The BOMA Magazine - July/August 2010 by lprats

Experience the Power of the BOMA Network

July/august 2010

Leading the Future Highlights from the BOMA Conference

Plus: TOBY Regional Winners Open for Business— How’s Your Contingency Plan Looking? Healthcare Reform and MOB Development

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July/August 2010 Volume 6, No. 4

24 28

BOMA Conference Highlights—Leading the Future in Long Beach

Open for Business Stephanie J. Oppenheimer, APR Communications and contingency plans are key to preparedness.

Lindsay Tiffany and Laura Horsley Delegates from across the country and around the globe tapped into the power of the BOMA network at the industry’s premier business networking and education conference.

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

TOBY Award Regional Winners

These winning buildings are raising the bar in building management and operations.

DEPARTMENTS 8

Connect with BOMA

See BOMA on YouTube: www.youtube.com/ bomainternational Follow BOMA on Twitter: BOMA President Henry Chamberlain @ HenryBOMA BOMA Vice President Lisa Prats @ LisaPratsBOMA

On the Cover: Greenway Plaza, Houston, Texas, an International TOBY award winner in the Suburban Office Park Mid-Rise category and BOMA 360-designated building. Volume 6, No. 4 The BOMA Magazine July/ August 2010, (ISSN 1532-4346), Copyright 2010. The BOMA Magazine is published bimonthly in January/February; March/April; May/June; July/August; September/October; and November/December by the Building Owners and Managers Association (BOMA) International, 1101 15th St., NW, Suite 800, Washington, D.C. 20005; Telephone 202-3266300; Fax 202-326-6377; www.boma.org. Periodicals Postage paid at Washington, D.C. and additional mailing offices. POSTMASTER: Send address changes to: The BOMA Magazine, Attn: List Department, 1101 15th St., NW, Suite 800, Washington, D.C. 20005. Undeliverable U.S. copies should be sent to: The BOMA Magazine, Attn: List Department, 1101 15th St., NW, Suite 800, Washington, D.C. 20005. Return undeliverable Canadian addresses to: PO Box 875, STN A, Windsor, ON N9A 6P2.

Message from the Chair

Legislative Update BOMA announces three new policy positions; a carried interest victory—for now.

State & Local Update

34 Green Scene

Cheryl English Three lighting solutions to consider.

36 Research Corner The 2010 Experience Exchange Report is now available; check out the current market data.

Florida Land Use Ballot initiative has potential national impact.

Codes & Standards Update

40 TRADE TOOLS

Brian Haas Options in fire alarm monitoring and security systems.

Angelo Grima—building code advocate, avid angler.

Around the Industry Learn how many office building jobs your city/state supports, policy and politics at Real Estate Roundtable meeting, changes coming to lease accounting standards and more.

Eye on Education The latest on healthcare reform, financing and trends in patient care bring record numbers to the Medical Office Building Conference in Chicago.

ICC Model Code revisions finalized; BOMA on front lines defending commercial real estate.

20 Leading the Way

Trends Tracker Healthcare reform brings opportunity and challenges to MOB developers.

Leading the Future.

Join BOMA on Facebook Join BOMA on LinkedIn

Buyers’ Guide Check out the latest products and services.

Conference Connection BOMA 360 designees take over the stage at the BOMA International Conference.

July/August 2010 BOMA

Message from the Chair

Leading the Future The more challenging the problem, the more innovative the solution. That’s what I saw on display time and time again during the recent BOMA International Conference and The Every Building Show® in Long Beach, Calif. Creativity and cooperation worked in concert as attendees tapped into the most powerful business network in the marketplace to seek out solutions to today’s most pressing commercial real estate issues. This is what BOMA does best, and I couldn’t be more thrilled to be taking the helm as BOMA International chair during such a historic time for commercial real estate. Historic, not because we survived one of the toughest market cycles the industry has seen, but because we sought out and applied lasting strategies that will lead us into recovery. Make no mistake, we are all climbing up from the bottom of a devastating recession and recovery won’t happen overnight, but now that we have survived the worst of times, we can apply the wisdom and skills we gained as we prepare for brighter days. BOMA will be leading the future in areas where you count on us most— advocacy, education, research, codes and standards—and we will continue to roll out the programs and resources to help all of us do our jobs better. Many of you saw the latest, and largest, class of BOMA 360 Performance Program® designees honored during the BOMA conference. The BOMA 360 program continues to gain momentum as property professionals realize the power of the “BOMA stamp of approval” in the marketplace. BOMA also recently added several new publications to the BOMA Suite of Standards, including standards for measuring Gross Area, Multi-Unit Residential

buildings and Retail, along with the recent release of the 2010 Office Standard and an updated Industrial Standard—all ANSI accredited. And, by the time you read this, BOMA will be just a few months away from the release of the latest edition of our Green Lease Guide, an updated Preventive Maintenance Guide and a new publication on Common Area Maintenance (CAM) charges for mixed-use properties. On the advocacy front, the year ahead looks to hold some of our biggest battles to date, not only on core tax issues but on looming new issues, including stormwater runoff and lead paint in buildings (see “Legislative Update,” pages 10-14, to view BOMA position papers). We will be reaching out to our vast grassroots network again to bring commercial real estate’s message to lawmakers. We know we can do it. We saw how BOMA members rallied during the fight to halt the tax increases on carried interest via the thousands of letters you wrote and phone calls you made to your senators and representatives—and, for now, it worked! I thank you for your action and support and ask that we continue to harness that energy for what will certainly be a very active legislative year. Finally, as I make my way across the country over the next year seeing old BOMA friends and making new ones, I can’t wait to see first-hand how you have put the Power of the Network to work in your BOMA communities, and I look forward to working with each of you as we Lead the Future together. Thank you for your support,

Publisher: Lisa M. Prats, CAE Editor: Laura Horsley Associate Editor: Lindsay Tiffany Contributing Editors: Karen W. Penafiel, CAE, Ronald Burton, James Cox, Lorie Damon, Ph.D., Emily Naden, Tracy Glink Designer: Amy Belice Published by: Building Owners and Managers Association (BOMA) International

BOMA International Officers Chair and Chief Elected Officer Ray H. Mackey, Jr., RPA, CPM, CCIM Stream Realty Partners, LP Dallas, Texas Chair-Elect Boyd R. Zoccola Hokanson Companies, Inc. Indianapolis, Ind. Vice Chair Joseph W. Markling CB Richard Ellis, Inc. Los Angeles, Calif. Secretary/Treasurer Kent Gibson, CPM Property Reserve Inc. Salt Lake City, Utah President and Chief Operating Officer Henry H. Chamberlain, CAE, APR BOMA International Washington, D.C. Call for Nominations: Vice Chair, Secretary/Treasurer and Executive Committee Members BOMA International’s Nominating Committee is seeking candidates for the positions of vice chair, secretary/treasurer and for five members of the Executive Committee to the Board of Governors. For further information, contact Ann Coslett at acoslett@boma.org. The cost for The BOMA Magazine is $75 a year for subscribers and $50 a year for BOMA International members. Publication of advertising should not be deemed as endorsement by BOMA International. The publisher reserves the right in its sole and absolute discretion to reject any advertisement at any time submitted by any party. Material contained herein does not necessarily reflect the opinion of BOMA International, its members or its staff.

Ray Mackey, Jr., RPA, CPM, CCIM Chair and Chief Elected Officer

BOMA July/August 2010

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legislative UPDATE

BOMA Wins Respite on Carried Interest AFTER MONTHS OF INTENSE LOBBYING, BOMA International achieved a huge advocacy victory on June 24 when the Senate cloture vote to end debate on HR 4213—American Jobs and Closing Tax Loopholes Act of 2010, better known as the extenders package, failed by a vote of 57-41. That was the Senate’s third unsuccessful attempt to limit debate and move to an up or down vote on a bill that includes the tax increase on carried interest as a revenue offset. The Senate leadership will likely set aside the legislation for now. Moving forward, it is unclear when it will revisit the extenders package or how it will address carried interest in the future. The extenders package includes a one-year extension for both the brownfields remediation and the 15-year depreciation period for leasehold improvements that expired on Dec. 31, 2009. This made this an extremely difficult issue for BOMA, pitting a one-year

extension of tax breaks that real estate actively supports against a permanent tax increase on carried interest. BOMA International and its partners in the commercial real estate industry could not have won this battle without your help! Thanks to all who called and wrote their senators and representatives in this effort; however, while we may have won the battle, the war is not over. We expect Congress to address this issue once more before the year is over, and we will likely call on you again to express your opposition to this ill-advised tax policy. In the meantime, the commercial real estate industry will continue working to educate policymakers on the need to move forward to extend the expiring tax provisions without using carried interest as the revenue offset due to the overwhelmingly negative impact that this proposal would have on real estate, job creation and economic growth.

Judith Purviance-Anderson, chair, Government Affairs Committee, reported on BOMA’s three new policy positions during the Board of Governors meeting.

BOMA’s Board of Governors Approves Three New Policy Positions At the BOMA International Conference and The Every Building Show®, the Board of Governors approved new policy positions on three emerging issues with an enormous potential impact on the commercial real estate industry: stormwater management; lead in paint; and Building Star legislation, as follows:

Stormwater Management BOMA International Position: BOMA International believes: (1) developed land, as a category, is not a point source under the Clean Water Act; (2) EPA has no authority to regulate impervious surfaces; (3) releases into municipal separate storm sewer systems (MS4s) are not discharges into waters of the United States; and (4) for properties where runoff is channelized and discharged into a water of the United States, EPA has not met the statutory prerequisites necessary to exercise any regulatory authority over such discharges. Background: On May 10, 2010, the U.S. Environmental Protection Agency (EPA) released a notice that it intended to disseminate a questionnaire to owners and developers on stormwater management discharges from developed sites. Under the Clean Water Act, EPA presently regulates point sources, including active construction sites. By sending the proposed Continued on page 12

BOMA July/August 2010

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legislative UPDATE questionnaire to owners of already developed properties, EPA is expanding its authority beyond those given to it in the Clean Water Act. In addition, the questionnaire itself is problematic. It would take considerable time and resources to complete (30 hours by EPA’s estimates, but much longer by ours) and asks for information the owner may not have (such as permit plans), especially if the owner was not the developer of the project. In addition, the questionnaire asks for confidential financial information that seems to have no bearing on the issues at hand. BOMA International, in conjunction with the Real Estate Roundtable, International Council of Shopping Centers, National Multi Housing Council, National Apartment Association, NAIOP—The Commercial Real Estate Development Association and the National Association of Real Estate Investment Trusts, filed comments on June 9, 2010, on the EPA’s information collection request and plans to continue to work to educate EPA, the Office of Management and Budget, the Small

Business Administration and Congress that this is an expansion of EPA’s authority and EPA should not be able to proceed without first following the process proscribed in Sections 308 and 402 of the Clean Water Act.

Lead in Paint BOMA International Position: The EPA must not move forward to issue regulations on lead-based paint in commercial buildings absent credible health studies, undertaken in commercial building settings, which determine there is a known or imminent public health emergency. Furthermore, EPA must also consider the impact that any lead-based paint regulations will have regarding energyefficiency and water conservation retrofits in commercial buildings.

Background: On May 6, 2010, the EPA issued an Advance Notice of Proposed Rulemaking (ANPRM) (75 Fed. Reg. 24,848), titled “Lead: Renovation, Repair, and Painting Program for Public and Commercial Buildings.” This is the first step in EPA’s plans to promulgate regulations on both internal and external building renovations. EPA and the Department of Housing and Urban Development have a long legislative and regulatory history addressing lead-based paint activities and hazards in “target housing” and “child-occupied facilities.” Studies to-date have been undertaken almost exclusively in residential settings. EPA itself acknowledges that issuance of the ANPRM derives from a litigation settlement agreement with advocacy groups and not any known lead-paint hazards. Though lead has long been prohibited in wall paints, it is still commonly used in commercial and industrial applications, such as metal doors, equipment and handrails. As such, EPA is not Continued on page 14

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legislative UPDATE expected to limit its regulatory scope to older buildings, as it has in residential settings (pre-1978). BOMA International and our coalition partners submitted comments to EPA on July 6.

Building Star Energy Efficiency Act of 2010 BOMA International Position: BOMA International supports

legislation, such as the Building Star Energy Efficiency Act of 2010 (S. 3079; H.R. 5476), that would provide rebates and financing programs for energyefficiency retrofits to existing buildings. BOMA International believes, however, that the application of Davis-Bacon prevailing wage and paperwork

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requirements to the bill diminishes its value and the cost of compliance would outweigh the benefits provided. Background: On March 4, 2010, Senator Jeff Merkley (D-Ore.) introduced S. 3079, the Building Star Energy Efficiency Act of 2010. This legislation would provide rebates to building owners to offset a portion of the cost of purchasing and installing qualifying equipment or materials or undertaking qualifying services to enhance the energy efficiency of existing commercial buildings and multifamily residential buildings and provides funding for loan programs. It is intended to be a short-term (two years) jobs bill to immediately provide much-needed job creation in the construction industry, while also assisting the commercial real estate industry to retrofit existing buildings and benefitting the environment by decreasing greenhouse gas emissions. Rep. Peter Welch (D-Vt.) introduced the House counterpart (H.R. 5476) on May 28, 2010; however, this bill has one key difference. Due to pressure from the labor unions, it contains language that applies prevailing wage standards to the Building Star rebates and financing programs. Sen. Merkley has stated that he intends to introduce a “Davis-Bacon” amendment to his bill at a later date. The Davis-Bacon Act of 1931 established the requirement for paying prevailing wages on public works projects. All Federal government construction contracts, and most contracts for federally assisted construction over $2,000, must include provisions for paying workers on-site no less than the locally prevailing wages and benefits paid on similar projects. Over time, the prevailing wage requirement has been extended by Congress to programs that finance private construction, such as through loans, grants and revolving funds, but there is no precedent to adding it to rebates to retrofit private projects. In addition to the wage requirements, Davis-Bacon also adds significant administrative requirements, such as weekly payroll and burdensome reporting requirements.

Give Your Electricity Bill A Really Close Shave

A brief from NECA’s Electrical Design Library Issue 3, 2010

p to 72% of the electricity generated by U.S. power plants goes to keeping our buildings running, according to the Department of Energy (Energy Information Administration. Energy probably is a significant line item in your budget, if you are a building owner (or your clients’ expenses, if you work for building owners). And it’s likely to increase over time. New and developing technologies, such as those promised by those working on The Smart Grid, offer promise for future energy reductions. You certainly can wait for those to become available. But you might well ask—what can you do today? Plenty! In cutting your electricity use, you’ll also help limit the need for new generating plants; your efforts will provide economic and environmental benefits in which we all will share. But the “bottom line” here is yours. Shave your electricity bill today, and you’ll reduce your outgoing monthly cash. The closer the shave, the more you’ll save.

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state & local update

Florida Land Use Ballot Initiative Has Potential National Impact REAL ESTATE INTERESTS IN FLORIDA are facing a serious threat designed to halt economic growth and development by shutting down the planning process. A proposed amendment to the state’s constitution, Amendment 4, would require citizens to approve all local comprehensive land use plan changes, rather than having those changes approved or rejected by city or county commissions. It is estimated that the average voter would be expected to decide about 200 to 300 intricate land-use planning amendments each year if this constitutional proposal is passed. Local governments would be forced to use taxpayer dollars to fund additional elections, or be forced to wait

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until the next election to list out all of the changes proposed to a comprehensive land use plan. Spearheading the Amendment 4 campaign is a group of environmental lawyers who founded Florida Hometown Democracy, a special interest group. More than half of its funding comes from Floridians for a Sustainable Population, a population control group. If this “Vote on Everything” initiative is passed, it could adversely impact every BOMA member in Florida. Building owners and managers would lose their ability to seek a fair hearing on land use classifications, bearing the onerous burden of waging a political campaign simply to assert their own property rights. Decisions based on more popular land uses, such as large homes on multi-acre lots, might be approved, while other uses, such as office, retail or industrial development, might be voted down. It could also encourage unfettered sprawl. Amendment 4 could permanently impact the state’s economic growth just as the state is rebounding from the Great Recession. The Florida Chamber

of Commerce has called the measure a “job killer,” permanently impacting employment and growth within major industries and job-generating activities. This could ultimately lessen the need for office, retail and industrial space. A recent study published by the Washington Economics Group showed that Amendment 4 would cost the state 260,000 jobs and reduce Florida’s economic output by more than $34 billion per year. If passed, growth in the state of Florida would be limited to land sectors with an existing comprehensive plan that does not require even the slightest change. Development could be halted as a result of developers’ unwillingness to become embroiled in a long-term, expensive and protracted approval process. Fewer commercial developments might be developed, forcing local and state governments to either raise taxes or cut services. If Florida voters approve Amendment 4, its implications are expected to reverberate far beyond the state, setting a national precedent for other states to

adopt such legislation or consider such ballot initiatives. No-growth and antigrowth groups could easily capitalize on the potential success of this campaign. While this type of measure has never been adopted in another state, the city of St. Petersburg Beach, Fla., adopted a local version of Amendment 4 in 2006. As a result, the town has seen fewer jobs, higher tax rates and endless litigation at taxpayer expense. According to the St. Petersburg Times, citizens have seen nearly a dozen lawsuits that have cost local taxpayers over half a million dollars in legal fees. Seeing the less-thanpositive results of this measure, voters scaled back their version of Amendment 4 by an overwhelming vote. According to the president of the National League of Cities, no single item on Florida’s 2010 ballot has the potential to weaken the state’s economy and hurt its taxpayers more than Amendment 4. Similar threats to businesses and local governments have also surfaced in other cities and states. In Spokane, Wash., a coalition of local and national associations defeated a measure known as the

Citizens Bill of Rights in 2009, which would have allowed voters to, among other things, give neighborhoods power to veto development projects through petitions and neighborhood councils. Commercial real estate interests played an active role in the initiative’s defeat. The measure was designed to be a launch pad to other urban areas of the country, and similar measures may be proposed in Portland and Salem, Ore. BOMA International and BOMA Florida have joined with other real estate organizations in Citizens for Lower Tax and a Stronger Economy, a coalition of more than 200 organizations that oppose the initiative. Other members of the coalition include the National Association of Industrial and Office Properties (NAIOP), the American Resort Development Association, NAIOP of Florida, the Florida Apartment Association and other business groups. The coalition has developed a comprehensive communication and grassroots strategy to defeat this measure. For more information on Amendment 4, visit www.florida2010.org.

July/August 2010 BOMA

Codes & standards update

ICC Model Code Revisions Finalized BOMA on Front Lines Defending Commercial Real Estate THE INTERNATIONAL CODE COUNCIL held hearings to determine the content of the 2012 editions of most ICC model codes in Dallas in May. Hundreds of proposed modifications were debated, many with far-reaching impacts on the commercial real estate industry. BOMA’s code advocacy team was once again the first line of defense in efforts to preserve safe, achievable and affordable building regulations against the growing influence of powerful groups lobbying for fundamental and costly shifts in this country’s building regulations. Proposals to increase the stringency and costs to provide mandatory fire protection, occupant egress, structural integrity and plumbing and mechanical systems for both new construction and existing buildings highlighted the Dallas hearings. Of even greater concern to BOMA was the unprecedented emphasis on retroactive implementation of many

proposed changes in existing buildings. The most sweeping changes were proposed for the fire code (IFC) and fire safety sections of the building code (IBC). Modifications that carry significant negative impacts for commercial real estate included:

bumps, as well as control over local ordinances dealing with street width were also approved.

• Mandatory automatic fire sprinklers and irrigation systems for roof gardens and “vegetated roofs” qualifying for green building program credits.

BOMA was successful in keeping even more damaging proposals out of the fire and building codes, including:

• Posting of fire evacuation plans at building main entry points.

• Retroactive sprinkler installations in all existing high-rise buildings.

• Installation of two additional fire service elevators in newly constructed buildings.

• Retroactive sprinkler installations in any existing building containing upholstered furniture.

• Prohibition of LP gas containers on roofs.

• Fire service authority to require electrical system special inspections and retrofits in existing buildings.

• Retrofit of fire extinguishers in buildings with automatic sprinkler systems. • Proposals giving fire officials veto over traffic-calming devices, such as speed

• Smoke detection systems in HVAC ducts. • Deletion of additional trade-offs for passive fire protection measures in

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BOMA July/August 2010

buildings with automatic sprinklers. • Mandatory third-party elevator inspections for existing buildings. • Mandatory smoke and draft controls for all elevators. Another round of hearings to determine the outcome of hundreds of proposals to modify the International Energy Conservation Code will be held this October in Charlotte, N.C. That will conclude the 2009-2010 ICC code development cycle and finalize the provisions in the 2012 ICC codes. BOMA and its allies in the real estate industry will continue the fight to maintain our system of developing the safest yet affordable building regulations for the built environment.

BOMA Standards Receive ANSI Accreditation Five BOMA floor measurement standards have now been accredited by the American National Standards Institute. This new “suite” of BOMA/ANSI standards includes methods of measurement for Office, Industrial, Multi-Unit Residential, and Retail buildings, as well

as a standard for measuring the Gross Area of all buildings. The new standards are designed to meet the needs of architects, appraisers, space planners, interior designers, engineers, property owners and managers, leasing professionals, asset managers and others associated with all building occupancies. With step-by-step procedures for calculating measurements, color illustrations, worksheets and 36 definitions of measurement terms hyperlinked in a downloadable format, the standards are easier to understand and apply. All of BOMA’s floor measurement standards are available in the BOMA Store. See at http://shop.boma.org.

BOMA and BOMA/New York Discuss Green Building Codes with NYC Mayor’s Staff Representatives from BOMA and BOMA/New York recently attended a meeting with New York City Mayor Michael Bloomberg’s staff to discuss the new green building codes—ASHRAE Standard 189.1 and the International Green Construction Code (IgCC)—and

how these codes might fit into New York’s program to “green” its existing building stock. Representatives from ASHRAE, ICC, USGBC and the Illuminating Engineering Society were also in attendance. The Mayor’s staff emphasized that 85 percent of the buildings that will be in operation in NYC in 2030 already exist and they contain 5.4 billion square feet of space. They are seeking a practical approach to assist existing building owners and managers to achieve more sustainable operations. BOMA emphasized that voluntary programs, like BOMA 360, LEED and Green Globes, have achieved significant success and should be part of New York City’s overall program. We also cautioned that, while the market has begun to value green and sustainable building practices, it is important to assess the economic impact of green building regulations to ensure a vibrant commercial real estate industry in the future. The Mayor’s staff indicated that they would like to schedule additional discussions on this issue before completing their assessment of how to move their programs forward.

July/August 2010 BOMA

leading the way

Angelo Grima Building Code Advocate Avid Angler ANGELO GRIMA IS DIRECTOR OF OPERATIONS with Schneider & Schneider in New York City, where he is responsible for the daily operations of more than six million square feet of owner-managed and third-party-managed real estate. He previously worked as a portfolio manager at Grubb & Ellis Management Services, Inc. Grima’s BOMA leadership spans 20 years. He has served as president of BOMA/New York and chairman of the Middle Atlantic Conference and has been an active member on several committees—preparedness, government affairs, codes and standards to name a few—at every BOMA level. He currently serves on BOMA International’s Executive Committee.

You’ve been involved with BOMA for 20 years. What are you most proud of? The accomplishment I’m most proud of is my involvement in the adoption of the International Building Code in New York City because of the vast and hopefully positive implications it has for all of real estate, as well as government functions.

That was a huge undertaking; what was the process like? We had numerous discussions with the International Code Council (ICC). The current New York City code was archaic at best. It was an old code with volumes of revisions, which hindered approval processes and was somewhat proprietary because, if you were a consultant outside of New York City, you were at a disadvantage as it was so hard to understand if you weren’t working with it on a daily basis. We began the process of introducing

BOMA July/August 2010

it to the New York City Department of Buildings. Then Buildings Commissioner Patricia Lancaster was savvy enough to understand the potential merits and put together a task force, of which BOMA/ New York and other real estate disciplines were heavily involved. We also secured the blessings of the Mayor of New York City Michael Bloomberg. The process was very political, in addition to being technical, and it was arduous getting the City Council to understand and approve it. We did a comparison of the then current code with the ICC code and came up with a blended code, which will serve the city well going forward. The whole idea of this was to make New York City more competitive with the rest of the world. We believe that’s what this code will accomplish going forward.

From a preparedness standpoint, what has been done to protect tenants in the past few years, and what challenges are still ahead? The good thing about New Yorkers— and I’m one of them—is that we understand that the problem is always there but we’re not going to succumb to it and be afraid. Right after 9/11, the city, along with various organizations—and BOMA took a lead position in this—started collaborating and working very closely to identify possible hazards and implement provisions to help safeguard the public and occupants of office towers in the city. One of the prize accomplishments is that BOMA/New York now has a Preparedness Committee that is second to none in advocacy and its proactive stance in working with the city. As well, a guide was prepared called the “New York City High-Rise Drill Book for

Building Staff,” which was published in March 2008. It was such a success that a more generic version is now available to BOMA local associations across the country. You can go through the guide and put together a real plan for your building in the event of a disaster. A big challenge we have is that the city, like every other municipality, is having budget issues right now; and securing funding for security issues, along with support at the Federal level, is difficult. It’s a huge challenge that directly impacts commercial buildings and tenants.

What do you get most out of your BOMA membership? I have found it to be invaluable to me. The multitudes of people in different disciplines I have met throughout the years have been tremendous to my career growth. I can pick up the phone now and find out the answer to something immediately. That is priceless. I’ve also found it helps keep me in the know—especially on the local level— with all the different code requirements that are constantly evolving. Having at my fingertips all the information about what’s happening in the industry, and the possible implications, makes me a better manager.

What’s life like outside of work? Right now my No. 1 hobby is my 17-year-old son and being involved with him through his maturing process. I’m also an outdoors person. Between fishing, boating, golfing, hunting and shooting, I could be outdoors 24/7, 365 days a year. I like taking my boat up to Lake George in the Adirondacks and go fishing for large-mouth and small-mouth bass. That to me is the ultimate peace.

Around the industry In Memoriam: J. Bradley Kennedy

From left: Chip Rodgers, senior vice president, Real Estate ISAC, with BOMA Chair Jim Peck and BOMA President Henry Chamberlain.

Policy and Politics Discussed at Real Estate Roundtable Annual Meeting THE REAL ESTATE ROUNDTABLE held its 2010 Annual Meeting in Washington, D.C. on June 16. BOMA Chair Jim Peck and BOMA President Henry Chamberlain were in attendance where topics included the impact of the upcoming elections on commercial real estate and the economic and strategic consequences of the global recession. Speakers included House Minority Leader John Boehner (R-Ohio), Senator Bob Menendez (D-N.J.) and Moderator of NBC’s Meet the Press David Gregory. Conference takeaway: Although “green shoots” of activity are happening, many of commercial real estate’s major issues— commercial mortgage backed securities, job creation, tax issues—are still in play. Congress is expected to pass a financial reform bill this year, but other issues may have to wait until after the mid-term elections.

Brad Kennedy, chairman emeritus of BOMI International, passed away in May. A dear friend and dear colleague to so many in the industry, Brad spent a career investing his talents in creating education. He was a member of the Board of Trustees of BOMI International beginning in 1993 and was among the first to hold triple designations from BOMI—Real Property Administrator, Systems Maintenance Administrator and Facilities Management Administrator. His property management career included roles with many prominent companies, including the Charles E. Smith Realty Companies, the Meridian Management Corporation and was capped off most recently working for the General Services Administration as property manager for the White House Service Center. He was a member of the Apartment and Office Building Association of Metropolitan Washington, D.C. and a regular attendee at BOMA International meetings. He is survived by his wife, Jacqueline, four children and 10 grandchildren.

How Many Jobs Do Office Buildings Support in Your State? For each $1 million of outlay for office building operations THE CONTRIBUTION OF OFFICE in 2009, 24.4 jobs were supBUILDING OPERATING OUTLAYS ON THE U.S. AND STATES’ ECONOMIES IN 2009 ported nationwide, resulting in a total of more than one million jobs directly supported by office building operations. The findings are from a new report released by BOMA International, The Contribution of Office Building Operating Outlays on the U.S. and States’ Economies in 2009, which details the impact of commercial office buildings on the national and local economies. The study provides a powerful snapshot of the industry’s contribution to the economy, the jobs it supports and the subsequent earnings it generates. Prepared for the Building Owners and Managers Association (BOMA) International by Stephen S. Fuller, PhD

Dwight Schar Faculty Chair and University Professor, Director, Center for Regional Analysis, George Mason University

To find out more about how office buildings contribute to your state and local economies, visit www.boma.org.

Look for Changes to Lease Accounting Standards According to “Real Estate Advisor,” a quarterly newsletter published by RSM McGladrey providing accounting, tax and business insights, significant changes in accounting for leases may be just around the corner. The article states that FASB and IASB are closer to what could be sweeping changes to lease accounting that could significantly impact financial statements. Current lease accounting is based on SFAS 13 and is considered very complex. The SEC does not like the “all or nothing” nature of the current rules as they have led to the clustering of lease arrangements with terms that approach—but do not cross—the “bright lines” in the accounting standards that would require capitalization. Beyond that, the article states that international lease accounting standards differ from those of the United States, even though leasing is an increasingly global business. In reviewing alternative approaches, the Boards appear to have settled on a “rightof-use” model under which a lessee would record, as an asset, the value of the right to use an asset over the lease term and would record a liability for its obligation to make future lease payments. Currently, the Boards are looking for an April 2011 issuance of the new lease accounting rules.

BOMA July/August 2010

Photo of the Month: Dynamic Duo

2007-2008 BOMA International Chair Brenna Walraven with Former U.S. President Bill Clinton at the Sustainable Operations Summit in San Antonio, Texas, in May.

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BOMA Conference Highlights—

Leading the Future By Lindsay Tiffany

Property professionals tapped into the power of the BOMA network in Long Beach, Calif., June 27-29, for the 2010 BOMA International Conference and The Every Building Show®. Over the course of the conference, attendees connected with colleagues, exchanging ideas and information, meeting with solutions providers and hearing industry leaders share strategies for success in today’s marketplace.

Still Smiling: Kurt Padavano (left) and Henry Chamberlain deliver the State of the Industry address.

State of the Industry Address: Jobs, Credit Availability Key for Real Recovery During the State of the Industry address, Kurt Padavano, chief operating officer of Advance Realty Group, and Henry Chamberlain, president of BOMA International, predicted that, despite a host of challenges, there are opportunities for high-performance assets. “Value is king,” Chamberlain told attendees. “Managing proactively and providing exceptional tenant relations have never been so important.” Key takeaways from the State of the Industry address included: We need a bigger stage! BOMA 360 designees honored.

BOMA 360 Buildings Recognized for Excellence The Tuesday General Session, sponsored by Johnson Controls, kicked off with a ceremony recognizing 100-plus buildings that have earned the BOMA 360 Performance designation in the last year. “In any market, even the best buildings need an edge to stand out,” BOMA 360 Council Chair Dan Chancey noted. “In the demanding market we are experiencing right now, it is essential. BOMA 360 brings distinction to properties in today’s competitive environment.” See the latest class of BOMA 360 buildings on pages 45-46.

BOMA July/August 2010

• Employment will be a key driver of recovery. Though the United States is no longer hemorrhaging jobs, Census hiring has made employment numbers appear stronger than they really are. • Recovery has been slow and indicators are still soft, though there is a slight increase in the availability of credit, some activity in the CMBS market and some sales and transactions. • The re-pricing of real estate continues. According to Moody’s/REAL Property Price Index, values are down 25 percent from a year ago and down 42 percent from the peak in October 2007. • Vacancy rates are now hovering just under 18 percent, with negative net absorption in the first quarter totaling six million square feet. • Hiring between May 2009 and May 2010 was strongest in the education and health services sectors. According to predictions by the U.S. Department of Labor, it will be 2017 or 2018 before employment numbers reach pre-recession levels. • For the rest of the year, market fundamentals will continue to soften as job growth lags. Debt and equity capital will gradually increase and valuations will slide for a time. Banks and other lenders will move from “extend and pretend” to reconciliation. • Despite tepid signs of recovery, there are opportunities for high-performing assets. Successful firms will leverage technology in their buildings and offer comprehensive sustainability platforms. There will also be a move toward transit-oriented development.

Expert Panel Discusses Real Estate’s “New Normal” Kurt Padavano moderated a panel of industry experts in a lively discussion about real estate’s “new normal” in the Tuesday General Session. The panelists agreed that property and asset management are critical to success in today’s market, and that property managers need to understand the finances of their assets in a marketplace where collaboration and expanded expertise are more and more important.

Ben Stein kept attendees laughing and thinking during the Monday General Session.

“The ‘new normal’ is that the people who manage buildings are no longer just ‘property managers’—they are enterprise leaders, managing their assets like businesses.”

Ben Stein Brings Wit and Insight

Sandra Boyle, executive vice president of Development and Project Management, Glenborough LLC

During the Monday General Session, sponsored by Yardi, renowned economist and humorist Ben Stein offered wit and insight into the state of the economy and commercial real estate, predicting that, although the recovery has been slow in coming, the economy will continue to grow and there probably won’t be a double-dip recession. He also noted that building owners and managers, in particular, have persevered through the worst of the downturn. “Trust in yourselves, you’re BOMA—you’re the best in the business,” Stein told attendees. “Keep digging until the gold starts flowing again; there’s always a recovery.”

“One problem in this industry is that the growth paths for property managers and asset managers are different. It’s like there is a glass wall between them. In fact, experience in managing a property is the best set-up for a successful asset manager. That experience is critical to understanding how operations affect the bottom line.” David C. Sears, managing director, JP Morgan Asset Services

“Collaboration will be a cultural shift for this industry. I think we’ll see more of this, especially with the new generation.” James Arce, executive managing director, Client Solutions, Cushman & Wakefield of California, Inc.

“The future will see a boom in mixed-use properties in Central Business Districts. Do you know how to work with the residential side? The retail side? Expanding your expertise will position you for success.” Mike Kent, U.S. president of Real Estate Management Services, Colliers International

The Tradeshow Floor Hummed at The Every Building Show®

Tuesday General Session panelists delved into real estate’s “new normal.”

The industry’s best products and services were on display at The Every Building Show®, which was filled with industry professionals looking for innovative solutions to deal with today’s toughest operational challenges. The green carpet was rolled out for attendees who visited the Green Pavilion and ENERGY STAR® Showcase, as they saw first-hand the solutions to increase efficiency and save money.

July/August 2010 BOMA

Other Highlights

TOBY winners in the Government Building category represent the Howard M. Metzenbaum U.S. Courthouse in Cleveland.

The Best of the Best Honored at the TOBY Awards During The Outstanding Building of the Year (TOBY®) Awards, sponsored by Securitas Security Services USA, 14 commercial properties were honored for excellence in building operations and management in categories based on asset type or size. See the regional TOBY winners on pages 28-29 and see the complete list of International TOBY winners in the September/October issue or at www.boma.org. Other highlights from the evening included BOMA International Chair Jim Peck recognizing BOMA/Miami member John Scott with the annual Chair’s award for his dedication, leadership and advocacy contributions to BOMA. Former president of BOMA/Atlanta and the BOMA Southern Region Rutledge Beacham was awarded Life Membership posthumously. Three Outstanding Members of the Year from three BOMA regions were also honored: • Middle Atlantic Region, Robert D. Denney, BOMA/New Jersey.

Attendees crowded into the more than 40 education sessions offered across five strategic tracks designed to help property professionals optimize building performance and take advantage of opportunities in today’s market. The sessions focused on everything from leading in lean times to tenant retention to understanding the new ASHRAE green building code. More than 50 college and graduate students and professors also took part in a special student program. They met with mentors, explored career opportunities, attended the Tuesday General Session and walked the tradeshow floor.

Delegates packed the rooms at BOMA’s educational sessions.

• Southern Region, John G. Oliver, BOMA/Atlanta. • Southwest Region, Gregory C. Grainger, BOMA/Dallas.

Ray Mackey Takes the Helm as 2010-2011 BOMA International Chair Ray H. Mackey, Jr., RPA, CPM, CCIM, was formally sworn in as the 2010-2011 chair of BOMA International during the TOBY Awards Banquet. In his acceptance speech, Mackey told BOMA members: “After two years of the deepest recession most of us have ever experienced, we’re still here. And, although we might have a few battle scars, we’re stronger for facing those challenges and ready to lead this industry into the future.”

BOMA July/August 2010

BOMA/Greater Los Angeles welcomed conference-goers to Long Beach during Sunday night’s Welcome Party at One World Trade Center. Fantastic live music and wonderful food—including California’s famed In-N-Out Burgers—made the night a smashing success. BOMA/Greater Los Angeles also sponsored a successful Rodeo Drive-themed BOMAPAC fundraiser that raised more than $9,000 for the BOMAPAC.

Find more information on the 2010 BOMA International Conference and The Every Building Show® online at www.boma.org. Mark your calendars for the 2011 conference, June 26-28, at the Gaylord National® Resort & Convention Center in Washington, D.C.

Bill Tracy, BOMA/Denver Metro, reported on BOMA’s work on the Codes front, giving delegates a summary of the recent ICC Codes Hearing, where BOMA helped members save more than $7 billion in direct costs and long-term revenues. Learn more about the outcome of the Codes Hearing in “Codes & Standards Update,” pages 18-19.

Board of Governors Highlights

During the Inclusive Membership portion of the meeting, BOMA Chair-Elect Ray Mackey reported that, despite difficult economic times, 34 BOMA local associations experienced positive growth in the past two years. He also told delegates that the BOMA One Baseline Standards have been overwhelmingly accepted by local associations as a strategic planning tool.

During the Board of Governors Meeting in Long Beach, Calif. on June 27, BOMA Chair Jim Peck announced the approval of several General Consent items: • New Life Member approval for Rutledge Beacham, RPA, BOMA/Atlanta (posthumously).

Steve Ash, chair, Local Association Services Committee, announced the winners of the Best Practices Awards Program. The winners are: • Marketing Communications category: BOMA/Boston for its Annual BOMA Benefit and BOMA/Chicago for its “Bid BOMA” Affiliate Awareness Campaign.

BOMA Chair Jim Peck recognized the Chinese Office Building Owners and Managers Association as a new international affiliate.

Down to Business By Laura Horsley

• New Local Association approval for BOMA/Greater Huntsville. • New State Association approvals for BOMA Washington State and BOMA New York State. • New International Affiliate approval for Chinese Office Building Owners and Managers Association (COBOMA).

BOMA Vice Chair Boyd Zoccola reported on the success of the MOB Conference.

Pat Clark, chair, Education Advisory Council, and BOMA Vice Chair Boyd Zoccola reported on Education highlights, including the success of the 2010 Medical Office Buildings (MOB) and Healthcare Facilities Conference, which had 550 attendees, up 20 percent from 2009. Find out what happened at the MOB Conference in “Trends Tracker,” page 32, and “Eye on Education,”page 38.

Lorie Damon, vice president of Education & Research, BOMA International, and Phil Mobley, vice president, Kingsley Associates, reported on the new 2010 Experience Exchange Report® (EER®), which is available now online at www.bomaeer.com. The reports are comprised of operating income and expenses from 4,200 buildings in 250 markets. Learn more about the 2010 Experience Exchange Report in “Research Corner,” page 36. During the Advocacy and Regulatory portion of the meeting, Judith Purviance-Anderson, chair, Government Affairs Committee, reported on BOMA’s three new policy positions concerning Lead Paint, Stormwater and Building Star. Learn more about BOMA’s new policy positions in “Legislative Update,” pages 10-14. The BOMAPAC report showed that more than $51,000 was raised in 2009 and $28,000 had been raised so far in 2010, which includes the more than $9,000 raised during the BOMA/Greater Los Angeles PAC drive during the BOMA Conference. A special thank you went out to BOMA local associations that participated in the ½-percent PAC challenge. They include BOMA local associations in Cleveland, Columbus, Fort Lauderdale, Greater Los Angeles, Little Rock, Memphis, San Francisco, Seattle-King County, Suburban Chicago, Kansas City and Wisconsin.

• Communications Management category: BOMA/Portland for its Community Relations Program. • Electronic & Interactive Communications category: BOMA/ Atlanta for its GREEN Real Estate Summit website. • Media Relations/Issues Crisis Management Category: BOMA/ Austin for its “2009 in Review” public relations effort. Guest speaker Michael Miceli, chairman, BOMA Canada, reported on BOMA Canada’s programs, including the BOMA BESt building certification program that has certified 1,600 buildings since 2005, and the ongoing pandemic preparedness offering of BOMA Canada, which includes a toolkit and planning guide for building operators. BOMA International’s new officers and Executive Committee members were approved during the Board of Governors Meeting. They include: • New Officer for Vice Chair: Joseph W. Markling, managing director of strategic accounts, asset services, CB Richard Ellis, Inc., BOMA/Greater Los Angeles. BOMA’s new Executive Committee members were

• New Executive sworn in during the Board of Governors Meeting. Committee members: Robert M. Brierley, vice president of operations, Boston Region, Brookfield Properties Corporation, BOMA/Boston; Brian D. Cappelli, vice president of operations, Forest City Commercial Group, BOMA/Cleveland; Gordon W. Hester, director of commercial management, Kiemle & Hagood Company, BOMA/Spokane; Wade W. Lange, RPA, FMA, CPM, vice president of property management, Ashforth Pacific Inc., BOMA/Portland; and Jen C. Suddreth, RPA, regional manager, Grubb & Ellis Realty Investors, BOMA/Houston. Visit www.boma.org to read a full recap of the Board of Governors Meeting.

July/August 2010 BOMA

2009-2010 Regional TOBY® Award Winners/Nominees Earth One Potomac Yard Arlington, Va. Managed by: Jones Lang LaSalle Owned by: JP Morgan

Fourth & Madison Seattle, Wash. Managed by: Hines Owned by: TIAA-CREF

Seventeenth Street Plaza Denver, Colo. Managed by: REIT Management & Research LLC Owned by: HUB Properties Trust

Collier Center Phoenix, Ariz. Managed by: CB Richard Ellis, Inc. Owned by: GE US Pension Trust

Gulf Canada Square

Corporate Facility BMR—Waples Research Centre San Diego, Calif. Managed and Owned by: BioMed Realty Trust, Inc.

Hewitt Associates, Buildings 3 and 7 The Woodlands, Texas Managed by: Jones Lang LaSalle Americas, Inc. Owned by: Warmack Investments

Lenovo Morrisville, N.C. Managed by: Duke Realty Corporation Owned by: Duke Realty LP

McDonald’s Corporation Oak Brook, Ill. Managed by: Jones Lang LaSalle Owned by: McDonald’s Corporation

Robert S.K. Welch Courthouse St. Catharines, Ontario Managed by: Ontario Realty Corporation Owned by: Ontario Ministry of Energy and Infrastructure

Historical Building 735 North Water Milwaukee, Wis. Managed by: Compass Property Management, LLC Owned by: Compass Properties North Water Street, LLC

Kearns Building

Atlanta, Ga. Managed by: Harbor Group Management Company Owned by: Hurt Financial Associates, LLC

Salt Lake City, Utah Managed by: Hines Owned by: Kearns Building Joint Venture

Oak Brook Pointe

Boston, Mass. Managed by: CB Richard Ellis/New England Owned by: TIAA-CREF

Oak Brook, Ill. Managed by: CB Richard Ellis, Inc. Owned by: Principal Real Estate Investors, LLC

Government Building Douglas County Courthouse Douglasville, Ga. Managed by: CB Richard Ellis, Inc. Owned by: Douglas County

Howard M. Metzenbaum U.S. Courthouse Cleveland, Ohio Managed and Owned by: U.S. General Services Administration

New York State Office of General Services—50 Wolf Road

Red River Road Ontario Government Building Thunder Bay, Ontario Managed by: Ontario Realty Corporation Owned by: Ontario Ministry of Energy and Infrastructure

Robert E. Coyle United States Courthouse Fresno, Calif. Managed and Owned by: General Services Administration

BOMA July/August 2010

Eugene, Ore. Managed and Owned by: General Services Administration

The Hurt Building

Holmdel, N.J. Managed by: Vonage America Owned by: Mack Cali

Wayne Lyman Morse United States Courthouse

BAC Colonnade

Vonage America

Milwaukee, Wis. Managed by: Inland Companies, Inc. Owned by: Wells REIT II—11200 W. Parkland, LLC

St. Paul, Minn. Managed and Owned by: U.S. General Services Administration

Calgary, Alberta Managed by: GWL Realty Advisors Inc. Owned by: The Great-West Life Assurance Company & London Life Insurance Company

Albany, N.Y. Managed by: Owens, Renz & Lee Co., Inc. Owned by: State of New York, Office of General Services

Wells Fargo Home Mortgage

Warren E. Burger Federal Building and United States Courthouse

Coral Gables, Fla. Managed by: Cushman & Wakefield of Florida, Inc. Owned by: Deka USA Colonnade, LP

The Newbry

Pembroke Courthouse Pembroke, Ontario Managed by: Ontario Realty Corporation Owned by: Ontario Ministry of Energy and Infrastructure

Robert A. Grant Federal Building and U.S. Courthouse South Bend, Ind. Managed and Owned by: U.S. General Services Administration

William Kenzo Nakamura United States Courthouse Seattle, Wash. Managed and Owned by: General Services Administration

Kennedy/Kenway Business Park Mississauga, Ontario Managed by: GWL Realty Advisors Inc. Owned by: bcIMC Realty Corporation

Legacy Center Business Park Houston, Texas Managed and Owned by: Liberty Property Trust

Newport Service Center Newport, Minn. Managed and Owned by: Xcel Energy

Medical Office Building Celebration Health Medical Plaza Celebration, Fla. Managed by: Lillibridge Healthcare Services Owned by: Seavest, Inc.

Desert Medical Pavilion Mesa, Ariz. Managed and Owned by: Lillibridge Healthcare

Edward Plainfield Medical Office Building B Plainfield, Ill. Managed and Owned by: BremnerDuke Healthcare Real Estate, A Division of Duke Realty Corporation

Memorial Hermann The Woodlands Medical Plaza 3 The Woodlands, Texas Managed by: CB Richard Ellis, Inc. Owned by: The Woodlands POB III, LP

OHSU Center for Health and Healing Portland, Ore. Managed by: CB Richard Ellis, Inc. Owned by: RIMCO, LLC

Renovated Building One Financial Plaza St. Louis, Mo. Managed by: Parmenter Realty Partners Owned by: Parmenter One Financial Plaza, LP LLLP

580 Building

Industrial Office Park

Cincinnati, Ohio Managed by: Cassidy Turley Owned by: 580 Investors LLC

CenterPoint Business Park

1000 Parkwood

Tampa, Fla. Managed by: Taylor & Mathis of Florida, LLC Owned by: Metropolitan Life Insurance Company

Cheyenne Commerce Center North Las Vegas, Nev. Managed and Owned by: Harsch Investment Properties

I-290 Industrial Park Northborough, Mass. Managed by: CB Richard Ellis, Inc. Owned by: Cabot Properties

Atlanta, Ga. Managed and Owned by: Parmenter Realty Partners

The Cadillac Fairview Tower Toronto, Ontario Managed and Owned by: The Cadillac Fairview Corporation Limited

Park Central 789 Dallas, Texas Managed by: Parmenter Realty Partners Owned by: Parmenter Park Central, LP

The Santa Ana Federal Building

University Circle

Von Karman Michelson

Columbia Center

Santa Ana, Calif. Managed and Owned by: General Services Administration

East Palo Alto, Calif. Managed by: Wells Real Estate Owned by: Wells REIT II

Irvine, Calif. Managed by: PM Realty Group/ American Realty Advisors Owned by: Von Karman Michelson Corporation

San Diego, Calif. Managed by: SENTRE Partners, Inc. Owned by: 401 West A Street SD PT LLC

Suburban Office Park Low-Rise

Under 100,000 Sq Ft

The Avallon

Cambridge, Mass. Managed by: CB Richard Ellis—NE Partners, LP Owned by: Piedmont Office Realty Trust

Austin, Texas Managed by: Grubb & Ellis Management Services Owned by: NNN/SOF Avallon, LLC

Ballantyne Corporate Park Charlotte, N.C. Managed by: The Bissell Companies, Inc. Owned by: H.C. Bissell

The College of Nanoscale Science and Engineering’s Albany NanoTech Complex Albany, N.Y. Managed and Owned by: Fuller Road Management Corp.

Crestwood Corporate Centre Richmond, British Columbia Managed by: GWL Realty Advisors Inc. Owned by: The Great-West Life Assurance Company & London Life Insurance Company

Delmar Gardens Chesterfield, Mo. Managed by: Colliers Turley Martin Tucker Owned by: Delmar Gardens at Conway Ridge, LLC

Drake Oak Brook Plaza

One Brattle Square

Balfour Beatty Center Plantation, Fla. Managed by: Pointe Group Advisors Owned by: The Realty Associates

400 & 450 North Brand Boulevard

BioMed Realty Trust Corporate Office San Diego, Calif. Managed and Owned by: BioMed Realty Trust, Inc.

Bridgepoint Square One Austin, Texas Managed by: REIT Management & Research LLC Owned by: Bridgepoint Property Trust

Hunt Club Crossing Ottawa, Ontario Managed by: Bentall LP Owned by: Investors Group Trust Co. Ltd.

Port Huron Federal Building & U.S. Courthouse Port Huron, Mich. Managed and Owned by: U.S. General Services Administration

100,000-249,999 Sq Ft

Kilroy Centre Del Mar

5th and Bell

Suburban Office Park Mid-Rise Centre de la Cité Pointe-Claire Pointe-Claire, Québec Managed and Owned by: Morguard Investments Limited

Corporate Center II and III Tampa, Fla. Managed by: Carter & Associates Asset Management Owned by: Corporate Center Owner Two and Three, LLC

Enterprise Corporate Park Shelton, Conn. Managed and Owned by: R.D. Scinto Inc.

Greenway Plaza Houston, Texas Managed by: Crescent Real Estate Equities LP Owned by: Crescent Crown Greenway Plaza SPV LLC/Crescent Crown Nine Greenway SPV LLC

Mid America Plaza Oakbrook Terrace, Ill. Managed by: CB Richard Ellis, Inc. Owned by: TR Mid America Plaza Corp.

300 West 6th Austin, Texas Managed by: Thomas Properties Group, Inc. Owned by: TPG-300 West 6th Street LLC

Oak Brook, Ill. Managed by: Jones Lang LaSalle Owned by: Private Investor

San Diego, Calif. Managed and Owned by: Kilroy Realty

250,000-499,999 Sq Ft

Seattle, Wash. Managed by: Hines Interests Limited Partnership Owned by: Hines REIT 5th and Bell LLC

111 North Orange Avenue Orlando, Fla. Managed by: Jones Lang LaSalle Americas, Inc. Owned by: MTJ Orlando, LLC

200 Kimball Drive Parsippany, N.J. Managed by: Grubb & Ellis Owned by: Principal Global Investors

Creve Coeur Center IV

Glendale, Calif. Managed by: Cushman & Wakefield of California, Inc. Owned by: Metropolitan Life Insurance Company

505 Union Station Seattle, Wash. Managed by: CB Richard Ellis, Inc. Owned by: Vulcan Inc.

550 West Washington Chicago, Ill. Managed by: Jones Lang LaSalle Americas (Illinois) LP Owned by: Beacon Capital Partners

901 Main Avenue—The Towers

Over 1 Million Sq Ft 1211 Avenue of the Americas New York, N.Y. Managed by: Cushman & Wakefield Owned by: 1211 6th Avenue Property Owner, LLC

Aon Center Chicago, Ill. Managed by: Jones Lang LaSalle Americas (Illinois) LP Owned by: Piedmont Office Realty Trust

Constitution Square

Figueroa at Wilshire

Denver, Colo. Managed by: Transwestern Owned by: Transwestern Broadreach, LLC

IDS Center

Overlook III Atlanta, Ga. Managed and Owned by: Parmenter Realty Partners

Los Angeles, Calif. Managed and Owned by: Brookfield

Minneapolis, Minn. Managed by: Inland American Office Management LLC Owned by: MB Minneapolis 8th Street LLC

The Tower at Cityplace

500,000-1 Million Sq Ft

Dallas, Texas Managed by: Stream Realty Partners, LP Owned by: Dallas CPT Fee Owner LP

191 North Wacker

Wachovia Financial Center

Chicago, Ill. Managed and Owned by: Manulife Financial

Two Twenty Two Berkeley Boston, Mass. Managed by: Hines Owned by: Equity Office

Accenture Tower

Manulife Place

Irving, Texas Managed by: CB Richard Ellis, Inc. Owned by: CB Richard Ellis Investors

1125 Seventeenth Street

Highland Oaks II

Dallas, Texas Managed by: CB Richard Ellis, Inc. Owned by: CBRE Investors, LLC

Urban Towers

Ottawa, Ontario Managed by: Oxford Properties Group Owned by: CPPIB & Omers Realty Corporation

1111 Third Avenue Building

Interchange Office Center

Montréal, Québec Managed by: Canderal Management Inc. Owned by: 9101-8697 Québec Inc. & 9109-7550 Québec Inc. acting on behalf of KanAm Grund

Norwalk, Conn. Managed by: BLT Management, LLC Owned by: 35 Glover Partners, LLC

Creve Coeur, Mo. Managed by: Cassidy Turley Owned by: I & G Direct Real Estate 18, LP

Downers Grove, Ill. Managed by: CB Richard Ellis, Inc. Owned by: Realty Associates Fund VII, LP

E-Commerce Place

Miami, Fla. Managed by: Cushman & Wakefield of Florida, Inc. Owned by: 200 South Biscayne TIC, LLC

Seattle, Wash. Managed by: CB Richard Ellis, Inc. Owned by: Archon Group

Minneapolis, Minn. Managed by: CB Richard Ellis, Inc. Owned by: CalSTRS

CNL Center Orlando, Fla. Managed by: CNL Commercial Real Estate Owned by: CNL

Official Sponsor of BOMA International’s TOBY® Awards

Vancouver, British Columbia Managed and Owned by: Manulife Financial

July/August 2010 BOMA

Open for Business

Communications and Contingency Plans Key to Preparedness By Stephanie J. Oppenheimer, APR It could be the event no one wants to think about, or the one thing that “will never happen to me.” In 2010 alone, blizzards crippled the East Coast, massive flooding overwhelmed Nashville and Times Square was evacuated twice in one week due to a car bomb and a suspicious package. Yet, surprisingly, many building owners and managers don’t have emergency preparedness plans in place to deal with whatever “it” may be. And that is a serious mistake, says Joe Donovan, senior vice president for Beacon Capital Partners in Washington, D.C., and chair of BOMA International’s Emergency Preparedness Committee. “Ever since September 11, the job of the property manager has changed,” says Donovan. “The old model of ‘I just have to focus on the four walls of my building to the curb’ is no longer applicable; if you’re not paying attention to the entire neighborhood in which you’re located, a building across the street could put you out of business if they have an event. It doesn’t necessarily have to happen to you.”

Planning and Communicating

Developing a plan goes far beyond the safety manual gathering dust on a

BOMA July/August 2010

shelf; it’s a matter of determining what services your tenant mix needs most, devising contingencies that work in a variety of circumstances, working out a communications plan in case traditional means fail, getting to know emergency responders and—above all—practicing. At Beacon Capital Partners, an owner and operator of office buildings in certain major cities, part of Donovan’s job is to ensure that all of the company’s properties, personnel and contractors are working on the same narrow bandwidth of appropriate response. “We started in earnest over five years ago, when we owned the high-profile John Hancock Tower in Boston,” he explains. “We had emergency plans for all of our properties, but we wanted to drive them to higher standards. We created detailed plans for 30 potential events and now run tabletop exercises (a drill of ‘what if’ scenarios) at every property every six to eight months. Our tabletops include all stakeholders, including property teams, fire and safety resources and tenants. It’s not unheard of to have 60 to 80 people per building involved.” Along the way, Beacon has become the only real estate company in the United States to receive the Department of Homeland Security’s (DHS) Safety Act designation, which recognizes anti-terrorism strategies and provides legal liability protections for those who employ them. “A secondary benefit of running

tabletops,” Donovan says, “is that we can repeatedly educate and remind our tenants of their roles and responsibilities. This is a great way to encourage tenants to develop their own plans.” Ben Comm, director of property management for Cassidy Turley in Washington, D.C., is also a proponent of regularly running tabletop exercises, something his firm does every quarter. The lessons learned came in handy this winter, when the city was inundated with three blizzards over the course of two months. “Weather events can be easier to handle because of advance warning,” remarks Comm, “so we assessed our manpower needs, ramped up our snow equipment supply and housed critical employees in nearby hotels to ensure they could get to our buildings no matter the road conditions. Tenant communications were vital during the days that the city was virtually shut down, although the closure of the Federal government helped a great deal, as many companies followed suit. We also monitored snow totals on our roofs; with 45 inches in some areas, it was important to run pound-per-inch assessments and take necessary action. “But, no matter the situation,” he adds, “you need a strong leader—like the chief engineer or senior property manager—who can organize and lead the team through the situation. You also need to plan for the possibility of losing e-mail or phone service; during the event is not the time to figure it out.”

Ed Fallon, vice president of operations, New York region, for Brookfield Properties Corporation, found that having an alternative communications plan became one of September 11’s strongest legacies. “We managed two properties adjacent to the World Trade Center, and communications were crippled when the twin towers [and cell phone towers] fell. Since then, we’ve adopted Blackberries and use a calling tree software system that allows us to reach out to hundreds or even thousands of contacts. It can be activated in multiple ways and provides options that previously weren’t available.”

Building your Backup Plan

Lynn Sugg, vice president and city leader for Cassidy Turley’s operations in Nashville, also focused much of her attention on communications when flooding put parts of Nashville under water and when endangered levees in other areas made the threat of power loss a constant. “Effectively managing this crisis depended enormously on staying in constant contact with city officials and our tenants,” Sugg says. “We regularly talked with the Army Corps of Engineers, emergency management and even the local television stations so that we could keep our tenant office managers abreast of changing circumstances. Knowing what the city’s emergency team is planning ahead of time proved especially important, particularly in terms of electrical power: If all your systems are running when power is cut, you’re setting yourself up for problems when it’s restored. A building’s sump pump in the elevator pit went out when the power was cut, for example, so when the power

was restored, the elevator motors got fried.” Sugg also stresses the importance of security backup during power outages, which can be as simple as manual door locks. As waters receded and areas were reopened, recovery plans were put into place; although, unfortunately, many buildings did not have separate flood insurance for building contents, and most did not have generators. “Some areas are in a specified flood plain, where insurance is available for the structure … but there was a significant amount of flooding that took place in non-flood plain areas, making flood insurance an impossibility for those particular owners,” Sugg says. “Complicating matters is that, other than buildings with tenants that have large call centers or data rooms, the majority do not have generators. Given the impact of this flood, we’re now expecting larger tenants to work generators into their lease renewal negotiations.” Scott Lenger, director of commercial vertical markets for Trane Commercial Systems, has seen a small minority of management companies utilize backup systems as part of their contingency planning by prepping their buildings with power connections that enable immediate hookup of an external power source and HVAC system. Doing so means that, within hours of a major event, tractor trailers with temporary generators and chillers could back up to a building and, in short order, get it up and running with emergency power and cooling “Typically, buildings with critical government facilities, hospitals, hotels that typically house first responders and some corporate facilities have this level of redundancy built in,” Lenger explains.

“Of course, once a property manager has been through some kind of catastrophe, he/she often looks back and says, ‘Whoa, for X amount of money, we could have prepared for this and could have kept our building open for business.’ It’s also important to remember that a big aspect of preserving property value is getting ventilation up and running quickly so that you don’t suffer secondary damage from lingering moisture, and trying to obtain that kind of service in the midst of an emergency can be difficult if you haven’t planned for it.” Other critical contingency planning should include remote HVAC and security monitoring, air intake and plans for evacuation and alternative space. Two final recommendations? First, don’t assume “it will never happen to me,” but also don’t get so bogged down in trying to imagine every possible event that you’re frozen by analysis paralysis. “An act of terror might never happen to you, but weather could. Or vice versa,” says Fallon. “Either way, you need to be prepared. All emergency planning applies to all emergencies, so put together a plan.” Second, know that the old adage, “It’s not what you know; it’s who you know,” can play a big role in the success of your plan. Nurture personal contacts. “Saying that you’ll call 911 in the event of an emergency is ridiculous,” Donovan stresses. “You need to know exactly who to call. When the first responders run through your doors and you throw them the keys, wouldn’t it be helpful to know who they are and what they need?”

About the Author: Stephanie J. Oppenheimer, APR, formerly the assistant vice president of communications for BOMA International, is principal of Skylite Communications, a freelance writing and editing company based in Falls Church, Va.

Crisis Communication Via Social Networking

When floods overwhelmed many areas of Tennessee—and severed phone and computer service on the U.S. Navy base in Millington—officials at the Naval Support Activity Mid-South turned to social networking site “Facebook” to help residents and employees learn the latest news, share information and post questions and answers about the ongoing disaster. At press time, more than 3,000 “fans” had become members of the site, with multiple messages and links being posted every hour. “The entire Department of Defense has only recently started to embrace social media as a valid means of communication, recognizing that the younger generation likes to communicate via Twitter, texting, etc.,” NSA Mid-South spokesman David Crenshaw told The Memphis Daily News. “But we’re the first ones to really implement it the way we have during a crisis.”

“Effectively managing this crisis depended enormously on staying in constant contact with city officials and our tenants.” —Lynn Sugg, Vice President and City Leader, Cassidy Turley

July/August 2010 BOMA

trends tracker A panel on healthcare reform featured speakers Debra Cafaro, Ventas Healthcare Properties; Leslie Norwalk, Epstein Becker & Green, P.C.; Robert Kolodgy, Blue Cross Blue Shield Association; and Robert Christie, Northwestern Memorial Healthcare.

Healthcare Reform Spells Opportunity for MOB Developers, Though Not Without Challenges By Lindsay Tiffany HEALTHCARE REFORM IS EXPECTED TO INCREASE DEMAND for medical office buildings and other ambulatory care settings in both the short- and longterm, experts agreed at BOMA International’s 2010 Medical Office Buildings and Healthcare Facilities Conference, May 5-7 in Chicago, Ill. Both hospital and healthcare real estate executives indicated that, as hospital systems work to accommodate the newly insured, they will increasingly seek to provide healthcare in ambulatory settings, such as MOBs, where care is much less expensive to deliver. This shift is expected to increase demand for MOB space, and many hospital executives indicated that capital projects that were on hold just a year ago would be restarted quickly in anticipation of this demand.

Assessing Access and Quality Chick Boyle, controller of Universal Health and chief financial officer of Universal Health Realty Income Trust, said healthcare reform will bring the uninsured population in the United States from 15 percent down to five percent. He explained that the 15 percent uninsured before healthcare reform still sought care at hospitals; insurance coverage for that population will mean a shift toward primary and preventative care, bolstering demand for medical office buildings. But access to insurance does not necessarily mean access to care, pointed out Leslie Norwalk, strategic counsel, Epstein Becker & Green, P.C., and former acting administrator for the Centers for Medicare & Medicaid Services. It was estimated that 30 million are uninsured, but that 100 million lack access to physicians. Several experts acknowledged

BOMA July/August 2010

that there are simply not enough doctors and nurses to meet the demands of an aging baby boomer population and the newly insured. These provider shortages are expected to affect demand for MOB space, and may, in the short-term, slow new development. How healthcare reform will impact physician practice patterns remains to be seen. Monica Bowman, managing director of physician services, Vanguard Health Systems, explained that “private practice physicians do not want to shoulder the burden of new trends” and are increasingly looking to get out of private practice and be employed in hospital systems. This trend may affect hospitals’ appetites for monetization, as increasing numbers of hospitalemployed physicians could mean that hospitals become the primary lessee of MOB space, making ownership of MOB assets more attractive. Experts agreed there needs to be major incentives for physicians and nurses; tort reform was mentioned as one such incentive, though there was debate about how much it would actually drive down costs.

Randy Fuller, director of thought leadership, Healthcare Financial Management Association, stressed the need to examine why the United States spends more on healthcare than other countries, despite achieving similar or worse healthcare outcomes. He emphasized that “tight integration between healthcare systems and physicians is critical to lowering costs and increasing quality.” Another key concern emanating from healthcare reform legislation is the prohibition of physician ownership of hospitals in facilities seeking Medicare and Medicaid reimbursement. The change is expected to have far-reaching effects on physician-owned specialty hospitals and ambulatory surgery centers (ASCs), as well as on the structure and frequency of joint ventures. Medicare and Medicaid reimbursement rate changes are also a top concern among industry experts, as physician reimbursement cuts are expected to squeeze physician profit margins still further. CMS reimbursements have not kept pace with inflation for nearly 20 years, and the future of the sustainable growth rate formula for Medicare reimbursements to physicians looms ominously, as physicians may face a 21-percent cut in reimbursements. Robert Christie, vice president of governmental and legislative relations, Northwestern Memorial Healthcare, said hospitals are looking at a $150 billion shortage in Medicare reimbursements. As hospitals work to implement and respond to healthcare reform, it’s clear that real estate strategies will be at the heart of how they address these complex challenges.

Cracking the Cost Equation The cost of healthcare reform is a key concern as most experts agreed that the legislation, as passed, is not a permanent solution because it does not sufficiently address the costs associated with reform. Blue Cross Blue Shield Association Senior Vice President and Chief Financial Officer Robert Kolodgy predicted that healthcare reform will substantially raise premiums, adding that the United States is “on an unsustainable cost trajectory in terms of the percentage of GDP spent on healthcare.”

Monica Bowman, Vanguard Health Systems, outlined concerns about how healthcare reform may impact physican practice patterns.

For more on what happened at BOMA’s 2010 Medical Office Buildings and Healthcare Facilities Conference, turn to “Eye on Education” on page 38.

Call for a free quote or catalog!

1010 East 62nd Street • Los Angeles CA 90001-1598 Phone: 1-800-624-5269 • Fax: 1-800-624-5299

Green Scene

Three Lighting Solutions to Consider By Cheryl English EFFICIENT LIGHTING SOLUTIONS are changing at a rapid pace, and there are many opportunities to improve both building efficiency and worker satisfaction. Here are three solutions to consider: 1. Relight offices and warehouse spaces. 2. Consider replacing existing lighting with new LED systems. 3. Incorporate lighting controls.

Relight Solutions For offices, new relight systems offer reduced energy consumption, often 50-percent lower than the lighting currently installed. With these systems, the lighting quality is improved by providing better glare control and lighting uniformity on tasks and walls. A relight kit can be installed without removing the old lighting reflectors; you simply insert a new fixture reflector and select

from several diffusers, including lensed “baskets” or louvers—both with superior glare control. Because the old fixture housing is not being removed, there are no disposal issues to be concerned about. Relighting helps revitalize the appearance of offices, improve lighting quality, reduce energy and maintenance costs and minimize disruptions to business during the upgrade. These systems can also qualify for federal tax deductions—up to $0.60/ square foot of renovated space. Warehouse spaces also present a real opportunity to improve your bottom line. Linear highbay lighting uses fluorescent T5 lamps and often provides better uniformity and color than metal halide lighting systems. Look for linear highbays that include good thermal management if your warehouse space is unconditioned. This type of lighting can reduce energy costs by as much as

The lighting in an office building conference room is notably improved by a relight solution.

59 percent, compared to a 400-watt metal halide highbay—nearly $3,400 savings per year for every 10,000 square feet ($0.10/kwh and 5,000 annual operating hours). The savings are even greater when controls are incorporated. These systems also qualify for Federal tax deductions.

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LED Options LED, or solid state lighting, is the new trend for many lighting solutions. LED lighting is evolving rapidly and the costs are becoming more justified for many businesses. Recessed downlights using LED sources now use about 27-percent less energy than a comparable compact fluorescent lamp (CFL) and they can be easily dimmed. The LEDs last about four times longer than a CFL, minimizing maintenance costs. Beyond that, there is no mercury in an LED lamp, which means no special disposal requirements. Some LED downlights are designed to fit right into an existing downlight housing with an incandescent socket, making the changeover extremely fast and easy. LEDs can also replace the task lights in office cubicles, and even outdoor site lighting now offers LED solutions. There is a wide range of quality in LED lighting; here are some things to look for: • Quality optical control—poorly controlled LEDs can be very bright. • Thermal management—the LED

driver can produce a significant amount of heat and fail prematurely if the heat is not properly dissipated. • Color—look for LED products that have a color temperature between 3000 and 4100K. This will provide a warm white color; color temperature over 4100K will appear bluish. • Testing—products should be tested to the IES LM-79 and LM-80 standards. • Products that carry the Department of Energy “Lighting Facts” label.

Claim Control Don’t forget the lighting controls. Even the most energy-efficient lighting will consume too much energy if it is left on when it is not needed. Vacancy sensors detect when an area is unoccupied based on motion and/or sound, and will not come back on until they are manually turned on. This is a great control solution in private offices, conference rooms and restrooms. Occupancy sensors used in warehouse aisles often reduce energy by more than 50 percent.

Many lighting systems now offer digital lighting solutions, with the controls integrated directly into the light fixture. This reduces the need to commission the controls and makes the installation much simpler. Make sure to incorporate dimming controls anywhere you have daylight integration. The return on investment for controls is very attractive, and makes the functionality of your building more attractive to clients. Take a look at the world of new opportunities for lighting. You can improve your bottom line with reduced operating expenses, fewer maintenance issues and more satisfied clients. About the Author: Cheryl English is the vice president of Industry and Government Relations for Acuity Brands Lighting. She is responsible for energy and sustainability programs, industry activities and government relations. She can be reached at Cheryl.English@acuitybrands.com.

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July/August 2010 BOMA

Research corner Property Managers Tightly Controlled Operating Expenses in 2009, According to 2010 EER

Property managers tightly controlled operating expenses throughout 2009, according to the 2010 Experience Exchange Report (EER), recently released in collaboration with Kingsley Associates. Analysis of operating income and expense data from “same buildings”—those who submitted data in both 2009 and 2010, whose total rentable area did not change by more than 10 percent and whose occupancy did not change by more than 15 percent— reveals that total operating expenses for U.S. private-sector buildings declined by a little more than one percent. The decrease in total operating expenses illustrates what commercial real estate managers have noted all year: There is considerable pressure to reduce operating expenses and maintain strong net operating income (NOI). This year’s report contains data from 4,200 buildings in more than 250 markets, making it the most comprehensive resource for financial performance information on private and public office buildings in the United States and Canada. Despite gains in retail rent, miscellaneous income dropped 11 percent, from $1.55 psf in 2008 to $1.38 psf in 2009. The drop in miscellaneous income may be due to a drop off in retail sales, as miscellaneous income includes retail income as a percentage rent from retail sales, as well as gross parking income; tenant service income; and miscellaneous income, such as vending machines, signage, late charges, health club, etc.

U.S. Private-Sector Office Building Rental Income, in dollars per square foot

2008 2009

5 0

All

Suburban

Downtown

Private-Sector Office Building Income Trends For the income side of the NOI equation, the same building analysis reflects good news in 2009. Rental income for U.S. private-sector buildings increased marginally, up one percent from $24.01 psf in 2008 to $24.26 psf in 2009. For U.S. private-sector downtown buildings, rental income increased 2.5 percent, from $25.96 psf in 2008 to $26.62 psf in 2009. For U.S. private-sector suburban buildings, rental income increased the most, jumping 4.4 percent, from $20.79 in 2008 to $21.70 in 2009. While retail has been hard hit by the recession, U.S. private-sector buildings in the survey reported that retail rent increased 21.7 percent, from $17.65 psf in 2008 to $21.48 in 2009. Retail occupancy for all U.S. private-sector buildings dropped 1.3 percent. For downtown properties, retail occupancy in office buildings decreased just 0.3 percent. Suburban properties saw a more significant drop in retail occupancy, a decrease of more than 10 percent.

2.5

U.S. Private-Sector Office Building Utilities, in dollars per square foot

2.4

2008 2009

2.3 2.2 2.1

Suburban

Downtown

Private-Sector Office Building Expense Trends Total operating expenses in all U.S. private-sector buildings decreased slightly, by 1.1 percent, from $8.05 psf in 2008 to $7.96 in 2009. Total operating expenses in U.S. private-sector downtown buildings decreased 2.1 percent, from $8.66 psf in 2008 to $8.48 psf in 2009. U.S. private-sector suburban buildings, however, saw a very slight increase in total operating expenses, from $7.05 psf in 2008 to $7.14 psf in 2009, a 1.5-percent increase. Control of utility expenses remains a high priority for most management teams: For U.S. private-sector suburban buildings, utilities expenses decreased 9.6 percent from 2008 to 2009, from $2.49 psf to $2.25 psf. In U.S. private-sector downtown buildings, utilities expenses decreased 4.4 percent, from $2.48 psf to $2.37 psf. For U.S. private-sector downtown buildings, fixed expenses increased from $4.50 psf to $4.65 psf, a 3.3-percent increase. The jump reflects an increase in real estate taxes, which constitute the largest share of the fixed expenses category. Suburban buildings, however, did not see the same increase as U.S. private-sector downtown buildings, which only experienced a one cent increase in fixed expenses, from $3.09 psf in 2008 to $3.10 psf in 2009.

BOMA July/August 2010

Private-Sector Office Building Total Expense Ratios For all U.S. private-sector buildings, fixed expenses, the largest portion of which consists of real estate taxes, have consistently been the largest percentage of total building expenses (35 percent in 2009). Utilities were the second largest portion of total expenses, making up 19 percent of expenses in 2009.

2009 Private-Sector Expense Ratios Cleaning 12%

Fixed Expenses 35%

Repairs/ Maintenance 15%

Want to know how your building stacks up? The online EER, brought to you by BOMA International and Kingsley Associates, allows you to access 15 million data points in 40 seconds or less, and it has never been easier. Simply follow this two-step process: First, set up a subscription: • Go to www.bomaeer.com. • Create an account by entering your login ID and password (new users will need to create an account, click on the subscriber login to create a new account). • Click on “Order 2010 Data” at the top of the screen. • Select “I would like to purchase subscription service for myself” and click “Continue.” If you are purchasing multiple subscriptions, select additional users now and add their names and e-mail addresses. • Make your market selections or order the entire EER. • Proceed to “Review Order” and “Payment Info.” • Enter your payment information. • Receive your confirmation through e-mail. Second, log out and log back in the access report immediately:

Utilities 19%

• Click on “2010 EER Reports,” which should now appear at the top of the screen. • Make parameter selections and run reports.

Roads/ Grounds 2%

Security 6%

Administrative 11%

Customize and buy your subscription based on your needs and your entire staff’s— all in one easy transaction. Visit www.bomaeer.com to get started. Ask about group and company-wide subscriptions: call (202) 326-6346. .

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Where education and fun come together www.BOMANevada.org

EDUCATIONAL COURSE SCHEDULE 2010 Location: Las Vegas, Hilton DATE

COURSE

Designation

August 26-28

Asset Management

RPA FMA

September 20-22 Facilities Planning and Project Management October 11-13

Leasing and Marketing for Property Manager

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RPA/FMA/SMA/SMT ACCELERATED COURSES

FMA

RPA

Aug 25, 2010

Real Estate Investment & Finance

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Technologies for Facilities Management

Sep 22, 2010

Fundamentals Of Real Property Administration

Oct 13, 2010

Facilities Planning & Proj Mgmt

Nov 3, 2010

Environmental Health & Safety Issues

RPA FMA FMC PMC

For Information and Registration call BOMA Nevada’s office at 702-938-BOMA

July/August 2010 BOMA

Eye on education

2010 MOB Conference Tackles Healthcare Reform, Financing and Trends in Patient Care By Lindsay Tiffany NEARLY 600 MEDICAL OFFICE BUILDING OWNERS AND MANAGERS, developers, brokers, lenders, investors and healthcare executives gathered for BOMA’s 2010 Medical Office Buildings and Healthcare Facilities Conference, May 5-7 in Chicago, Ill., to network, share insight and hear experts’ predictions on the latest industry trends. The program kicked off with a tour of the Orthopedic Center of Excellence, part of the first phase of a $1 billion transformation of the Rush University Medical Center campus that is jointly owned by Midwest Orthopaedics at Rush and Rush University Medical Center under an air-rights lease structure. Attendees learned first-hand how partners in the joint venture navigated the highly complex strategic, financial, operational and regulatory issues to bring the state-of-the-art project to bear. Healthcare reform was a theme in most education sessions. Both hospital and healthcare real estate executives agreed that healthcare reform will boost demand for medical office space, though most were reticent to predict precisely how much new construction would be required. Other provisions of reform, however, present challenges for those structuring MOB developments. The prohibition on physician ownership of hospitals is expected to have far-reaching effects, both on physician-owned hospitals and ambulatory surgery centers. Changes in Medicare and Medicaid reimbursements are also expected to shift more hospitals toward employed physician modes, which may, in turn, affect hospitals’ appetites for monetization. For in-depth coverage on the effects of healthcare reform on real estate, see “Trends Tracker” on page 32. In addition to healthcare reform, the conference also included extensive discussion about the current health of the capital markets. “A Balanced Equity Diet: How Do MOB Investors Count the Calories?” featured representatives from four different capital sources on how they are looking at medical office investment opportunities in today’s market: publicly traded healthcare REITs, non-traded healthcare REITS, private-equity medical office investors and foreign capital. Philip Marin, senior vice president of investments, Golub & Co., explained that MOBs have become a core product in the last few years, adding that “as cap rates have compressed in traditional asset classes and investors search for yield, we have found it in medical office.” Chris Bodnar, vice president, Healthcare Capital Markets Group, CB Richard Ellis, quoted a recent report indicating that, while total sales volumes have dropped, there has been a 349-percent increase in medical office sales volume as a percentage of all office building sales since the beginning of the recession. Capitalization rates were also a hot topic. Bodnar cited a CBRE investor survey that places market cap rates for Class A on-campus medical office properties between 7.5 and 8.5 percent. Danny Prosky, president and chief operating officer,

BOMA July/August 2010

TOP: A tour of the state-of-the-art Orthopedic Center of Excellence on the Rush University Medical Center campus kicked off this year’s MOB conference. ABOVE: During the Keynote Luncheon, Forbes Publisher Rich Karlgaard emphasized how innovation—both technological and cultural—will help reshape the healthcare industry.

Grubb & Ellis Healthcare REIT II, Inc., said that rates may compress more, though he noted that he expects “we will see more stability in the next year.” All agreed that there will be more capital available in the next six to 12 months. Innovative strategies for delivering patient care were also highlighted as part of the “Provider Strategies” track of education sessions. During “Emerging Facilities Solutions to Meet Evolving Patient Needs,” a team of speakers from Carolinas HealthCare System addressed the latest trends in patient care. Mary Beth Kuzmanovich briefed the crowd on two pioneering facility strategies to meet patient care needs and market demand: a mobile hospital that can be deployed into any community and a freestanding emergency department located 10 miles from an acute-care hospital. Kuzmanovich noted that freestanding emergency departments offer a level of emergency care comparable to that of a hospital, but costs to build and renovate them are significantly less than those of a hospital campus. The conference featured Forbes Publisher Rich Karlgaard, who stressed the importance of innovation for economic growth in the Keynote Luncheon sponsored by GE Healthcare Financial Services. Karlgaard drew parallels between the current recession and the one in the mid-1970s and predicted that it will be a “tepid recovery” coming out of the Great Recession. But, he noted, that, as in the 1970s, recessions can produce great innovation and create environments that launch successful business. Such successes as Microsoft, FedEx and Southwest Airlines all started in the 1970s; those businesses that wrap their business models around new technology and understand consumer changes will emerge successful, he explained. For more information or to order conference recordings from the 2010 Medical Office Buildings and Healthcare Facilities Conference, please visit www.boma.org.

Marathon Oil Tower, Houston, TX Owner: Hanover Real Estate Partners Management Company: Transwestern Designated a BOMA 360 Performance Building in December 2009

Give your building an edge

q The market has never been more demanding. You need an edge. That’s where the BOMA 360 Performance Program® comes in. It can help distinguish your property in today’s competitive environment. It’s designed to recognize commercial properties that demonstrate best practices in all major areas of building operations and management. The benefit is clear. The BOMA 360 Performance Program designation demonstrates to owners, tenants and prospective tenants that your building is being managed to the highest standards of excellence. That’s the kind of edge that enhances asset value in any kind of market. For more information, visit us at www.boma.org.

The Power of Performance

trade tools [FIRE/LIFE SAFETY AND SECURITY]

Secure by Design WHEN WE THINK OF BUILDING SECURITY what first comes to mind might be security personnel, video monitoring, biometrics, key fobs and a host of other systems hardwired into a building. But a complete security plan takes the entire building environment into consideration. Through environmental design, obstacles are used to frustrate trivial attackers and delay serious ones. At the very least, these obstacles make it difficult for the average criminal to enter a building.

Cost-Saving Technologies for Fire Alarm Monitoring By Brian Haas THE VAST MAJORITY of today’s fire alarm monitoring systems currently rely on a digital alarm transmitter that sends a communication across the traditional public switch telephone network (PSTN), or what’s also commonly known as a landline. After hard lobbying by at least one major communications provider, this past spring the FCC issued a public statement outlining the proposed plan to eliminate the public switched telephone system (PSTN), or landline, and replace it with a national Internet protocol (IP) based switching system. Whether or not traditional landlines are ever regulated out of existence, there are compelling reasons to consider “cutting the cord” today. Most buildings have at least one, if not two, phone lines dedicated to the fire alarm panel. In fact, the cost of those lines can far exceed the cost of the monitoring service itself. One option, Wireless Radio Frequency (RF) monitoring, allows you to eliminate the cost and maintenance of wired telephone landlines; is UL and NFPA (Fire Code) approved; and is available right now in many markets. Key benefits for moving to a Wireless RF alarm monitoring system include the following: • Signals travel securely through FCC-approved frequencies. • There is no need to integrate your life safety systems with the daily “ups and downs” of your Intranet or Internet networks. • RF technology was developed by the military and is designed to resist weather and other acts of nature. • RF networks provide multiple paths of communication to emergency personnel. This provides the redundancy that UL and the Fire Code require. • RF signals travel quickly and, in many applications, offer the fastest communication when an emergency happens on your property. • Unlike cell-based options, RF is not carried on cellular networks, which continue to evolve, possibly requiring expensive, future upgrades. Whether or not you are managing two buildings or 200, wireless RF alarm monitoring may be worth investigating for your properties. About the Author: Brian Haas currently serves as the national director for Cintas Fire Protection. For more information, visit www.cintas. com or call (513) 701-1322.

BOMA July /August 2010

Examples of environmental design include: Warning signs. Examples include “No Trespassing” signs and video surveillance and alarm system warnings. Fencing. Fences act as a deterrent, making it more difficult for someone who is undesired to come onto your property. Examples include perimeter fences and fences that block corridors inside a building (used often in retail and educational settings). Concrete bollards (posts). Typically made of heavy concrete (sometimes disguised as planters) and designed to be immobile, concrete bollards prevent vehicles from being driven into the building. Barriers. Barriers prevent vehicles or people from entering a particular area. Some barriers are movable and can be retracted or moved out of the way once authorization to enter has been granted. Vehicle height restrictions. This helps prevent large vehicles from being placed in close proximity to the building. Remove hideouts. Opportunities for concealment can be found behind structures (HVAC, screens, trash container corrals, etc.) and landscaping materials that could provide a hiding place. Site lighting. Adequate exterior lighting makes walking safe for occupants and helps eliminate hiding places for criminals. Information provided by BOMA International’s Foundations in Real Estate Management course.

Performance Matters Take the Lead with the 2010 EER® To outpace the competition in your commercial real estate marketplace, measuring and managing asset performance is an absolute must. ■

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buyers’ guide

Buyers’ Guide to Building Products and Services PRODUCT

DETAILS Ingersoll Rand’s Electronic Locks Set a New Standard in Access Control Ingersoll Rand Security Technologies introduces the Schlage ADSeries, a groundbreaking series of electronic locks that allows purchasers to buy a customized solution to secure their facilities with flexibility built in for future changes. Components that have been traditionally located around the door are now integrated into the lock itself, allowing the locks to be upgraded without ever removing them from the door.

For more information, visit www.schlage.com/ad-series

Manage Access Control Through Siemens’ Remote System Siemens’ Remote Security Management system offers a convenient solution for security professionals who want comprehensive video and access control for their buildings but lack the resources to manage and monitor their systems full-time. Siemens hosts the management software for the video and access control systems, and its expert team administers, manages and monitors the building’s access control and video system 24 hours a day, seven days a week.

For more information, visit www.siemens.com

Lithonia Lighting’s RTLED Series Delivers Performance and Value The RTLED volumetric recessed series from Lithonia Lighting delivers ambient LED white light for office buildings, retail locations, healthcare facilities and more. The series includes three configurations: a two- by two-foot fixture with 3,300 delivered lumens for high light levels or higher mounting heights; a two- by two-foot fixture with 2,200 delivered lumens for general application levels; and a one- by four-foot option that offers 2,200 delivered lumens for general applications.

For more information, visit www.lithonia.com

We do windows.

Inspired by Mother Nature.

Serving the U.S. fenestration marketplace since 1952, Wojan Window & Door Corp. is a veteran-owned, Inc. 5000 company.

Wojan Window & Door was a green company long before environmental awareness became trendy.

Our diverse line of quality aluminum windows and sliding glass doors are performance-rated for many commercial and architectural applications.

Our product line’s recycled aluminum, glass and vinyl content help contribute points toward your efforts to achieve a desirable LEED rating for the building project.

Our value to you is based on competitive pricing, lead times and customer focus. We’re also members of AAMA, and a Registered Provider of AIA/CES courses.

www.wojan.com/boma ● 800-632-9827 x-2 ● boma@wojan.com

Wojan product design is inspired by our location near the Great Lakes shoreline. Everchanging climate and weather drive our work to create Quality Windows for All Seasons.

www.wojan.com/boma ● 800-632-9827 x-2 ● boma@wojan.com

BOMA July/August 2010

BOMA Mag Ads.indd 1

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PRODUCT

DETAILS The Valuation of Office Properties Explains Office Building Valuation The Appraisal Institute’s The Valuation of Office Properties: A Contemporary Perspective is a concise guide that provides the terminology, concepts and analytical techniques needed to value complex, multi-tenant office buildings. Through case studies and examples, the guide demonstrates the application of the income capitalization approach and thoroughly examines office leases, the forecasting of cash flows and the estimation of rents, vacancies and operating expenses. Take advantage of special member pricing in the BOMA Bookstore now.

For more information, visit http://shop.boma.org

Glo Brite Eco- Exit Signs Bring Safety Signage to Outdoor Settings

Jessup Manufacturing Company has introduced Glo Brite® Eco- Exit™ PM100, exit signage approved for outdoor and wet applications. Developed by a leading manufacturer of photoluminescent safety products, Jessup’s new Eco- Exit PM100 sign provides building owners with a new zero-energy, lowmaintenance solution. The signs use the latest technology to absorb and store ambient light. During an emergency blackout or smoky conditions, the stored energy lights the sign, reducing the risk of panic or injury during an emergency evacuation. No electrical wiring or battery backup is needed.

For more information, visit www.jessupmfg.com

Armchem’s Dumpster Fresh Eliminates Odors on Contact Armchem International Corp., a leading distributor of specialty maintenance supplies, has introduced Dumpster Fresh, a solution developed to destroy pungent garbage odors on contact without masking them with fragrance. Dumpster Fresh’s molecular odor-suppressant granules destroy odors in the air and at the source. For both indoor and outdoor use, Dumpster Fresh is specially designed for garbage receptacles, trash compactors, incinerators, laundry rooms, sewer maintenance and more. It is non-toxic, non-flammable and non-caustic.

For more information, visit www.armchem.com

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NECA..................................................................... 15

Akzo Nobel Coatings Inc.- Glidden Pro..... 21

Pro-Bel................................................................... 19

American Anchor.....................................Cover 2

Salsbury Industries.............................................. 33

ASSA ABLOY Door Security . Solutions................................................... 23, 34

Schneider Electric ................................................ 9

Bartlett Tree Experts.......................................... 34

Seesmart LED...................................................... 12

BOMA Atlanta..................................................... 37

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

BOMA International....... 39, 41, 44, Cover 3

Trane Company................................................... 18

BOMA Nevada.................................................... 37

Universal Protection Services......................... 13

Circumspex LLC.................................................. 35

U.S. Green Building Council-USGBC........... 11

Contemporary Walls......................................... 16

U.S. Lawns............................................................... 3

General Elevator Parts....................................... 43

Wojan Window & Door Corporation........ 42

Johnson Controls Inc.......................................4-5

Yaskawa Electric America.................................... 6

Scientific Conservation...........................Cover 4

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July/August 2010 BOMA

conference connection

Largest BOMA 360 Class Recognized in Long Beach THE STAGE WAS OVERFLOWING with BOMA 360 designees during the Tuesday General Session of the BOMA International Conference in Long Beach, Calif., this past June. BOMA 360 designees from the past year were honored before their peers at the industry’s most prestigious business networking conference. The crowded 101 California

1500 Quail

San Francisco, Calif.

Newport Beach, Calif.

Owner: 101 California Venture

Owner: MIREF 1500 Quail, LLC

Manager: Hines

Manager: Cushman & Wakefield

245 Park New York, N.Y.

2040 Main

Owner: BFP 245 Park Co. LLC

Owner: 2040 Main, LLC

Manager: Brookfield Properties

300 Madison Avenue New York, N.Y. Owner: BFP 300 Madison II LLC

Irvine, Calif. Manager: Transwestern

2500 City West Houston, Texas Owner: TPG 2500 City West, L.P.

stage was due to the momentum the BOMA 360 Performance Program has gained in the past several months. The second quarter of 2010 saw the largest number of buildings designated BOMA 360 buildings in any quarter with 61 (listed below), doubling the total number of buildings receiving the designation to 122.

China Basin-Berry Street Building

Concourse Corporate Center Five

Gwinnett Commerce Center

San Francisco, Calif.

Atlanta, Ga.

Duluth, Ga.

Owner: China Basin/San Francisco LLC

Owner: 485 Properties, LLC

Owner: Parmenter Realty Partners

Manager: McCarthy Cook & Co.

Manager: Cousins Properties Inc.

Manager: Parmenter Realty Partners

China Basin-Wharfside Building

Concourse Corporate Center Six

Hawthorne Street

San Francisco, Calif.

Atlanta, Ga.

Owner: China Basin/San Francisco LLC

Owner: TIAA-CREF

Owner: RREEF America REIT III Corp. EE2

Manager: McCarthy Cook & Co.

Concourse Corporate Center One

Manager: Brookfield

Manager: Thomas Properties Group

505 Montgomery

Aon Center

San Francisco, Calif.

Chicago, Ill.

Owner: RREEF AMERICA REIT II CORP. RRR

Owner: Piedmont Office Realty Trust

Manager: CB Richard Ellis, Inc.

Manager: Jones Lang LaSalle

Concourse Corporate Center Two

Bank of America Tower

Atlanta, Ga.

Jacksonville, Fla.

Owner: Teachers Concourse, LLC

1000 Parkwood Circle Atlanta, Ga. Owner: Parmenter Parkwood LP, LLLP Manager: Parmenter Realty Partners

1400 K Street NW Washington, D.C. Owner: Brookfield Properties Manager: Brookfield Properties

Owner: Jacksonville Tower Associates, LLC Manager: Parmenter Realty Partners

Manager: CB Richard Ellis

Four Chasewood

Downers Grove, Ill.

Houston, Texas

Atlanta, Ga. Owner: Teachers Concourse, LLC

Manager: Transwestern

Manager: Cousins Properties

Four WestLake

Highland Oaks I & II Owner: Realty Associates Fund VII, LLC Manager: CB Richard Ellis

Howard Street San Francisco, Calif.

Houston, Texas Owner: WestLake Four Tenant LLC Manager: Stream Realty Partners - Houston

Owner: RREEF America REIT III Corp. EE3 Manager: CB Richard Ellis

Las Colinas Corporate Center I

Manager: Cousins Properties

Grace Building

Concourse Corporate Center Four

Owner: Brookfield Properties

Owner: Wells REIT - Las Colinas Corporate Center I, LP

Manager: Brookfield Properties

Manager: Piedmont Office Management

Atlanta, Ga.

Pittsburgh, Penn.

Owner: Concourse IV Associates

Manager: Grubb & Ellis Management Services

Manager: Cousins Properties Services

Owner: Genesis Capital Partners XVII, LP

Bridgeside Point Owner: Inland American Office Management

San Francisco, Calif.

Manager: Cousins Properties Services, LLC

Irving, Texas

New York, N.Y.

Granite Tower @ 290 Houston, Texas Owner: NWX Partners Ltd. Manager: Granite Properties

Continued on page 46

July/August 2010 BOMA

conference connection

Lincoln Plaza

Park Central 8

Three WestLake

U.S. Bank Plaza

Dallas, Texas

Houston, Texas

St. Louis, Mo.

Owner: California State Teachers Retirement System

Owner: Parmenter Park Central, LP

Owner: WestLake Three Tenant LLC

Owner: U.S. Bank

Manager: CB Richard Ellis

Manager: Parmenter Realty Partners

Manager: Stream Realty Partners - Houston

Park Central 9

Two Forest Plaza

Dallas, Texas

Manager: Transwestern

Owner: Parmenter Park Central, LP

Owner: Parmenter Two Forest Plaza, LP

Manhattan Towers

Manager: Parmenter Realty Partners

Pennzoil Place

Two Riverway

Houston, Texas

Owner: Metropolis Investments Holding, Inc.

Owner: Two Riverway Holdings, LLC

Manager: Transwestern

Manager: Stream Realty

MacArthur Plaza Irving, Texas Owner: Falcon Southwest

Manhattan Beach, Calif. Owner: Wells REIT II Manhattan Towers Manager: Piedmont Office Management

Metro Center - 535 Costa Mesa, Calif. Owner: RREEF America REIT II Corp, CCCC Manager: Transwestern

Lenox Park Building A

Metro Center - 555

Memphis, Tenn.

Costa Mesa, Calif.

Owner: Grubb & Ellis Realty Investors, LLC and Tenants in Common

Owner: RREEF America REIT II Corp CCCC

Manager: Grubb & Ellis Management Services, Inc.

Lenox Park Building B Memphis, Tenn.

Manager: Transwestern

Metro Center - 575 Costa Mesa, Calif. Owner: RREEF America REIT II Corp CCCC

Owner: Grubb & Ellis Realty Investors, LLC and Tenants in Common

Manager: Transwestern

Manager: Grubb & Ellis Management Services, Inc.

New York, N.Y.

Lenox Park Building C Memphis, Tenn. Owner: Grubb & Ellis Realty Investors, LLC. and Tenants in Common Manager: Grubb & Ellis Management Services, Inc.

Lenox Park Building D

One Liberty Plaza Owner: Brookfield Properties Manager: Brookfield Properties

One New York Plaza New York, N.Y. Owner: Brookfield Properties

Memphis, Tenn.

Manager: Brookfield Properties

Owner: Grubb & Ellis Realty Investors, LLC. and Tenants in Common

One World Financial Center

Manager: Grubb & Ellis Management Services, Inc.

New York, N.Y.

Lenox Park Building E

Owner: Brookfield Properties One WFC Co. LLC

Memphis, Tenn.

Manager: Brookfield

Owner: Grubb & Ellis Realty Investors, LLC. and Tenants in Common

Paces West

Manager: Grubb & Ellis Management Services, Inc

Owner: Behringer Harvard

Lenox Park Building F Memphis, Tenn. Owner: Grubb & Ellis Realty Investors, LLC. and Tenants in Common Manager: Grubb & Ellis Management Services, Inc

Atlanta, Ga. Manager: Behringer Harvard

Park Central 7 Dallas, Texas Owner: Parmenter Park Central, LP Manager: Parmenter Realty Partners

BOMA July/August 2010

Manager: Cassidy Turley

Westwood Corporate Center Orlando, Fla. Owner: Manulife Financial Manager: Manulife Financial

Xerox Centre Santa Ana, Calif. Owner: 1851 East First Street Investors, LLC Manager: PM Realty Group

Ralph H. Metcalfe Federal Building Chicago, Ill. Owner: General Services Administration Manager: General Services Administration

Republic Plaza Denver, Colo. Owner: Brookfield Republic Plaza LLC Manager: Brookfield Properties Colorado LLC

Resurgens Plaza Atlanta, Ga. Owner: Behringer Harvard Manager: Behringer Harvard

Riverwood 100 Atlanta, Ga.

Good News for BOMA 360 Applicants

Missed the EER® Deadline? No Problem. Participation in BOMA’s annual Experience Exchange Report (EER®) survey is required for all BOMA 360 applicants. But if you missed this year’s EER survey deadline, you can still submit your BOMA 360 application. BOMA will review your application but will delay conferring the BOMA 360 designation until you complete the next EER survey. This will ensure that confirmation of your designation will not be delayed once you complete the next EER survey. Or, if you participated in IREM’s most recent office survey, you can claim that in lieu of the EER survey for the initial application. Your application will be reviewed and the 360 designation confirmed without any delay.

Owner: Riverwood 100 VAF, LLC Manager: Fifth Street Management

Robert A. Grant Federal Building & U.S. Courthouse South Bend, Ind. Owner: U.S. General Services Administration Manager: U.S. General Services Administration

San Jose Campus San Jose, Calif. Owner: Adobe Systems Incorporated Manager: Cushman and Wakefield

The Orrick Building San Francisco, Calif. Owner: 405 Howard LLC Manager: Ashforth Pacific of California

For more information on the BOMA 360 Performance Program, visit www.boma.org/ getinvolved/boma360.

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The interactive downloadable formats include hyperlinks, expanded definitions and many full-color illustrations.

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