Property Management: On the Front Lines

By Paul Rosta

Despite 10 Years of Advances in Emergency Preparation, Managers Seek Further Gains, More Tenant Involvement

The terrorist attacks on the World Trade Center and the Pentagon 10 years ago this month challenged many long-held assumptions of property managers and their clients. Procedures for familiar events like weather emergencies, fire and blackouts were already part of the standard procedures, but the attacks brought home the dangers from newer threats like terrorism and cyber-sabotage.

“I think it raised the existing awareness to another level,” said Richard Muhlebach, a senior managing director for Kennedy-Wilson L.L.C. who has a longtime interest in emergency preparation and helped develop Before Disaster Strikes, a manual originally published in 1989 by the Institute of Real Estate Management. As a case in point of the continual evolution of thinking on the topic, the next edition of Before Disaster Strikes will include a complementary chapter on emergency response when it is issued next year.

Some senior professionals contend that Sept. 11 expanded the real estate manager’s role to include greater responsibility for emergency response planning. Today’s challenge is to be ready for dangers that range from hurricanes to cyber-sabotage. New attention to business continuity preparation has become part of the best practices. Setting the stage for the more sophisticated strategy has been the gradual improvement in cooperation and information-sharing between government agencies and the commercial real estate sector.

Many sophisticated companies have appointed an executive as a roving ambassador to government agencies to provide perspective on potential impacts of an emergency on the industry and to glean insights into preparedness. A recent addition to the ranks of those professionals is security industry veteran Mark Anderson, who will serve Jones Lang LaSalle Inc. in that capacity from the firm’s U.S. headquarters in Chicago. Government agencies, in turn, have done their part to improve ties to commercial real estate and other industries. The Federal Emergency Management Agency, for instance, “overhauled itself to align itself more closely with the private sector,” explained Joseph Donovan, senior vice president for Beacon Capital Partners, who oversees emergency response for the Boston-based investment management company’s 30 million-square-foot portfolio and is also a vice chairman of the Real Estate Roundtable’s Homeland Security Task Force and chairman of the Building Owners and Managers Association International’s Emergency Preparedness Committee.

Besides working with first responders to deal with the immediate event, property managers and their clients have taken steps to ensure that a business keeps going in the days and weeks that follow. Business continuity has “become part of the fiduciary duties of the leaders of organizations,” noted Patrick Phillips, CEO of the Urban Land Institute. As part of a recent review of ULI’s organizational procedures, a consultant advised its leadership to add redundancy to its data network. ULI responded by bringing in a number of data service providers in order to supply backup in multiple locations. Such steps have become the norm for sophisticated professionals in an industry where information is the coin of the realm. “From a data technology standpoint, we have different locations for running our servers (and) for our data,” noted Real Estate Research Corp. CEO Ken Riggs.

In addition to responding to events in real time, emergency preparedness for properties also demands readiness to deal with the aftermath. The destruction of the Twin Towers disrupted operations for countless companies located in the area surrounding the World Trade Center site itself. In this respect, the Sept. 11 attacks have further broadened thinking about business continuity. Stakeholders in this area should pay particular attention to the key services that support commercial real estate, like energy, telecommunications, water and emergency services. “If you don’t have any one of these, you’re out of business,” Donovan noted.

Staying on Track

Moreover, planning by property managers and owners must encompass events beyond their own shops. Emergency procedures should also account for incidents that affect neighboring buildings, Donovan noted. Since the ability for a building and its occupants to keep operating after an emergency depends on functioning service providers, property managers should also weigh reliability and strength in numbers as part of the criteria for hiring janitorial companies, security firms or any other vendor that provides vital everyday services. He strongly advises investigating the vendor’s own business continuity plans. “When you’re hiring a contractor, you should be asking yourself, ‘Is this a company that you can lean on in an emergency?’” The ability to continue operating in an emergency, and to bring in additional people when needed, is a strong plus for those front-line vendors.

Despite these property management advances that shore up the commercial real estate sector against disruption, however, room for improvement remains. Sometimes, inattention to detail hampers the response to events. A failure to communicate is frequently the culprit. Not long ago, a sprinkler line broke in an office building occupied by a client of Circumspex L.L.C., a Pittsburgh-based firm specializing in risk management and business continuity. As emergencies go, the problem in itself should have been relatively minor.

But the client unwittingly compounded the difficulty of handling the situation. After moving into the building, the tenant had relocated its servers without telling the on-site manager, explained Circumspex partner Debbie Mistick. Since server rooms typically require a higher level of access than other parts of an office suite, the troubleshooters were delayed in getting to the area. As a result, the broken sprinkler had more time to inflict damage on the client’s equipment and raised repair costs, Mistick explained.

Such incidents indicate that emergency preparation can still be hit-and-miss. Predictably, perhaps, the passage of time has taken the edge off preparation. “Sept. 11 was a long time ago,” Mistick contended. “I think we’ve gotten lazy again.” Too many owners, she charges, increase their risks by dragging their feet about developing an emergency-response program. “It’s not an emergency until it is, and there are so many things that compete for attention.” Technology, too, is an area where upgrades will help expedite emergency response, Mistick argued: “It’s really time for managers to get rid of the binders on their desks.”

Team Effort

Executives insist there has been progress in making emergency response a team effort. To begin with, they say, service providers are developing a framework for a regular exchange of ideas. In 2004, Jones Lang LaSalle introduced a proprietary Web-based emergency management platform dubbed Foresight. The tool spells out procedures for the firm’s property managers to follow in the case of extreme weather hazards, bomb threats and other situations.

The platform also incorporates tabletop exercises of a kind that have gained traction in the past 10 years. Through role-playing drills, the engineering staff and tenants alike can practice how to respond to actual events. “Everybody not only understands what their role is but how their role can be refined to be more active or more proactive,” explained Jeff Johnson, COO of property management services for Jones Lang LaSalle and a member of the Real Estate Roundtable’s Homeland Security Task Force.

Strategies like this have gone a long way toward creating teamwork among stakeholders, yet room for improvement exists. One area with room for improvement, Johnson said, is participation by tenants in emergency preparation. “It’s all about participation, it’s all about communication, it’s all about understanding what one another does,” he said. “Ask the tough questions of your manager, or your owner, or your tenant, so you can understand how to respond in a crisis or to an everyday problem.”