary breakfasts, as well as other services not considered in the analysis, such as free wireless Internet access. Consumer preferences will most likely result in significant growth in the cost of CSG in the future. K L Robert Mandelbaum is the director of research information services for PKF Hospitality Research, an affiliate of Colliers International. For more information on the Trends® in the Hotel Industry report, please visit www.pkfc.com/store.
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sm a rt d esig n fo r t h e wo rk pl ace
The U.S. Green Building Council headquarters in Washington, D.C., was designed by WDG Architecture and includes MechoSystems products as part of its energy conservation strategy.
Made in the Shade
MechoSystems takes the lead on sustainable design with groundbreaking automated window systems. By Teresa Kenney When it comes to innovation, if you wait long enough, every brilliant idea will eventually be
embraced by the general public. Just ask Jan Berman, president of New York-based MechoSystems, a leader in commercial and residential window shade systems. The company—which created the original chain-operated roller screen in the 1960s—first made its foray into sustainable design in 1977, when it was asked to collaborate on the Gregory Bateson building in Sacramento, Calif.—the flagship of the Energy Efficient Office Building Program. Berman’s father Joel convinced architects to use automated exterior shades to conserve resources. “At the time we had a young kid working for us—the Steve Jobs of MechoSystems—who built a computer with hardware about the size of a bedroom to automate the shades within our parameters,” Berman recalls. 12
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A “mere” thirty-plus years later and conserving resources through eco-technologies is quickly gaining wide acceptance, although pioneers like the Bermans have been quietly developing new innovations for years. “The history of our company begins with my grandfather on a boat coming over from Europe. He learned the upholstery trade as a kid; my father grew up in the business. At that time, it was known as Homecraft Drapery and Upholstery, and was a workroom that designers would use as a trade resource. My father studied architecture and lighting, and he changed the company into a commercial drapery and upholstery business, eventually inventing the MechoSystems products that we see today,” explains Berman. Working with leading designers and architects, the company has installed tens of thousands of automated shades in systems across the country—including some of the best-known high-performance “green” projects in the world. They have worked on the offices of The New York Times, the headquarters of the U.S. Green Building Council and the NASA Sustainability Base—which is using MechoSystems products as part of NASA’s goal of achieving net-zero energy use for the building. The company also invented a new type of shading system for the Frank Gehry-designed, Cleveland Clinic’s Lou Ruvo Center for Brain Health in Las Vegas. The center features curving, undulating walls and unusual window geometries. They are also collaborating with the construction team of The Shard at London Bridge Quarter in London. Once completed, The Shard will be the tallest building in Western Europe, and will feature 11,000 panes of glass, no two of which will be alike. In the building, MechoSystems is installing its SolarTrac product, a PC-based, software-driven, automated shading-control system. “Window coverings used to be considered a simple decorative element—the only pre-planning required was for someone to choose a color 10 weeks before move-in. Today they are a major building systems strategy,” Berman notes. “I’m finding that whether buildings are following LEED [Leadership in Energy and Environmental Design] or other green building guidelines, people are being forced to find new frontiers to improve the performance of their properties. Designers have incorporated various technologies such as under-floor air knowledge-leader.com
U S G B C : L a r r y Ols e n
working space
systems to improve operational efficiencies, but automating the window has been a relatively under-utilized area for improving building performance.” Until now. “There has been a growing interest in this technology over the past several years. People are starting to intuitively understand the benefits of automated shading,” says Berman. One of MechoSystems’ more innovative products is the aforementioned SolarTrac, which fosters energy savings in buildings by maximizing views and comfort while protecting occupants from glare and reducing the need for artificial light and air conditioning. Through the system, roof-mounted radiometers monitor the weather in realtime. Using proprietary algorithms that analyze raw solarsensor data to determine the sky conditions, shades are automatically raised or lowered depending on the sun’s angle, whether the sky is cloudy or clear and the preferences of the occupants. The program can also be customized based on the use of the office: If it’s a collaborative gathering space, the system will allow daylight to permeate further into the room. If it’s a private workspace, daylight permeation will be limited to avoid glare and personal discomfort from solar rays. “The system is a dynamic solution for buildings. It lives and breathes and reacts to the environment, maintaining a specified level of comfort. Before, people had a distrust of dynamic solutions, but they are much more acceptable today,” says Berman. As automated shades become more accepted as an operations strategy, developers and building owners are bringing Berman’s team into the design process much sooner than ever before. “The New York Times contracted with us before they even issued the interior contract documents to the general contractors to build out their space. And prior to being awarded the project, we worked with them for two years leading up to the bid process,” says Berman, adding, “You’ve got your lighting, your HVAC, your electrical. Automated shading is in effect a sub-system that will affect all of those systems, so its impact needs to be understood. We provide the modeling and the technical data to the design team so that they can run energy simulations to see what effect SolarTrac will have on those other systems.” Last year, MechoSystems announced its next knowledge-leader.com
generation of automated shade products—the MechoLux System, developed in partnership with Encelium, a lighting-energy control company. MechoLux resides on the same PC and shares the same communications backbone as SolarTrac. Lighting control is achieved through an Energy Control Unit (ECU), which serves as the central intelligence point, collecting information from sensors, zone and scene controllers, and personal control software. Working with SolarTrac to set appropriate brightness levels for each assigned zone, the ECU communicates with a building’s Local Area Network (LAN) using standard Ethernet connections. The system can reduce lighting energy costs by 50–75 percent and enables lighting to be adapted to task-based needs and occupancy, improving energy management and employee productivity. “MechoLux was created because we were searching for an ideal lighting-energy management system for the renovation of our headquarters in Long Island City, NY. The 100-year-old industrial building was our for-
mer factory, and we’re targeting our renovations to achieve LEED Gold for New Construction. We found Encelium and installed their system with our SolarTrac. We were so impressed with the results that we decided to work with Encelium to create an integrated product with SolarTrac. Our nearly finished building is full of light, without heat or glare, and our lighting and HVAC costs are significantly reduced as a result,” Berman says. This type of ingenuity and commitment to conservation has been an integral part of MechoSystems’ business philosophy from its very beginnings, he says. “Long before ‘sustainability’ became a household term, we understood the importance of energy conservation and its place in design and construction. Everything from our PVC-free shade cloths to our energy-conserving automation systems are informed by this philosophy. It’s not merely a marketing strategy for us. We’ve been walking the walk for 40 years. So it’s rewarding to see the rest of the world catching on.” K L
The NASA Sustainability Base is using MechoSystems products as part of its goal of reaching net-zero energy use. Sim Van der Ryn’s Gregory Bateson Building in Sacramento, Calif., was equipped with an automated shade system by MechoSystems in 1977. MechoSystems updated the shades in 2007.
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Bank Notes
Co m m erci a l Fin a n cin g N e ws
History Lessons
A little-known 1944 report to Congress may hold important lessons about today’s mortgage crisis. By KC Conway Today we take for granted institutions like
the Federal Deposit Insurance Corporation (FDIC) and the Federal Home Loan Bank (FHLB). While we may recall that the genesis of these organizations had something to do with the Great Depression and its aftermath, we may not be familiar with the specific details. As a result, we’ve lost valuable perspective that could help us understand the pitfalls of today’s governmental intervention into the mortgage markets. My real estate resume includes leadership roles in both the Atlanta and New York Federal Reserve Banks, where I was called upon to put into perspective many of the issues facing our industry today. Although I never was a great student of history in school, I’m now an avid believer in the value of historical perspective. Increasingly, I find myself discovering that the banking, real estate and policy mistakes of the past tend to resurface in my search for solutions to today’s economic crisis. As a third-generation Member of the Appraisal Institute (MAI) and Counselor of Real Estate (CRE), I have access to my late father’s real estate library, which contains nearly every meaningful text, report and study on real estate and banking dating back to 1938. These documents give incredible insight into our current housing situation and cover five of the most tumultuous real estate periods in U.S. history: World War I, the Great Depression, World War II, the 1974-1981 recession, and the 1987-1994 savings and loan crisis. One little-known 1944 report to Congress regarding the housing and mortgage crisis that followed the Great Depression sheds particular light on what we face today. The report was ordered to help Congress unravel government intervention in the mortgage markets between 1932 and 1944, including the creation of the Home Owners Loan Corporation (HOLC). HOLC was founded in 1933 to prevent foreclosures by refinancing home mortgages that were 14
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in default—much like the Home Affordable Modification Program (HAMP) of today. Here are the five take-home lessons from the 1944 report: Lesson #1: A temporary program without a concrete phase-out plan can take on a life of its own, resulting in a cost that far exceeds the program’s original intention.
According to the 1944 report, HOLC was created by Congress to “provide for the direct relief of homeowners delinquent in their mortgages,” but it became “a financing device for the effective rehabilitation of a dangerously undermined mortgage structure.” In a rush to create programs following the rise in foreclosures between 1930 and 1933, the architects of HOLC underestimated the scope of the problem. Intended to last three years and cost less than $1 billion, HOLC existed for 11 and cost nearly $4 billion before Congress requested a full accounting and review of objectives in 1944. The language from the report sounds eerily similar to today’s discussions surrounding the creation of HAMP and its foreclosure prevention strategies. In 1932 Congress created the FHLB to restore mortgage credit and to re-establish home lending in savings and loan associations. Congress appropriated $125 million to open 12 regional home-loan banks to make loans to lending institutions that would begin restoration of mortgage credit. However, in the time that elapsed in organizing and opening these home-loan banks, foreclosures had reached 1,000 per day by the spring of 1933. Compare that number to 2010, when the U.S. had 3.8 million foreclosure notices or 10,400 per day. The 1944 HOLC report notes that: “FHLB records show that the FHLB failed to recognize the grave difficulties affecting homeowners in every part of the U.S.; and that its regulations for making loans were
so restrictive that the FHLB became wholly ineffective.” Of the 42,000 applications received by the FHLB between 1932 and 1933, only three loans were approved totaling $9,000. Comparing the number of homeowners today versus the 1930s, there is strong similarity to a recent report that HAMP has assisted 500,000 homeowners—far less than its original goal of 3 to 4 million. Lesson #2: Programs that are designed
without a clear understanding of the problem are doomed to be ineffective. Since 2007, loan modification efforts have failed to understand the home equity line of credit (HELOC) component complicating the modification of first-lien mortgages. This was compounded by the failure to understand the decline in home values on loan-to-value (LTV) eligibility for refinancing. Both the HELOC and LTV missteps are reminiscent of the FHLB’s original failing. As a result of the FHLB’s ineffectiveness in restoring mortgage credit to distressed homeowners, Congress promptly passed the Home Owner’s Loan Act of 1933…which brings us to the next lesson. knowledge-leader.com
Lesson #3 : If at first Congress does not succeed, it will create another program.
According to the report, “In the rush to create the FHLB in 1932 to address the greatest mortgage panic in U.S. history in which 500,000 homes had been foreclosed and another 1.017 million homeowners were seriously delinquent, the Congress did not fully appreciate either the scope or possible duration of the crisis.” Recent interventions into the mortgage markets began with loan modifications and evolved into the creation of the Federal Housing Finance Agency (FHFA) to take control of insolvent government-sponsored entities such as Fannie Mae and Freddie Mac. This was followed by HAMP, and then most recently by the creation of the Consumer Finance Protection Agency (CFPA). Lesson #4: It is extremely risky to create a
program today without taking into account a shift in consumer behavior or attitude. The 1944 report cites Americans’ intent to pay their mortgage debt obligations—regardless of home values—as critical to the HOLC having losses of only $255 million against the $3.484 billion investment by Congress between 1933 and 1944. This is 7.5 percent of total appro-
GREAT DEPRESSION MORTGAGE CRISIS 1929-1933
>
Of the 42,000 applications received by
the Federal Home Loan Bank between 1932 and 1933, only three loans were approved totaling $9,000.
priated capital, or less than 1 percent per year over its 11 years in existence. “The gratitude of self-respecting American citizens, who recognize their obligations to their Government and their intent to make sacrifices to save their homes, has made a conspicuous success of an extraordinary lending venture. The Corporation made 1.017 million loans totaling $3.093 billion, and losses have mounted to only $255 million, or 7.5%. During even the worst periods of the Depression, 80% of borrowers were making their mortgage obligations on time, and the remaining portion were less than 90 days delinquent. The HOLC borrowers have steadily reduced their indebtedness and built up stronger equities in their homes. This willingness by borrowers to pay their mortgage obligation had the effect of making the collateral behind the loans of constantly increasing value as the borrower has exhibited every interest in keeping up his payments.” As a result, HOLC was able to find investors
GREAT RECESSION MORTGAGE CRISIS 2007-2010
Annual Peak Housing Starts
900,000
Annual Peak Housing Starts
1,800,000
Peak-to-Trough HPA Decline
25.9%
Peak-to-Trough HPA Decline
26.1%
Peak in Foreclosures knowledge-leader.com
1933 @ 1,000/Day
Peak in Foreclosures
2010 @ 10,410/Day
for the loans it had originated to stem the foreclosure crisis. Can we expect the same of those who are borrowing today? What is the adverse impact on the cost and availability of mortgage debt built around a policy of principal forgiveness, forbearance and strategic default rather than one built around repayment? Policy makers must consider the borrowers’ intent to pay. Will we pay our mortgage obligations like our parents and grandparents did, regardless of value? Or are we going to be a nation of homeowners that only pay if our homes go up in value? Lesson #5: If there are no guarantees, there is no end in sight.
The final paragraph of the 1944 HOLC report contains what I consider to be the most significant point to consider: The market will not take back the full risk removed by government intercession without an incentive against the risk. Corporation Commissioner John H. Fahey notes in the concluding paragraph of the report: “Most of the gentlemen skilled in mortgage lending with whom I have had the privilege of discussing this matter during the past year see no feasible method at present of selling all the Corporation’s remaining loans except in connection with government guarantees against loss.” This is déjà vu for the Federal Reserve and FHFA with respect to unwinding the government-sponsored enterprises (GSEs). I suspect that both the Federal Reserve and the FHFA will be retaining for a long time a large portion of the mortgages that they currently hold. The FHA and GSEs were the vehicles that ultimately led to the sunset of the HOLC and the liquidation of its loans. And just as Fahey noted, it took government guarantees to sell HOLC’s remaining assets. K L Colliers international Summer 2011
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When Chuck Keel isn’t leading his team at Wolters Kluwer as vice president of real estate and workplace solutions, he’s assistant chief of the Florham Park, New Jersey Volunteer Fire Department.
Fire Works
photos by A aron Fedor
Enthusiasm for Wolters Kluwer’s Workplace Solutions Is Spreading Like Wildfire. By Cheryl Reid-Simons
When Chuck Keel walks into a boardroom and says that he’s been putting out fires, he’s not talking about smoothing out lease details or meeting work deadlines. He’s talking about literal, hot-flames-and-smoke fires. Because when he’s not leading his team at Wolters Kluwer as vice president of real estate and workplace solutions, he’s suiting up and leading another as assistant chief of the Florham Park, New Jersey Volunteer Fire Department. “Thank God, we don’t have a lot of fires in Florham Park,” Keel jokes, when asked about his dual responsibilities. As his volunteer firefighter gig suggests, Keel is not your everyday corporate VP. And his career path did not follow the standard trajectory— not unlike the Dutch company he works for. Headquartered in the Netherlands, Wolters Kluwer is a leading global information services and publishing company that traces its roots to the Schoolbook Publishing House founded in 1836. In 175 years, Wolters Kluwer has evolved from textbook publisher into a multi-billion-dollar worldwide firm that produces professional journals, software, and educational and information services for the legal, business, tax, accounting, finance and healthcare industries. Keel first worked with Wolters Kluwer more knowledge-leader.com
than 20 years ago as an information technology (IT) consultant for what is today part of the Corporate Legal Services (CLS) division of Wolters Kluwer in North America. After about a year, he moved on, but was asked to return just one month later to head up CLS’ computer programming and data center management groups. When CLS reorganized to focus on services rather than products, Keel found himself in charge of much more than programming. “It’s not the typical career path,” he acknowledges. “The company was divided into sales, service, human resources, technology and finance. Anything else that was left over, the CEO threw in my lap because I had proved through different projects I’d worked on that I had the ability to assess operational deficiencies and identify and implement solutions,” Keel explains. Among those “left-over” responsibilities was CLS’ real estate portfolio. “I found there were a lot of similarities and overlaps between building data centers and building office space, so the transition to managing a real estate portfolio was, in many regards, a pretty natural progression,” Keel says. In fact, his technical background has proven to be a solid foundation on which to build, helping him to navigate aspects of the company’s real estate interests even today.
In 2003, Keel was promoted and tasked with controlling Wolters Kluwer’s real estate portfolio for all of North America and Asia-Pacific. In this role, Keel’s IT background has helped him make some extraordinarily forwardthinking real estate decisions. To date these have translated into more than $19.5 million in annual lease cost savings for Wolters Kluwer, while simultaneously improving operational efficiency. In recent years, that has meant balancing seemingly opposing objectives, like exploring ways to maintain productivity while allowing some employees to work from home, or utilizing shared office space while minimizing distractions and maximizing privacy. Keel’s comfort with the technology side allows him to recognize the benefits of these changes. “Some people look at technology changes in a negative light,” he says. “I try to be more open-minded and have an eye towards how technology is affecting workflows. It wasn’t a sinister plot on anyone’s part; slowly but surely, we started deploying technology that made people more collaborative and more mobile.” Technology is changing the way people work and it only makes sense that the physical work environment should change as well. He notes that the question of how to best design an individual office workspace is not Colliers international Summer 2011
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“
With @WorkAnywhere, we are able to better
match the work environment to employees’work styles rather than the other way around.” – chuck keel, vice president of real estate and workplace solutions
insignificant when it comes to a company’s overall property portfolio. “Real estate is always in the top two or three expense categories on a company’s P&L [profit and loss statement],” Keel says. “We have to be good shepherds of the real estate portfolio to minimize those costs wherever possible. So, we have to be very diligent about managing capacity.” When Keel first started in real estate, the formula for determining capacity requirements was fairly simple: a top-down approach was used, by which senior management would contact Keel with standard requests. “He or she would tell me that there were 100 people and they needed 65 percent cubicles with the rest in offices, a nice boardroom, and a couple of conference rooms with a place to grab a sandwich,” Keel says. “And I would give them a choice of beige or gray.” Today, Keel is the head of a small corporate real estate (CRE) team of three that he hand-picked for their specific skill sets. David Barban has a master’s in business administration in finance from New York University and has been working with Keel for more than 10 years. Kevin Bertone is his national facilities director, and has been building everything from pharmaceutical laboratories to office space for more than two decades. Together they have 50-plus years of real estate and facilities management experience. Keel and his team began to realize a few years ago that the space requirements they were receiving from senior management often included cubicles or offices for many employees who didn’t utilize them very often—if ever. “The position had always been, if you’ve got 100 employees, you need 100 cubicles/offices, period,” he notes. The team started questioning that formula, and their top-down approach. They asked themselves: Why are we warehousing empty cubicles and offices? That single question launched the beginning of an alternative workplace strategy that is known today at Wolters Kluwer as @WorkAnywhere. The @WorkAnywhere program developed by Keel and Barban uses various tools to assess the specific space needs of Wolters Kluwer employ18
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ees on a building-by-building basis. Some tools solicit information from the top down, but most provide feedback directly from interactions with employees, or, from the bottom up. “Who knows what employees need better than the employees themselves?” Keel posits. Time utilization studies (TUS), focus groups, interviews and surveys provide the team with a myriad of qualitative and quantitative data that help them understand workflows and work styles within a particular office building, which in turn help them to design customized and efficient work spaces. As the primary numbers cruncher for the team, Barban feels the more data, the better. “Some of the most powerful data we collect comes from TUS,” Barban explains. “They help us understand the amount of mobility that exists within a given office and ultimately how much space we are warehousing. When you tell a chief financial officer that his $10 million-ayear New York City office is only used about 40 percent of the time, you get his attention.” Keel and his team are using the data to convince senior management to leverage the mobility they are experiencing by offering employees the ability to work remotely as much as two to three days per week. In exchange for that autonomy and flexibility, employees are expected to give up their dedicated work space, and, when in the office, work in a shared environment that offers everything from Starbucks-inspired lounges to high tech “war rooms” and wide-open collaborative zones. Keel compares their shared-space concept to a president’s club lounge at an airport, and estimates that about 20 to 30 percent of employees will qualify for remote work at each site. Barban explains: “We build our shared spaces at a 2 to 1 or 2.5 to 1 ratio of people to workspaces. At those ratios we are able to reduce our square footage per person metrics for remote workers by 50 to 60 percent—or 100 square feet per employee, down from 225 square feet.” Keel notes, “Historically, employees have been expected to work inside the confines of a cookie-cutter approach to office design. Now with @WorkAnywhere, we are able to better match the work environment to employees’
work styles rather than the other way around. Not only does it create more functional space, but it saves us money, increases employee productivity and morale, and decreases turnover and hiring costs.” Introducing these kinds of dramatic changes isn’t easy, Keel acknowledges, but he is passionate about designing workspaces that are as flexible as the employees using them. The @WorkAnywhere approach is conducted on a property-by-property basis. With more than 100 offices in its portfolio, the team of three has its work cut out for it. “This workplace design strategy is helping Wolters Kluwer streamline its real estate footprint,” says Colliers International New York’s Vice Chairman Mark Friedman. Friedman has worked with Keel for more than 20 years, and identifies Keel as among the first to recognize how technology would change the way companies use space. “The world is a very different place than when we first started working together,” Friedman says. “Just because a company is sitting on 50,000 square feet of space doesn’t mean they need that much when the lease comes up. People are not just sitting at their desks anymore.” This paradigm shift enables companies to succeed with less space per employee, Friedman explains, adding, “I think brokers are naïve if they don’t utilize this strategy. Keel’s innovative thinking has given us the green light to architect a more efficient work flow.” Keel’s technology background has also helped to streamline the management of his firm’s extensive real estate portfolio. Because of the time and resource demands of their @WorkAnywhere program, Keel sought a technology solution that would help create efficiencies in the transaction management process. He wanted a tool that would allow him to instantly receive an update on any project that was in progress from anywhere, at any time, without picking up the phone or sending an email. “At best we were doing this by combing through our inboxes for emails on a specific project. That’s not the most user-friendly and productive way to manage the high volume of knowledge-leader.com
Wolters Kluwer is offering its employees the ability to work remotely as much as two to three days per week.
communications associated with a single project, let alone with the multiple projects we juggle on a daily basis,” Keel notes. So he talked with Colliers about creating a Web-based transaction management system that could keep everyone up-to-date on the status of a project. “I said, ‘Look guys, the world’s changing as we know it. Let’s see if we can transition to something that doesn’t put more on you as brokers and on the folks behind brokers, so we all don’t have to continually update each other by phone and barrage each other with emails. We need a place, a dashboard, to keep up with all the different deals,’” recalls Keel. Colliers was already using a software program that did just that, helping brokers manage, organize and track the myriad of communications and documents on all their transactions. When Keel mentioned to Friedman that he was interested in using a similar system, Friedman and his team adapted the internal management tool to be a customer-facing program as well. “Just as I’m Chuck’s service provider, he’s Wolters Kluwer’s. That requires us to be connected—virtually or otherwise—at all times to proactively address issues, take advantage of opportunities or negotiate deals. This program allows for that around-the-clock connection, regardless of what time zone we or the properties are in,” says Friedman. The time that Colliers is able to save Keel and his team on transaction management activities allows them to focus more time on their passion for @WorkAnywhere. “It is just the sort of technology success story that they see making the workplace a more efficient and less frustrating place to spend the better part of one’s day,” Friedman says. That efficiency also allows Keel the time to do things like volunteer for his local fire department and spend time with his wife and their two sons. One son recently graduated from college and the other is in his sophomore year. Although neither has a firm career path in mind, Keel says one thing is certain: “They’re just desperately hoping to find a job that doesn’t require a cubicle.” If their dad’s ideas keep spreading like wildfire, their prospects look good. K L knowledge-leader.com
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value-add technology is helping corporations and financial institutions keep track of how much their portfolios are worth. By Teresa Kenney
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It sounds like the plot of a summer
blockbuster thriller: A group of mysterious strangers in suits walk into a bank branch on a Friday afternoon and inform the manager that they are taking control of the bank. They terminate all of the employees—including the manager—and there is absolutely nothing anyone can do. They are not bank robbers, safe crackers or terrorists trying to outsmart Bruce Willis. They are the federal government and they are there on behalf of the American taxpayer.
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Scenes like this have been playing out in communities across the country over the past several years, as the FDIC seizes the assets of failed banks. Short for the Federal Deposit Insurance Company, the FDIC is an independent agency tasked with maintaining stability and confidence in the U.S. financial system. In addition to insuring deposits of up to $250,000 per depositor per bank, the FDIC supervises institutions for safety, soundness and consumer protection. The government agency was created in 1933 in response to the thousands of bank failures in the 1920s and early 1930s. And now, 78 years later, the FDIC is again seizing control of banks in precarious financial positions, thanks, in large part, to faulty loans and asset holdings that are worth nowhere near the value of their loans. “As the market continued to slide, a lot of these banks went into failure and didn’t have enough money to cover all of their depositors. So the FDIC began to seize those banks, while working to determine the banks’ true assets while covering obligations,” explains Joe Fitzpatrick, executive vice president of Colliers
International’s Valuation and Advisory Services Group. “They come into town midweek and check into a hotel under a false company name as they prepare to seize the bank. They then converge on each branch of the bank on a Friday afternoon around 4 o’clock and announce that they are taking control. They fire everyone, and then they immediately rehire everyone temporarily under what is now a bank receivership.” TGIF it’s not— unless of course the “F” stands for FDIC. Over the weekend, Fitzpatrick says, is when the real work begins. “The first thing that they have to do is determine what of value is in the bank, because ultimately, it’s taxpayers like you and me who have to clean up this mess. So everything they do is by the letter of the law. They make sure that they catalogue everything over the course of one weekend, in every single location of that financial institution, including its corporate headquarters,” he explains. “They go through every loan document, every safety deposit box and every drawer of cash. Anything that they can identify of value—from home loans to corporate jets to the artwork on the walls and the boardroom conference table—is catalogued by the receivership.”
After everything is valued, they then determine how to liquidate it all so that they can pay back the depositors and use any leftover funds to balance the books. As the FDIC began this daunting process in communities across the U.S., it reached out to appraisal companies for assistance. “Most of the companies out there largely said, ‘We can do the appraisals for you. Why don’t you just give us the right to value all of these properties?’” Fitzpatrick says. But that’s not what the FDIC needed. They were looking for an outsourced partner that could manage the process. That’s when Colliers International’s Valuation and Advisory Services Group stepped up. “Ken Harrison, CEO of our group, was the first to say, ‘We can absolutely help you. We will manage the process for you: We’ll assemble a team, create a technology platform, order the appraisals, and do a quality control crosscheck to make sure that the appraisals coming in are sound and that the estimated values are correct and not inflated,’” Fitzpatrick recalls. “That’s something that we are very, very good at—understanding true value.” Once they received the green light from the FDIC, Harrison and his team went to work. “We assembled our internal team of experts, rolled up our sleeves, got out our laptops and immediately began researching thousands of appraisers across the country, establishing relationships with many of the larger appraisal firms and creating a database of vendors,” recalls Fitzpatrick. “We also started working in-house to develop a platform that would automate and control the processes.” That was back in November of 2008. Now, just over two years after they first developed the service for the FDIC’s pressing needs, the group’s robust technology platform is carrying them into the future, helping a range of real estate-owning companies adapt to the financial markets “new normal.”
Cloud Computing Clients of Colliers’ Valuation and Advisory Services Group have their own private portals where they can track the progress of their appraisals in real time or run customized reports about their portfolios.
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The platform the group created to manage the process is built on cloud-based technology, and allows clients to order from one to an unlimited number of appraisals or brokers’ opinions of value. “As a client, you log into your own, secured portal. You bring up a new property order request and fill in about 15 key fields that are required to start the process. Those fields tie to our existing database, public records and various other pieces of proprietary information. We then begin to source for the best knowledge-leader.com
appraiser—the person who knows how to do that particular type of property in that particular market—whether it’s Rockefeller Center in New York City or 123 Main Street in a small town in the Midwest. Once we have a select group of the most experienced candidates, we then issue an automated request for proposal and wait for responses,” says Fitzpatrick. The team then awards the bid to the candidate whose credentials best meet the client’s needs. The vendor has his or her own portal that they will log into to keep the Colliers team apprised of all key milestones along the way. If there is a problem—if they can’t get access to the building or are missing key pieces of information, for example—the vendor informs Colliers, which then reports back to the client. Once the appraisal is complete, the appraiser sends it to Colliers electronically, where it will then go through a thorough cross-check and review for quality control. “The quality review is an extra step we take that really adds value for the client. If our internal reviewer—who is among a select group of the most experienced appraisers in the business—has a question or finds anything out of sync, he or she will contact the vendor and ask for related details that confirm their own independent review of value. They’ll work through the process together. While this is going on, the client can log into his or her own secure portal and track the progress for one or thousands of properties in a portfolio,” says Fitzpatrick. Clients are all assigned an account manager who serves as a dedicated point of contact. “When a client submits a support ticket, within one business day they will get a response. They have access to their secured site 24/7 and receive an email to let them know that a report they ordered is ready,” explains Sheleen Scharf, who runs the front end of the service. She notes that they have run anywhere from five to 10 appraisals for one client in a month to more than 200 appraisals for a single client in a week. Scharf focuses on the client’s experience, providing guidance to the account managers to make sure the lines of communication are kept open. She also works in concert with the vendor client coordinator to ensure that the brokers and appraisers are performing to strict standards, cutting ties with any vendors that do not meet the group’s high standards. This is yet another quality control that benefits the client. While Scharf focuses on customer service, Brian Eckels concentrates on quality control. An experienced appraiser, he works with the platform programmers to customize reports knowledge-leader.com
The Valuation and Advisory Services Group has overseen the appraisal of $20 billion in assets so far across all 50 of the United States and Puerto Rico.
to specific client needs and also oversees the internal cross-check reviews. “In my role, I get more involved in what the individual contract requires on the technical end of things. I work with the team to develop solutions to any process requests or questions,” explains Eckels. By all accounts, what they’ve been doing thus far is working. The group has overseen the appraisal of $20 billion in assets so far across all 50 of the United States and Puerto Rico. Fitzpatrick explains, “If a client has 2,500 properties in a portfolio and wants to put them all in our system and order appraisals as needed, they can. They can choose to check on the properties’ values once a quarter, once a year or every other year. And if you are a client and have just been asked by the president of the bank for an exact accounting of where your portfolio stands, including how many loans you have, their property types, geographic locations and current value, all you have to do is log-in to our system and run a real-time report. That’s that beauty of this system; it’s completely scalable to what the client needs.”
Real Estate’s New Normal As the markets gradually warm up and companies and institutions begin wading back into the real estate waters, services like those offered by the Valuation and Advisory Services team will become even more sought after. “There are signals that certain things are looking better and stronger, but overall, the future of real estate is still uncertain. People are very nervous and lenders in particular are very con-
cerned about the value of a property before they loan on it. And if the property is already in their portfolio, they want to know what it is truly worth today,” says Fitzpatrick. Following the financial disaster, Congress is asking, “What happened?” and more importantly, “What can we do to guarantee that this will never happen again?” The government has established a set of guidelines that in effect say that if you are a large enough financial institution—what they term a “systemically important financial institution” or SIFI for short—you must look ahead, monitoring and reporting quarterly on your portfolio’s value. “Many companies don’t have the necessary infrastructure to accomplish that—it’s a significant effort, particularly because the appraisals need to be done by a third party—much like an audit. For others, the daily oversight is not a value-add to their internal operations. That’s where we can help,” Fitzpatrick says. Even if your company is not defined as a SIFI, Fitzpatrick says that now, more than ever, assessing the value of a real estate portfolio on an ongoing basis is paramount to the financial success of an organization. “Companies and financial institutions need to take a constant temperature read on what their portfolios are worth, especially in relation to other key indicators,” says Fitzpatrick. “We track trends in more than 180 markets, so not only can we look at the value of a portfolio, we can add value by helping you understand which of those markets you should consider for future investment and which you should avoid.” And that’s true value in any economy. K L Colliers international Summer 2011
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the Roof
Raise
Green roofs and solar panel systems are among north america’s hottest roofing trends. By Jeff Bond
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Trends in fashion and food may typically begin on either coast, but when it comes to rooftops, the leader in sustainable sensibilities is smack dab in the middle of the country. According to Toronto-based non-profit Green Roofs for Healthy Cities, Chicago has the highest number of green roofs in the United States. Under the leadership of former Mayor Richard Daley, the Windy City leads the nation in developing green roofs on the city’s downtown skyscrapers, installing more than 500,000 square feet of roof space covered by plants in 2010 alone. That’s the equivalent of more than 14 football fields. One of Chicago’s most impressive green developments is the rooftop garden on City Hall. The vegetated roof 11 stories up reduces storm runoff and energy use, naturally controls building temperatures, increases the lifespan of the roofing materials and even reduces that old carbon footprint. According to Steven Peck, founder and CEO of Green Roofs for Healthy Cities, Chicago has become the leader of the movement in the United States because Daley was convinced about a decade ago that promoting a green city would not just be good for the air, water and the city’s carbon footprint, it would be good for business. “Daley understood that if you create a vibrant environment in your city, such as the promotion of a green initiative, you attract the creative class of people who will help generate greater economic activity for the city,” Peck says. While Chicago is the clear leader in North America in the number of green roofs, it has competition. Other metropolitan areas, such as Washington, D.C., New York, Philadelphia, Portland, Ore., and Seattle have seen major
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increases in the square feet of roof space turned green. Canada has also caught green fever: Toronto’s city government implemented one of North America’s most aggressive green policies last year, when it called for all new buildings and retrofits to include green roofs. Peck’s industry association, which promotes the development of green roofs throughout North America, recently reported that the green roof industry grew by nearly 29 percent in 2010 alone. That surge in business follows the industry growing by 16 percent in 2009. Angie Durhman, the national green roof manager for Tecta America, the nation’s largest commercial roofing company and the leader in green roofing, says that during the past decade, her division of the Skokie, Ill.-based company has grown from developing one or two green roofs a year to now being involved with 20 to 30 largescale projects annually. “When Tecta first started installing these roofs back in 1999, it was very novel,” Durhman says. “Building owners were interested in the idea but they were often too nervous to give it a try. Today, it’s much more mainstream.”
Green Roof 101 While the idea of green roofs may be relatively new in America, Durhman points out that the technology is old-school for many European governments and property owners that have been installing vegetated roofs for more than 100 years.
According to Tecta officials, a green roof— also known as a vegetated roof—is a plant-filled rooftop system that offers an energy-saving plant layer on top of a conventional rooftop. The Tecta system begins with the application of waterproof roofing materials, overlaid by a membrane to prevent damage to the roofing system. Next, a drainage layer is added to store water, followed by a filter mat that allows the water to pass through. Dirt or some other plant media is put on top of the mat. The last layer is made up of plants that are chosen for the location and climate. Green roofs are more expensive than traditional roofs. They also require more planning and long-term maintenance to cultivate and preserve the vegetation, so they are only as good as the maintenance systems designed to care for them. In the early years of green roofing, many building owners found that improper maintenance resulted in the death of the vegetation, adding costs and management headaches. There are many variables to the process, including the number of layers used, specifications about drainage and the amount of soil. And designers need to consider whether or not the roof will be used by people as an outdoor space. But, in general, added costs can be reduced by storm water credits and tax incentives. Tax breaks for green roofing vary across the country, but some cities, including Portland, Ore., and New York, offer tax incentives that can add up to about $5 a square foot. knowledge-leader.com
Measure
for Measure
New technology offers property owners a better way to accurately measure even the most challenging rooftops. By Jeff Bond
3D Diagram
Length Diagram
Pitch Diagram
Angle Diagram Applying mathematical equations to aerial photographs of roofs, EagleView Technologies’ patented system creates a three-dimensional model of a roof for a more accurate measurement. knowledge-leader.com
Chris Pershing thought there had to be an answer to his brother-in-law’s ongoing problems. The software engineer had listened while his relative, roofer Dave Carlson, lamented the difficulty of his work in the Los Angeles area. Carlson had to climb up on hot, dirty and dangerous roofs, and then somehow accurately measure them. Pershing thought there must be a way to measure roofs without having to climb up on top of them and pull out the tape measure. Turns out, he was right. After more than a year of research and development, Pershing came up with a software system that is now at the heart of EagleView Technologies, one of the top innovators in residential roofing in recent years. By applying mathematical equations to aerial photographs of roofs, Pershing was able to develop a system that accurately creates a three-dimensional model of the roof. It not only measures the square footage of the roof, but also accurately measures each roof’s eccentricities, including the pitch, eaves and valleys. Today, the Bothell, Wash.-based company uses its patented system to supply roofing contractors with a complete report on nearly any residential or commercial roof in the United States within about 24 hours. Rush jobs can be completed in one to three hours. The company’s secret is using Pershing’s software program on accurate aerial photographs obtained from various sources, including county and municipal governments that use the photographs to help estimate property values. “Essentially, all we need is a street address,” says EagleView President and CEO Chris Barrow. “We will send you back a completed, professional report, complete with photographs and all measurements in usually about one day. We are convinced there is no more accurate way to measure a roof than the way we do it.”
Barrow says using the EagleView system gives customers accurate measurements, and saves money and time, while also allowing for more flexibility and efficiency. The reports can accurately detail the amount of materials needed for the job, saving both the contractor and the property owner money. The cost of the report is based on the size of the roof and starts between $20 and $30 for a small roof. Since the company’s launch in 2008, residential and commercial contractors, as well as insurance carriers, have quickly become believers in EagleView’s accuracy. The company began as a tool for residential contractors, but now sees about half its business coming from insurance carriers that are determining the cost of roof damage from natural disasters and storms. Barrow says a large portion of the company’s business comes from the Midwest where insurance companies must assess the damage done by hailstorms and other wild weather. Such success has helped the firm’s business more than double each year. It now has more than 30,000 customers, ranging from individual roofing contractors to the nation’s largest insurance carriers, and earlier this year it completed its millionth property report. Barrow says his product is becoming so ubiquitous in the industry that it is sometimes used to settle disputes over the details of a job, with EagleView’s report information being the deciding factor. It has even, on occasion, been used as a verb: to “EagleView” a roof means to measure it accurately. As for the future, EagleView’s Chief Technology Officer Chris Pershing has applied for a total of six patents and the company is working to expand into new fields, including measuring for solar energy. “Our growth has been phenomenal,” says Barrow. “We are now looking at international markets and plan to launch in Europe later this year.” Colliers international summer 2011
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Tecta America reports that an 80,000-squarefoot solar panel system produces 500 kilowatts of energy a year.
The benefits of going green But not all the savings are in tax breaks. Green roofs can also save property owners money by reducing energy costs and extending the life of roofing materials. For instance, the Tecta website uses the example that on a 90-degree day, the temperature on a typical roof can reach 160 degrees. But the same green roof would reach only about 95 degrees, saving the energy needed to cool the building that additional 55 degrees. Experts also contend that green roofs can double the lifespan of roofing materials. Durhman says the green roofs may even increase the lifespan of a given roof by more than double. Then there are the environmental factors. Green roofs are an excellent way for any building operator to receive points toward the increasingly important Leadership in Energy and Environmental Design (LEED) certification, an internationally recognized, green building certification system. 28
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“If you are trying to achieve gold or platinumlevel LEED certification, more than likely you are incorporating the roof in your plan,” Durhman says. “In fact, there is almost no way around it.”
Sun power Of course, the one green roofing technology that has recently gained the most appeal is solar power. Tecta, which is also among the leaders in developing roof solar systems, is seeing increased demand across the country, but most acutely in the 23 states that offer some form of tax incentives to build a solar roof system. Katie Riedo, the solar development manager for Tecta America, says that states such as Massachusetts, New Jersey and California are among those leading the way for solar installations. Tecta officials use the example of an 80,000-square-foot system of solar panels that would produce 500 kilowatts of energy a year. In 2010, the system in Massachusetts would cost about $2.25 million to install. But with the federal government’s 30-percent investment tax credit,
the price was reduced to $1.575 million. The system also benefits from a five-year, accelerated depreciation schedule and Massachusetts’ own market-based incentive program. Tecta officials estimate that with all these benefits, the system would pay back the investment costs in about five years. After 10 years, the system would produce an after-tax rate of return of about 12 percent. While such tax breaks vary greatly, in the right circumstances, solar power can be a good deal for the right company with the right facilities. Riedo says that beyond tax incentives, solar technology continues to improve, with manufacturers creating more efficient panels more cheaply. Such innovations are lowering the cost of the panels and making the systems increasingly more cost-effective. And more innovations are expected. “There are companies out there that are pushing the technology envelope and creating more and more efficient cells,” Riedo says. “The cost of the materials is dropping. Solar is definitely becoming more mainstream.” K L knowledge-leader.com
Behind the Scenes
Neil Evans, president and CEO of Pillar Properties.
No matter how you add them up, the number
of properties in Pillar Properties’ portfolio is impressive: 23 commercial properties, 17 acres of development property and 700,000 square feet of rental property valued at more than $100 million. But then, what else would you expect from a company headed up by two chartered accountants? An office, retail and industrial development company headquartered in Saskatoon, Saskatchewan, Canada, Pillar Properties’ two principals, Neil Evans and Basil Waslen, have a long history of real estate development and investment experience. Of course, the company’s success didn’t happen overnight. Evans and Waslen used their accounting backgrounds—as well as ample patience and calculated acquisitions—to carefully build their portfolio. The two first ventured into the real estate industry in the 1990s with the purchase of a modest number of apartment complexes. Then in 2002, a local property owner looking to free up capital invested in real estate approached Evans and Waslen with a sale-leaseback opportunity. “That’s when our strategy for long-term holds came into light,” recalls Evans, president and chief executive officer of Pillar Properties. “This property acquisition came with land for future development. We built on the excess land that same year and doubled the value of the property.” The strategy was to own, hold and enhance a property’s value. “We acquired undervalued properties, improved their quality through selective capital expenditures and filled them with tenants,” explains Evans. The strategy worked. So when the Saskatoon economy picked up in 2006, Pillar Properties knowledge-leader.com
Crunching Numbers
Two chartered accountants are changing the landscape of Saskatoon. By Chris Ransom and Duncan Mayer
saw an additional real estate opportunity—this time in development. “Many people were buying in 2007, but it made more sense to step above the competition and develop a higher quality product,” says Evans. Evans points to two key reasons Pillar Properties has targeted its real estate efforts in Saskatoon— the largest city in the province, with a population of more than 250,000: market strength and convenience. The city is nicknamed “Hub City” because of its ideal location for distribution and logistics. “We’re focused on Saskatoon because it’s one of the strongest markets in North America and offers the benefit of being on-site in less than 15 minutes,” Evans explains. Because the Saskatoon economy is resourcebased—it is the world’s largest producer of potash, which is used in fertilizer—it has been consistently strong over the years, maintaining demand for retail, office and industrial space. “So far, the retail sector has exploded and there have been sizable increases in industrial development as new land comes to market. We’re also seeing front-end growth of office users including a huge expansion in the suburban office market,” Evans notes. Pillar Properties is one of the pioneers of the emerging suburban office market in the city, developing 45,000 square feet of suburban office space in the past two years alone. And they’re not done yet—the company has plans to develop additional office space in both the suburban market and in Saskatoon’s Central Business District. In the meantime, Evans and Waslen have been directing their attention to a number of other ongoing projects. In 2010, Pillar Properties acquired the land for their single largest development to date: a 23-acre, $65 million community mall called
(Top) Pillar Properties’ University Heights Square includes three phases of retail and office space. (Bottom) Pillar Properties is developing office space in Saskatoon, including this proposed building in the city’s central business district.
University Heights Square. Phase I of University Heights Square is a retail development, which is currently 80 percent leased. Phase II consists of retail and suburban office space. For the third and final phase, the developer is planning to include an unspecified grocery-store anchor. “Over the years, we have built a dependable team of contractors and architects,” says Evans. “Colliers has helped us understand the market. The most recent example is we’ve shifted our industrial developments to larger buildings with superior specification to address the space requirements of companies looking to locate or expand in Saskatoon.” K L Colliers international Summer 2011
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Ann Drake is CEO of Chicago-based DSC Logistics. Behind the Scenes
Ready for Anything
Staying open and flexible to changing markets, DSC Logistics CEO Ann Drake uses technology and collaboration to help her company and her clients succeed. By Aaron Finkelstein
In 1994, Ann Drake took the reins of the
family business, a traditional brick-and-mortar public warehousing and trucking operation called Dry Storage Corporation. Among the first things she did as chief executive officer was to ask the head of sales for a list of key national customers, only to be told no such list existed. “This was not just an information problem,” Drake explains. “DSC wasn’t thought of or run as a single company, but 22 standalone businesses, in which everyone did their own thing.” So began the long process of transformation to the DSC Logistics of today. Unified under a single brand, the Chicago-based company is now a strategic, dynamic logistics solutions provider, leading the way in the new era of supply chain management. “The change in the business as it was then to the business of today is enormous,” says Drake. “Some reflects change in the industry, but mostly it’s what my instincts told me 20 years ago would be necessary for us to be successful in the 21st century.” Uniting under a single nationwide entity was the first step toward becoming a leading strategic logistics organization. Founded by Drake’s father, James McIlrath, in 1960 as Dry Storage Corporation—a regional warehousing and trucking business—the business had grown into a national operation. It had multiple entities, each with its own capabilities, culture, systems and operating standards. At that time, customers who worked with DSC in more than one location were forced to adapt to operational differences among the various divisions. “It was so clear to me,” Drake recalls, “that that wasn’t what the customer wanted or needed.” One of the first major initiatives was 32
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technological integration. “Moving to common platforms and a single operating standard for warehouse operations and transportation management in the ‘90s was huge for us, because we started to get information about our customers’ businesses that even they didn’t have.” Armed with this new business intelligence, Drake reshaped the operational and management structures to create a true partnership with the customer that provides continuous improvement. “Fifteen years ago, we were order-takers on a good day,” she explains. “Now our customers bring us to the table for thinking and planning. It’s not just about the execution of the business, but staying ahead of the business.” For instance, DSC has pioneered labor management systems that provide detailed efficiency information on order fulfillment to help their customers control costs, which in turn helps them to better serve their own customers. This type of service is becoming more essential to supply chain management, according to Drake. “It’s really being studied as a science now, which is exciting. When I entered the field, there were only four schools that offered a degree in logistics and supply chain management. Now there are hundreds.” She sees the next decade accelerating the trend of aggregation and integration. Not only will new technologies bring more usable information directly off different points of the supply chain, but supply chain managers will need to integrate increasingly outsourced providers across the globe. “I think there will be all kinds of unpredictable ways to use information and technology to improve the business. We have two warehouses experimenting with iPads right now. Who would have thought that?”
So how do we prepare for the unpredictable? Drake says “flexibility is the name of all games,” which is why she fosters an adaptive, learning culture within DSC. “I think we have to continually prepare our people and business models for unpredictable futures. This used to be a business of bricks and mortar, like manufacturing: you decide where you want to be, and that’s where you put your buildings.” But the model has changed drastically, due in large part to rising fuel costs, which have prompted suppliers to reduce their ownership footprints. “It’s a very different model now, with more leasing. The megatrend of huge distribution centers is starting to reverse, with a move to smaller centers closer to market. This is why flexibility in real estate is so important. It’s hard to achieve, but our customers demand it.” Colliers International Executive Vice President Lynn Reich, SIOR, has worked with DSC for more than 20 years, and has seen first-hand how Drake’s early investments in technology and collaboration have paid off. “When Ann took over for her dad, she had a vision of a truly client-centric organization,” Reich says. ”She was instrumental in transforming DSC—realigning the financial, physical and technological components to be more responsive to its customers’ needs.” DSC celebrated 50 years in business this past year, but Drake is firmly focused on tomorrow. “We rely on six strengths that will keep us ready for the future: Leadership, Collaboration, Information, Execution, Flexibility and Integrity. We don’t just want to sit back and react; if we can stay process-oriented, collaborative, and be open-minded about the future, we’ll be ready to apply ourselves to tomorrow’s customer challenges.” K L knowledge-leader.com
Investment/Leasing Opportunities A SELECTION OF COLLIERS INTERNATIONAL AVAILABLE PROPERTIES FOR lease
Stadium Towers Plaza 2400 E Katella Avenue Anaheim, California
• Class A high-rise office building located in Central Orange County • Stadium Towers Plaza features unparalleled views of Angel Stadium of Anaheim • Up to 100,000 RSF of contiguous office space available featuring building-top signage • Amenity-rich location; access to three major freeways, public transportation
FOR Sale
Redlands Town Center 9900 - 10080 Alabama St. Redlands, California
Robert G. Caudill bob.caudill@colliers.com Matt Didier matt.didier@colliers.com Ryan Ward ryan.ward@colliers.com
• Trophy power center; 2008 construction • JC Penney, Toys/Babies R Us, GNC, Chili’s, Payless, T-Mobile, Men’s Wearhouse, Qdoba • 98% occupied; 65% of income from national retailers • Low tenant rollover • 8.5% IRR (conservative) • Zero debt
+1 949 724 5500 FOR lease
Watson Commerce Center
The West Campus
Tom J. Lagos + 1 213 532 3299 tom.lagos@colliers.com Christina Pambakian + 1 213 532 3245 christina.pambakian@colliers.com El Warner + 1 213 532 3267 elhum.warner@colliers.com www.ColliersRetail360.com FOR sale
East Fishkill, New York
26635 Pioneer Avenue Redlands, California • 616,542 SF, state-of-the-art distribution facility • Currently under construction, will be complete October - 2011 • Cross-dock configuration • ESFR sprinkler system / 32' clear height • LEED certified construction • 114 dock-high doors, 2 ground-level ramps • 100% concrete truck courts
Thomas E. Taylor thomas.taylor@colliers.com Steven J. Bellitti steve.bellitti@colliers.com Summer Coulter summer.coulter@colliers.com +1 909 605 9400 www.watsonredlands.com FOR Lease
444 Brickell 444 Brickell Avenue Miami, Florida
• Immediate occupancy • Spaces available from 500 - 16,500 SF • Located on Miami’s prestigious Brickell Avenue • Views of the Miami River and Biscayne Bay • The Capital Grille restaurant located on the first floor • Capital improvement program under way • Building signage available
• Prior IBM chip manufacturing facility containing 160 acres of land that permits utilization of entire expanse. • Unique opportunity to acquire a large site in highly desirable location suited for multiple alternative uses. • Improvements include nearly one million square feet of former IBM office, meeting and manufacturing space. • Priced to sell
Macy’s Building
Stephen Westerberg +1 203 961 6599 stephen.westerberg@ colliers-international.com FOR sale
10th and Idaho Street Boise, Idaho
Randy Olen randy.olen@colliers.com William Cutler william.cutler@colliers.com +1 305 446 0011
• 115,721 SF building • Outstanding corner location in downtown Boise • Mixed-use potential with street-level retail and office use • Close to government offices, financial institutions, shopping and entertainment • $2,150,000
Dave Wali +1 208 472 2844 david.wali@colliers.com
Investment/Leasing Opportunities A SELECTION OF COLLIERS INTERNATIONAL AVAILABLE PROPERTIES FOR sale
Arden House 1001 Arden House Road Harriman, New York
FOR lease
Class A Distribution Building 5830 Green Pointe Drive S Groveport, Ohio
• “America’s First Conference Center” • 100,000+ SF mansion • 450 AC • 125-AC private lake • 40 miles from Midtown NYC • 97 guest rooms • Tiered conference center built by Columbia University • Extraordinary views and public spaces
Richard m. Warshauer +1 212 716 3767 richard.warshauer@colliers.com www.theardenhouse.com FOR Sale
Cessna Mfg. Facility
Galeries Kirkland
Michael Linder, SIOR +1 614 410 5628 michael.linder@colliers.com www.columbusindustrialteam. com FOR sale & lease
3570 – 3664 ST CHARLES Kirkland, Quebec
22550 Nelson Road Bend, Oregon
• 200,000 +/- SF of highly functional and well-kept aviation manufacturing space • Formerly occupied by Cessna Aircraft • Located on the tarmac and newly expanded taxiway of Bend Municipal Airport • For sale at $5,975,000
• 302,657 SF distribution building • 81,239-194,989 SF available • Lease Rate: $2.75 NNN • 6.8 AC of excess land for expansion or trailer storage • 3,500 SF of office space • 30'–32' clear height • 100% tax abated on real property improvements • Up to 24 dock doors
Jerry Matson +1 503 499 0077 jerry.matson@colliers.com Gregg Wassmansdorf +1 416 643 3446 gregg.wassmansdorf@colliers. com
• Strip centre retail and office • This centre is located in one of the busiest commercial arteries • Household income is approximately $127,000 • The property has a history of continuous cash flow growth on a yearly basis
www.colliersproperties.com/ cessna
JOE LOMANNO +1 514 764 8177 joe.lomanno@colliers.com
FOR sale & lease
Modern Corporate Facility
Pilkington Building 402 – 11th Avenue SW Calgary, Alberta
2201 Winston Park Drive Oakville, Ontario • First-class facility in prestigious business park • 80,276 SF • 27' clear • Fully air-conditioned • Expansion potential
FOR Lease
Deborah Solaryk +1 289 266 1005 deborah.solaryk@colliers.com Gord Cook +1 416 620 2831 gord.cook@colliers.com
• 3 floors of office with roof top patio • Bistro and fitness facility on the lower level • Unique heritage style building • Furniture and flooring system to accommodate 300+ employees • Fiber-optic cabling throughout • Loading dock
Peter Mayerchak +1 403 215 7256 peter.mayerchak@ collierscalgary.com Justin Mayerchak +1 403 298 0424 justin.mayerchak@ collierscalgary.com
Investment/Leasing Opportunities A SELECTION OF COLLIERS INTERNATIONAL AVAILABLE PROPERTIES FOR lease
EPCOR Tower 10423 - 101 Street Edmonton, Alberta
• 625,000 SF building area • 28 floors including retail • Designed to meet or exceed LEED Gold Standard • First downtown high-rise in 22 years • 3 parkade elevators • Building amenities include day care, fitness facility, business centre, bicycle parking and showers
Brian Canfield Centre
1804 - 1848 McOrmond Drive Saskatoon, Saskatchewan
Office Leasing: Ian Bradley +1 780 969 2996 ian.bradley@colliers.com Phil Goh +1 780 969 2989 phil.goh@colliers.com
Prime A Class Office Building in Midtown Toronto
• 23-AC retail and office development site • 1,400-25,000 SF available • Centrally located in Saskatoon’s northeast quadrant • Surrounded by 7 neighborhoods with a projected population of 45,000+
Retail Leasing: Cam Picketts +1 780 969 3000 cam.picketts@colliers.com FOR SUBLEASE
3777 Kingsway Burnaby, British Columbia
• 114,000 SF of office space available for sublease • Highly visible location within close walking proximity to public transit • Large, efficient floor plates and abundant on-site and neighborhood amenities • Flexible sublease terms available to April 29, 2026
University Heights Square
for lease
Keith WebB +1 306 664 1216 keith.webb@colliers.com Ken Suchan +1 306 664 1215 ken.suchan@colliers.com www.collierscanada.com/1980
Large Block Sublease
FOR SUBLEASE
300 Consilium Place Toronto, Ontario
Rob Chasmar +1 604 661 0822 rob.chasmar@colliers.com Marco DiPaolo +1 604 661 0838 marco.dipaolo@colliers.com Jason Mah +1 604 692 1460 jason.mah@colliers.com FOR Lease
• 100,000 SF of sublease office space available for long-term lease • Large block of contiguous space at significant savings • Turnkey space with prewired workstations and furniture available • Ideal accessibility to highways, public transit and amenities with local shuttle available
Patrick Cowie +1 416 791 7223 patrick.cowie@colliers.com Andrew Meanchoff +1 416 791 7231 andrew.meanchoff@colliers.com www.collierscanada.com/1736
Royal Centre
FOR lease
1055 West Georgia Street Vancouver, British Columbia
121 Bloor Street East Toronto, Ontario • Up to 64,735 SF of prime midtown office space available for lease • Underground tenant parking • Quick access to Bloor underground PATH and subway • 24/7 security and on-site custodian • On-site convenience shop • Internal staircase connecting floors
Albert Bolter +1 416 643 3480 albert.bolter@colliers.com Ryan McIver + 416 643 3749 ryan.mciver@colliers.com
• Royal Centre is the premier address for a large-format retailer or highscale restaurant • Offered as a build-to-suit expansion, Royal Centre has the advantage of being able to cater to various retail concepts depending on tenant needs
Drew Gilbertson +1 604 694 7244 drew.gilbertson@colliers.com Sherman Scott +1 604 661 0828 sherman.scott@colliers.com
personal biz
En h a n cin g t h e e x ecu tiv e lifest y l e
In today’s technology-centric workplace,
keeping your information safe is not only second nature, it’s company policy. Your information technology (IT) team has probably locked down your computer at work with all sorts of security safeguards. They may have given you strict guidelines about how to choose passwords and how often to change them. And they no doubt have provided backups and fail-safes to ensure that you don’t lose any data—or can retrieve it readily if you do. But we often aren’t as cautious about how we use our computers, smartphones, tablets, or other devices outside of the office. As our lives become increasingly connected to the Internet through multiple devices, how you work at home could compromise the security of the systems at work. Now more than ever, it’s imperative to implement smart security practices at home.
What’s the password?
Better Safe than Sorry Keep your personal and business information safe with these home computer security tips. by Jonathan Kay
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Most of us create very secure passwords for our work environment, but use simpler passwords while at home. However, because we often access many of the same websites and servers at home as we do at work, it is imperative that we maintain the same level of security across all devices. If one environment is compromised—for example, if someone gains access to your personal email account—it becomes that much easier to hack into other websites and servers that you access, including your work accounts. Even if you don’t do anything work-related on your home computer, simply visiting the same social networking or shopping site from both your work and home computers or mobile devices can compromise security in both places. It can be a daunting task to think of—and remember—an effective password, complete with letters, numbers and symbols, especially if you change it as often as recommended. So here are a few tricks that can make passwords easier to manage and recall: knowledge-leader.com
1.
May The Force Be With You!
=
M5FB26! 2. 1. Think of a phrase—perhaps a favor1. ite line from a movie—and use the first letter of each word in the sentence. If a letter falls on the top row of your keyboard, use the number or symbol above it instead of the letter. 2. To make a password that you change 2 . frequently easy to remember, incorporate a few interchangeable characters within the password, such as a two-digit number, and change only those characters. You can also transpose the position of those characters rather than change the entire password. 3. Make sure that the mnemonic device 3. you use to remember your password is something no one else would know. Don’t use your children’s or pets’ names, or the quote that you have framed above your desk.
Safety first There are some basic security precautions we should all take when we are out and about. The most secure password in the world is useless if it is typed over an unencrypted connection. Any connection on a public wireless network is especially vulnerable. If you connect to a secure website—a website with a URL that begins with https:// (note the “s”)—your information is encrypted. However, if you connect to a website that begins with http:// (no “s”), anything you do on that website can be intercepted. This can be especially dangerous if you use the same password on multiple websites. The safest way to connect to the Internet knowledge-leader.com
in a public place is through a Virtual Private Network(VPN), which your IT department should be able to provide.
Got your back Most corporate IT departments today do a good job of providing backup services for employees, but you likely have valuable data at home that you should back up as well, such as family photos, legal documents and other personal information. There are many excellent, third-party backup services you can use that are secure, including Google Documents or Amazon Cloud Services. You can also purchase software that will back up your personal information to another computer or external hard drive. Keep in mind, however, that if a fire or natural disaster destroys your home—where you keep your computer and external backup—your data will be lost forever. So it is best to keep a backup of irreplaceable information somewhere other than your house, such as a safety deposit box that only you have access to. External hard drives and USB thumb drives are the most stable ways to store data. Burning data onto CDs or DVDs is risky. Their lifespans vary, so your information may not be readable in a few years. Taking precautions such as these may seem overly careful, but, as the saying goes: “Just because I’m paranoid doesn’t mean they aren’t out to get me.” The world of the Internet is, unfortunately, teeming with security vulnerabilities, and there are scores of individuals who are taking advantage of those vulnerabilities to
MØØN$TRUCK23 MØØN$TRUCK32 MØØN32$TRUCK
3.
ens t t i m
access unsecured information, such as Twitter passwords, credit card numbers, corporate accounts and trade secrets. Those of us who work in the IT industry spend enormous amounts of time protecting data from hackers, pranksters and thieves, and we are all too aware of just how unsafe the great information highway can be. These few simple tips can help safeguard you and your company from cyber-robbery. K L Jonathan Kay is co-founder of Seattle-based Alchemy Computer Solutions, Inc. (www.alchemycs.com). Colliers international Summer 2011
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follow the leader
Pro fil e in l e a d ership
Tools of the Trade
Industry association equips commercial real estate professionals with the technology needed to help their clients succeed. By Linda Popovich
“Location, location, location.” That’s long been real estate’s standard mantra for a property’s perceived value and appeal. But in today’s challenging and ever-changing marketplace, that is no longer the case. Thanks to emerging technology innovations offered by the Certified Commercial Investment Member Institute (CCIM), top real estate professionals are now better equipped to assist their clients in navigating through a real estate market with a more complex mantra: “Location, timing and demographics.” Headquartered in Chicago, the CCIM Institute was founded in 1954 to provide education and networking opportunities for commercial real estate professionals. Members can select classes to satisfy continuing education requirements or choose to pursue the esteemed CCIM designation, which requires more than 160 hours of case-study-driven education. CCIM designees include brokers, leasing professionals, investment counselors, asset managers, appraisers, corporate real estate executives, property managers, developers, institutional investors, commercial lenders, attorneys, bankers, and other allied professionals. Colliers International has 217 CCIM designees, as well as an additional 81 candidates. The CCIM designation emphasizes practical application of a core body of knowledge. Earned by approximately 6 percent of commercial real
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designation is one of the most respected designations in the industry.
knowledge leader summer 2011
estate professionals, it is awarded to those who have successfully completed a high-caliber educational program and have proven experience in the field. Skill sets include financial analysis, market analysis, user-decision analysis, investment analysis, ethics and interest-based negotiation. The CCIM designation is one of the most respected designations in the industry, and, as such, equips its members—the top performers in the industry—with the most forward-thinking technology today, including STDBonline, CCIMREDEX and MailBridge.
STDBonline STDBonline—or Site To Do Business Online— is a resource for market information and trends. The Web-based application provides access to a variety of information, including demographic reports, retail market potential, tapestry segmentation, consumer spending, business list data, thematic mapping, traffic counts and satellite imagery. STDBonline can be used in many ways. Quick Maps allows professionals to find a location using a variety of data, and provides users with detailed street maps, aerial images, hybrid maps, topographical maps and flood-plain maps. Map reports can be used in marketing materials or imported into a variety of software, including Microsoft Office products. Clients looking to buy or lease space can benefit from a specific, research-driven, targeted list of potential properties that fit their needs, while executive summary reports give clients key demographic attributes for a specified area, helping with site selection and providing market analysis. The program also provides trend data spanning a 10- to 20-year time frame, allowing users who are strategizing future investments to quickly determine whether a market is improving or deteriorating.
CCIMREDEX Released in 2010, the CCIM Real Estate Data Exchange (CCIMREDEX) is an all-in-one platform that analyzes, prospects and markets real property assets. Through numerous third-party prospecting, marketing and analysis tools, the program provides CCIM designees with the capability to create professional listing presentations and packages for prospecting or marketing, including flyers, Flash websites, e-books, investment and lease analysis, online auction services and online project collaboration. In addition, CCIMREDEX distributes property listings to numerous national and regional Commercial Information Exchanges (CIEs) and listing syndications, providing a cost-effective and efficient marketing method for maximum exposure.
MailBridge Utilizing CCIM’s worldwide network of professionals, MailBridge is an opt-in email platform that provides members with a preference-matching contact system within the United States and internationally. CCIM designees can set location preferences, including state or country, and message types, like property “haves” or “wants,” depending on whether their clients are looking to buy or sell. Because each member is setting similar preferences, MailBridge ensures that the professional’s email—sent from his or her own email address— is reaching the appropriate recipients, providing a much more targeted marketing effort. For example, if you have a property in California that a client is interested in selling, MailBridge sends your email listing to people interested in purchasing similar properties. CCIM members can also send general messages under specific categories and subjects, such as “Analysis: How do I analyze this...?” or “Expertise: I’m looking for someone with expertise in...” They can also send Marketplace messages such as: “Financial Want: I need capital financing for...” or “Service Want: I need a property management firm in...” or “Appraisal Vendor: We do appraisals...” All three of these online tools enable CCIM designees to cut through the noise of the real estate market, honing in on only those opportunities that best meet their clients’ needs. For information on the CCIM Institute, its course offerings and technology tools, visit www.ccim. com or call 312.321.4460. K L knowledge-leader.com
csr
co rp o r at e s o ci a l resp o nsibilit y
E-Cycling Knowledge Leader takes a look at where technology goes after it dies. by Jessica C. Trupin, MPA
“You might want to turn around.”
Don’t Donate Them
But it was too late. We saw the old keyboard arc through the air, followed by the monitor and then the printer. It was like watching a cartoonish history of the evolution of office technology, each iteration ending with a crash, a crack and a cringe. But really, what did we expect? A row of Santa’s helpers magically dismantling our old technology and morphing it into new? When we brought our items to the local university’s surplus station, they were tossed into a bin like…well, like garbage. The friendly staffer warning us to look away was merely trying to protect our delicate recycling sensibilities from the reality of what happens when you take your old technology to be e-cycled. From cellphones and iPads, laptops and printers, televisions and fax machines, Americans own an estimated 24 electronic products per household according to the Consumer Electronics Association. And each one of those gadgets will, at some point, quit working once and for all. According to the Environmental Protection Agency, of the 2.25 million tons of electronic products ready for a trip to the great electronics farm in the sky, only 18 percent—or 414,000 tons—was collected for recycling. Eighty-two percent, or 1.84 million tons, was mostly disposed of in local dumps. Many of us want to do the right thing, i.e., recycle, but how do we do it? Let’s start with what not to do.
Don’t donate your used electronics to a nonprofit. Like bringing the food bank two cans of cream of mushroom soup and some old packets of bouillon that have been sitting in your pantry for years, donating your ancient PC to the corner charitable organization isn’t helping. According to the nonprofit Goodwill Industries: “Goodwill agencies that receive unsalvageable donated electronic items must pay a collector or take the electronic items directly to a disposal site and pay a fee to properly discard them…When Goodwill pays fees to dispose of unwanted electronics, that money is diverted away from support of its mission.” So before you take your electronics to a nonprofit, always check its donation guidelines. The reason why electronics are so hard to dispose of is because of the toxic stuff they are made of, namely, cadmium (a carcinogen used in paint and batteries), lead and mercury. There are a host of toxic chemicals in electronics that when released into the environment can poison groundwater and cause cancer, among other lethal outcomes. Add to that the many kinds of plastic in most electronics and it becomes a waste disposal nightmare. Many municipalities have enacted rules and fees for disposal of electronics that allow them to afford safe and proper treatment of hazardous waste.
knowledge-leader.com
Do Recycle Smartly Recycling is the right thing to do, right? Our
tires become satchels and yesterday’s newspaper becomes tomorrow’s building materials. Garbage becomes something useful. And with 400 million electronic units being scrapped each year, according to the Environmental Protection Agency, there’s an enormous market for recycling, de-manufacturing and creative reuse. But the truth is, some recyclers are better than others. The Basel Convention is a treaty adopted in 1989 in response to wealthier countries’ dumping of toxic waste on developing countries. Like building codes, waste management is something you don’t really want to think about—until, of course, it saves your life. Implemented in 1992, the convention’s aim is to help reduce the health and environmental impacts of toxic chemicals used in the production of electronics throughout the supply chain. When you bring your old cellphone, computer monitor, laptop or other electronic gadget to a recycler, you expect that any useful pieces will be harvested in an environmentally responsible way. However, many recyclers simply contract with middlemen, who in turn bundle your discarded electronics into a shipping container bound for countries with lax environmental laws and worker protection enforcement. There, workers—some of whom may be children—are given minimal tools and no training to extract rare and precious metals, all the while being exposed to extraordinary levels of toxic chemicals. There are several places you can turn to for guidance in recycling conscientiously. The Basel Action Network (www.ban.org) has launched the e-Stewards campaign (www.e-stewards.org) to certify American recyclers. These recyclers are committed to upholding the highest standards of recycling, and offer added accountability in regards to working conditions and hazardous e-waste disposal. A handful of recyclers have achieved full-certified e-Steward status, with many more in the pipeline. EBay’s Rethink Initiative provides accessible ideas for repurposing or recycling your electronics, with advice on what to look for in a recycler, and tools for responsible donation and community organizing. If you want to get more involved, the Silicon Valley Toxics Coalition is an organization that works to hold electronics manufactures accountable for responsible recycling of their products. For more information, visit www.electronicstakeback.com/how-to-recycle-electronics. K L Colliers international summer 2011
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In Focus
Fro m t h e Presid en t & CEO
Attitude Adjustment Shaping the spirit of enterprise means shifting away from “why we can’t” to “how we can.” by doug frye
Attitude shapes solutions One of the participants in Davos described an experiment in which a teacher showed a picture of a person in a wheelchair to a group of students. He asked, “Why can’t this person drive?” As you may expect, the students came up with a long list of logical reasons. But then the teacher tweaked the question, very subtly, for another class. He asked, “How can this person drive?” The students focused on the solution—not the problem—volunteering dozens of possibilities. In business, we see evidence of how attitude shapes solutions in dozens of organizational case studies. For example, Southwest Airlines spreads the blame for delays or process breakdowns throughout a team. As a result, individuals aren’t pointing fingers or passing the buck—the team shares responsibility to create a solution.
Attitude creates space for innovation But what if a business isn’t having problems? What if things are going pretty well? Attitude 40
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knowledge leader summer 2011
is a factor here, too. Our attitude toward risk is often the only thing standing in the way of greater accomplishment. For example, at Pixar Animation Studios, mistakes are celebrated along with successes— the nothing-ventured, nothing-gained mantra is, “He who fails the most wins.” Pixar’s appetite for risk has removed layers of fear that stifle creativity and limit an individual’s willingness to go out on a limb with a crazy idea. What I love is that Pixar hired top-notch creatives who were considered “unmanageable” by other companies and gave this group free reign to do their best work. The results? Pixar’s film The Incredibles won Academy Awards and became a best-selling DVD, even though its budget per minute was lower than any previous Pixar film. Google has a similar success story. It enables its engineers to spend one day per week—or up to 20 percent of their time—working on anything that interests them. Both Google News and Google Product Search were spawned by this permission to innovate. Pulitzer-winning Author David Vise explains, “Google...technologists think first of ways to solve problems; only later, if ever, do they worry about how to ‘monetize’ them.”
Give the right motivation, and attitude will follow So if attitude is key, how do business leaders inspire it? How do you motivate employees? In his book Drive, Daniel Pink notes that more money doesn’t necessarily equal better performance. Although money motivates achievement for physical or repetitive tasks, monetary rewards can hamper creativity and complex thinking. “Pay people enough to take the issue of money off the table,” Pink explains, then unleash them to do their best work. What really motivates people, he found, was a combination of autonomy, mastery and purpose.
Doug Frye is the global president and chief executive officer for Colliers International.
Pink explains that when employees are directed on how to work, the result for the business is compliance. But when professionals are empowered and encouraged to make their own choices, the result is engagement in the business and a much better work product. That’s when the big wins happen.
Shaping the spirit of enterprise In commercial real estate, there is no magic formula or single guidebook that explains how to best serve a client. It’s critical that clients’ concerns are fully heard and incorporated into our action plans. When we listen with a practiced ear, like a musician tuning an instrument, we hear greater nuance. That’s why we value expertise so highly. Mastery also lays the foundation for innovation and creativity—critical when every day brings a new business challenge. Colliers’ spirit of enterprise is an attitude that’s part of our culture—we hire for it, reward it, and even design our training curriculum to emphasize engagement over compliance. Our aim is to create the most powerful platform for our professionals to do their best work, using their best judgment. Giving greater control to on-the-ground teams can be scary for some corporate managers. But it ultimately makes us more nimble, connected and accountable to our clients— inspiring attitudes and actions that accelerate their success. K L knowledge-leader.com
Kenna Klosterman
Colliers International had the unique opportunity to attend the World Economic Forum’s annual meeting in Davos, Switzerland, this year. We came away from it inspired and invigorated—not only by the opportunity to connect with 2,500 of the world’s foremost business and political leaders, but also by the attitude that pervaded the entire event. It was an attitude of possibility. Of optimism. Of the belief that no problem is too big. That we can change the world, so let’s get going. Now, several months later, I keep thinking about how that attitude shaped every conversation in Davos. Is solving the toughest problems, whether in the world or in business, simply a matter of perspective?