Browse Month: July 2011

Revenue Management for Today and Tomorrow

 

Guest Blog Post by IREM staff memberJoel Felix, Senior Curriculum Developer from the Institute of Real Estate Management (IREM).

Revenue management system-based pricing, once reserved for the biggest real estate management companies, has become an increasingly common strategy to establishing apartment rental rates. The basic principle of revenue management has been around for decades: to produce the highest possible yield of revenue. What’s notable today is the growth in implementation of modeled revenue management data lease strategy.

Knowing the real-time forecasting of demand for apartments in a given market is the essence of revenue management. Profits are optimized when leasing strategies are adjusted by not only supply, but by the buying characteristics of specific consumer profiles. For example, business travelers have less flexibility in travel plans than other travelers. The customer with less flexibility is likely to pay a higher price for the flights and hotels than other customers. Having the data at hand to determine the highest-yielding price in apartment leasing situations already  implemented in leasing offices of larger management firms.  Vendors such as Rainmaker Multifamily, Yardi, YieldStar™, RentRoll™, and AMSI deliver suggested rent prices to property managers by weighing some or all of the following factors: Seasonality, recent demand level, lease application lead times, traffic, lease lengths, concessions, incentives for renewal, and future supply.

Revenue management is both a pricing strategy and a lease administration method. The cost of implementing this strategy has become increasingly approachable for companies with mid-size and smaller portfolios. The impact of wider use of revenue management data is that activities of the leasing office, and the skill sets required for on-site staff, are changing in the multifamily industry. And with change, as ever, comes resistance to change. Many onsite managers may still be resistant to revising their leasing plans based on suggestions from a data-driven model. Many others resist for another reason: property owners may not want to invest in the data without seeing research that proves return on investment.

Despite these resistances, the market of revenue management products is exploding. Is it only a matter of time before the skeptics sign on and present the case for investment in data? And is only a matter of time before revenue management jumps the divide to office and retail leasing? How would access to sophisticated real-time data modeling affect the negotiation between real estate brokers and the office/retail space manager? If the most favorable deal goes to the one with the most data, the future for all lease deals could be data-driven.

 

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Six Ways REALTORS® Can Save Money

Are you a REALTOR® and looking to spend less right now?  Here’s a helpful list for you of ways that NAR saves you money!

  1. CCIM‘s Intro to Commercial Real Estate Investing Course
    Members can save 50%!
  2. IREM‘s Intro to Property Management Course
    Members can save $40!
  3. STDB Online Lite
    Members can get a trial version for FREE!
  4. CREW Convention & Marketplace
    Members can register at the CREW Member rate for this upcoming event, a tremendous savings!
  5. RealShare Conferences
    Members can save $50 on registration at an upcoming RealShare Regional Conference!

Notice a trend here?  While commercial real estate specific, these are just a handful of all things that REALTORS(R) can save money on.  Get the complete details and the special promo codes on these savings, at NAR Commercial Offers and Savings.

In addition, as a REALTOR® you have access to many more discounts through the REALTOR Benefits® Program.   Whether you need a Professional Development Line of Credit from REALTORS® Federal Credit Union, are looking to save money on your shipping costs through FedEx, or want to get a great deal on a rental car through a partner like Avis, Budget or Hertz –  the REALTOR Benefits® Program has got you covered.   Take full advantage of the value your NAR membership offers you!

Latest Commercial Advocacy Timeline

You probably don’t look at your insurance policies more than once a year unless there is an incident.  Here is one insurance policy that you need to read monthly because the stakes continue to rise each moment that passes in Washington with the potential of a debt crisis looming.

NAR Commercial produces the Commercial Advocacy Timeline each month to keep you up-to-date on what NAR Commercial is doing on the front-lines everyday to protect your business and property rights.  This timeline is updated by a full-time team member, Vijay Yadlapati, in our DC offices.  He is tasked with keeping abreast every day on legislation and regulations impacting commercial real estate.  He in turn communicates with NAR Commercial leadership, NAR lobbyists, industry coalition members, congressional and agency staff about REALTOR® positions, your positions, on these issues.  Needless to say, he’s really, really busy.

We also recommend that you sign up for the Washington Report, also updated by Vijay.  Provided weekly by NAR Government Affairs, it is a concise snapshot of the week’s news from the Hill and REALTOR® Involvement

Besides all of the letters, testimony, and timelines Vijay writes, he is also available, schedule allowing, to speak at your next REALTOR® association meeting about all of these issues related to commercial real estate.  Contact the NAR Commercial Signature Series Speakers Bureau at 312-329-8484 to inquire about his availability.

 

 

Crisis Control a.k.a Protecting Your Company’s Reputation

 Guest Blog Post by Mariana Toscas Nowak, Editor of the Journal of Property Management (JPM®) from the Institute of Real Estate Management (IREM).

 

Did you know that your company’s reputation could go up in smoke in hours, or even seconds?

While you can’t affect the outcome of a disaster, you do have the opportunity to take control of communications regarding the event—potentially minimizing damage to an owners’ or managers’ reputation (not to mention your own).

Crises of all kinds—whether shootings, hurricanes, pandemic outbreaks, terrorist attacks, or all-too-common emergencies, like power outages, microwave fires, elevator malfunctions or petty thefts—are inevitable in places where people live, work and shop. Preparation is your best defense.   Here are some pointers to keep you calm when disaster strikes:

HAVE A PLAN:
A crisis communication plan should identify:

  • Who makes up the crisis communication team;  
  • Who is responsible for what;
  • Who may speak to the press, and under what circumstances;
  • A strategy for handling the press;
  • Potential disastrous scenarios that could affect a property; and
  • Possible written or verbal responses to those scenarios.

Read more about developing an emergency procedures manual in the publication Before Disaster Strikes, 3rd edition.

 

COVER ALL THE BASES:
Stick to the facts. Company statements need to be transparent, accurate and compassionate. Making sure all stakeholders—tenants, vendors and regulators—have all the relevant information in any crisis is key.

STREAMLINE YOUR MESSAGE:
Develop key messages and phrasing to pass along, and then centralize those messages by relaying them through one source or spokesperson. Don’t identify your messages on the fly; get a firm grasp on what your clients’ expectations are in advance so you’re prepared.

COMMUNICATE SWIFTLY:
Use all means necessary—phone, e-mail, Facebook, twitter and instant message—to ensure prompt delivery of information to stakeholders and tenants. Streamline delivery of these messages by using automated emergency notification systems that can reach large numbers of individuals instantly and simultaneously.

Find out how Japanese property managers turned to mobile technology during the Great-Quake Tsunami.

STAY IN CONTROL:
Don’t leave your reputation in the hands of other people. Be prompt and informational when communicating about a crisis situation. Seize control of the facts before rumor and innuendo fill the gap.

Read on about “Crisis Communication” in the May/Jun issue of JPM®.

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Flexibilty – 5 Areas to Exercise For Your Business

I’m a runner.   Well, not a fast, enthusiastic runner, but I make the effort to do my best and always make forward progress.  One foot in front of the other, right?

One thing that I struggle with is taking the time to stretch before and after I run.    It’s a simple thing, yet I tend to find myself more focused on getting the run over with – instead of taking the time to prepare my muscles and then take care of them afterwards.    I’ve experienced the negative results that can come from not stretching properly – shin splints, pulled muscles, etc….PAIN.   What I have come to learn is that the practice of stretching is critical to my continued success and strengthening as a runner.

Similarly, in business – and especially in today’s economy – the need to stretch and improve professional flexibility is extremely important.   

I was inspired as I listened to our Signature Series Speaker Marsha Petrie Sue, in her Flexibilty Factor webinar that she recorded for us.   She talks about the “Flexibility Five” she came up with – and how this can help streamline focus and help someone improve their ability to adjust with the challenges, obstacles and managing yourself in the process. 

Here’s a brief recap:

1. Change Your Thinking – You can CHOOSE to have resonance or dissonance.   If you choose resonance, you opt to look for the positive in everything.     Negativity can wear down those around you.

2. Customer Service –  Be detail oriented and focused on the human interaction. Clients are more demanding today than ever, because they have choices.   It’s critical to focus on customer engagement.

3. Exceed Client Expectations –  Build the best team you can have, be the most responsive you can be…but stay balanced.

4. It’s All About Them – Develop discipline, hone negotiating skills, build confidence,  work on financial skills…but keep perspective.    Focus on your clients and what they are experiencing.

5. Leverage Technology –  Learn new applications and leverage yourself through social network engagement opportunities

 

So take a little time for to work on yourself, and don’t forget to stretch – I’ll see you at the finish line.

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Overwhelmed? Strategic Planning for Your Life

“Being overwhelmed is as beneficial as doing nothing.”

–          Eric Boles, Fearless Focus

It is really easy to be overwhelmed in today’s workplace. In the aftermath of a recession coupled with the ongoing necessity to produce more with less, you would be in the company of many if you feel overwhelmed. In a recent NAR Commercial Webinar, we heard from Eric Boles, a REALTOR® Signature Series Speaker, and President of the Game Changers, Inc., suggests considering the 80/20 rule to assess your priorities. What priorities fall in the top 20% of your priority list? And how much energy are you devoting to those top priorities?

Eric’s webinar resonated with me on a very personal level – in addition to working for the National Association of REALTORS®, I am also pursuing a Master’s Degree in Non-Profit management. In order to be successful in both work and academics, the necessity to prioritize has become exceptionally crucial. There are a lot of late nights full of angst – but I have to remind myself with the above quote – being overwhelmed will only slow you down and make it impossible to achieve your goals. In order to be successful, you have to outline your priorities and then work to discipline yourself to focus on those priorities.

This session forced me to really examine how I was approaching my academics – why was I so anxiety ridden? I was meeting my deadlines and making straight A’s; why should I be so worried about my progress? Then it dawned on me – I needed to start making myself and my academic career my TOP priority outside of work. I was spending too much time outside of work with social distractions, rather than my academic goals. So, I started a calendar, which I now share with my family and friends so they can see that at certain times, I am focused on academics and shouldn’t be disturbed. As a result, my weeknights are more productive in terms of school and my weekends can be spent running errands, socializing with friends and enjoying time away from work and school.

So, I’m wondering – What adjustments have you made in your business to prioritize and focus your attention on the top 20% of your priority list?  Post a comment and let us know!

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Are we headed for inflation or deflation?

The following guest post is by REALTORS(R) Signature Series Speaker Rob Nahigian, FRICS, SIOR, CRE.

As we focus on the third quarter of 2011, we are faced each day with investment decisions based on projections. Where is the economy headed for the remainder of 2011 or for the next 5 years? Are we headed into inflation or deflation? Are interest rates going to rise or fall?

I recently posed similar types of questions to members of the Charleston Trident Association of REALTORS® during their Commercial Education Program – with opinions differing across the room.  After mixed responses from the audience, I offered my thoughts, along with those of well-respected industry experts.   I let them know that I am in the midst of reading “The Age of Deleveraging” by Dr. Gary Shilling. Shilling’s outlook on inflation is quite bearish.  Shilling feels that the U.S. consumer, after 30 years of spending, is now ready to pay off the bills and “stash the cash.” He also feels that Governments cannot afford to spend more money either.

Commercial real estate professionals must think like economists because investors do!  I believe that in the very near future it is becoming evident that we will see immediate inflation. These 5 listed issues below will help influence your answer this summer.

  1. The market’s reaction after the end of QE 2 on June 30th. The M2 Money Supply is already starting to shrink. Will interest rates increase dramatically, slowly or nominally?
  2. The proposed Risk Retention Rules would require that CMBS issuers hold at least 5% of the credit risk of any loan as part of the pool. Lenders could curtail financing or dramatically increase interest rates.
  3. Trillions of dollars of CMBS financing is coming due and KC Conway, CRE has stated that the CMBS debt will break the dam during 2011 with new defaults (and foreclosures?). Will this cause deflation of real estate pricing?
  4. The Federal Debt Ceiling: will the Feds vote to increase it? If not, interest rates will skyrocket.
  5. Greece and its debt and the impact on the German bondholders. Can Greece really pay off these loans?  I am suspicious.

Bob Rodriguez, the successful fund manager of FPA Capital Stock was interviewed in the June, 2011 Money Magazine article. In early 2007 he felt that the housing debt would be a crisis and he had worried then about the federal debt. He took a sabbatical in 2010 and now observes “I would say a lot of nothing has changed. Investors are still chasing after high yields and loading up on risky investments. Very little has been learned. At best, we’re facing a substandard recovery.”

We cannot spend our way out of this mess without some repercussions years down the road. We need economic encouragement that investing in real estate and other assets will not result in penalties as well. The long-term capital gain tax rate will expire in 2 years and I anticipate a flurry of activity. But I would be fooling myself in not admitting that this recovery will be slow and will need 4 more years to recover. But the question, are we headed into inflation or deflation? We may need the summer to see how matters settle out.

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Do You Know Your IEQ?

Guest Blog Post by Mariana Toscas Nowak, Editor of the Journal of Property Management (JPM®) from the Institute of Real Estate Management (IREM).

Did you know that making improvements to the indoor environment quality (IEQ) of the buildings you manage can enhance the health, productivity and profitability of the office environment—increasing tenant productivity by almost 40 work hours per week?

A healthier and happier work environment has been shown to boost employee productivity while reducing absenteeism, insurance premiums and recruitment costs (since employee turnover decreases). A little goes a long way.

Consider suggesting the following low- and no-cost improvement ideas to tenants:

  • Rearrange office cubicles to increase daylight exposure;
  • Install efficient lighting (or simply remove fluorescent lighting);
  • Maintain low humidity levels;
  • Add artwork and photos (consider DIY projects to save money);
  • Paint office walls with zero-VOC paint (green and has been proven to promote peace and calm, while yellow can improve memory and concentration); and
  • Add wall mirrors or create interior openings to give a sense of space.

Increasing the IEQ of the buildings you manage makes tenants happier, lowers costs, leads to higher NOI and ultimately increases asset value—at little to no extra cost to your tenant!

Read more about IEQ improvements in “Do You Know Your EIQ?” from the May/Jun issue of JPM®.

 

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