WILL BE IMPROVED,
With the ushering in of a new political
era in 2017, the winds of uncertainty have
been constantly blowing. Even the best political pundits and Wall Street analysts do not
know with any certainty whether there will be tax
reforms, changes in the Federal Reserve’s leadership or any other alterations to the structure of our
financial systems. As a battle-scarred veteran of
this industry, I remember too well the incentives
that were built into the real estate business in the
early 1980s by the Reagan administration, only
for them to be taken away by the same administration just a few years later. With that came a
long road to real estate recovery.
We often look at sustainability as a means to become more economical and save money for property management businesses. It’s true, many so-called green initiatives eventually have positive
benefits on properties in the long run. But these
initiatives don’t have to operate in a vacuum of
green. They can be supported by conventional
systems that are already in place but whose efficiencies are improved, allowing for savings that
can then be invested in sustainability efforts or
realized as profit.
My forecast is that we will see an increasing
sensitivity to operational excellence, and sustainability will enjoy measurable benefits as a result.
Even though much of the real estate industry is
becoming commoditized, there will be a clear
focus on enhancing income from existing mechanisms. For example, lease administration will become more scrutinized as owners and managers
recognize the opportunities that currently exist in
the agreements with residents and tenants in the
various food groups of real estate. Everyone will
win; buildings will be improved, sustainability will
increase, resource consumption will decrease and
the byproduct will be that less money goes towards
utility companies and instead goes back into the
pockets of real estate owners and tenants with
more efficient buildings that have increased value.
SOLID AND STEADY
As IREM members and industry professionals, we
are the marathoners of the business. The sprinters
will come and go, but we will survive and thrive
just as well-located, properly built and responsibly managed buildings do through terrible storms
and challenging economic times.
During periods of uncertainty, sometimes it’s
best to work with what you have and focus on
making it better. I believe 2018 can bring with it a
newfound optimism for enhancing sustainability
while improving buildings with the funding and
financing needed coming from existing rental
streams that are viewed and administered with an
eye on creating benefits for everyone.
CHECK YOUR MECHANISMS
· Take a fresh look at the leases and their structures in your commercial and residential buildings.
Many opportunities exist that will benefit ownership and occupants.
· Look at the CAM spreadsheets and formulas you use, and be more cautious to understand the
base years, escalations and various other capital recovery clauses in your leases.
· When budgeting, look at the downstream financial benefits and value-adds beyond just the simple
payback periods—and be ready to make the business case to package and sell these benefits to
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