2009 May | MHN Blog

‘Editor’s Notebook’ with Diana Mosher: Phoenix Light Rail Opens up New Possibilities

"Editor's Notebook" with Diana Mosher 2 Responses »

May 112009

The next time you’re in Phoenix, I highly recommend taking a ride on the newly opened light rail. Whether your niche involves marketing apartment communities, financing them or building them (or, like me, reporting on them) I’d say checking out public transportation options from time to time is a no-brainer. It’s interesting to see the backbone of future transit-oriented development in action.

I didn’t intend to research the Metro Light Rail ($2.50 for a day pass) while in Phoenix for the NAA’s green conference, but it turned out that my hotel was much closer to the airport than to downtown. Also, I thought the train would save me lots of time—it did, but first I had to get myself to the light rail. This meant catching a ride with the hotel shuttle, and aligning myself to its schedule.

Needless to say, I just took an expensive taxi back from the convention center that evening. As the Urban Land Institute points out in its “10 principles for Successful Development Around Transit,” TOD is a great idea, but it can be challenging to get people to ride transit.

Overall, my experience drove home the reality that while some cities are made for driving, it’s also true that many more of us could develop an appetite for public transportation if it’s fast, inexpensive, and stops at ALL the places we need to go.

The Metro Light Rail describes itself as “a great way to get to work, school, shopping and events in Phoenix, Tempe and Mesa.”

The city of Phoenix has initiated a Station Area Planning Program in support of transit-oriented development (TOD) around light rail stations. Local residents, business owners, and community groups are encouraged to improve the connectivity of their neighborhood’s light rail system by becoming involved. They’ve been invited to submit plans to identify opportunities for new development.

However, as Eugene Gilligan, senior editor, Commercial Property News, reports, “In the near term, development along the light rail corridor is likely to be subdued due to the credit crisis and the economic recession. But there’s a silver lining. The slowdown in the development cycle,” will mean more time that can be used for planning purposes. Click here to read his story, “As Phoenix Light Rail Debuts, Will T.O.D. Get on Track?”

(Diana Mosher is Editor in Chief of MHN. You can contact her at Diana.Mosher@nielsen.com).

‘The Green Picture’ with Erika Schnitzer: Enforcing an Energy-Efficient Building Environment

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May 072009

What’s everywhere, practically invisible and costs $15 billion each year?

Energy in New York City buildings!

New York City Mayor Mike Bloomberg, along with Council Speaker Christine Quinn, recently announced plans to reduce greenhouse gas emissions from existing residential, commercial and government buildings.

As MHN has reported, the proposed legislation is aimed at encouraging developers to meet tougher energy requirements any time they renovate, to conduct an energy audit every 10 years, and to make energy improvements that will pay for themselves within five years. (Click here to read MHN’s story.) According to the city, the energy improvements could save property owners $750 million a year—assuming they upgrade everything from their lighting systems to boilers. (Click here to read the proposal.)

This is the first measure of its kind in the United States—but hopefully not the last.

I recently spoke with Nancy Biberman, president of WHEDCo (Women’s Housing and Economic Development Corporation) about Mayor Bloomberg’s plan. Biberman certainly knows her stuff about energy retrofits—for the past three years, the organization has been working on the retrofit of Urban Horizons, a 10-story, 132-unit community that also includes 40,000 sq. ft. of program space, a 4,000-sq.-ft. commercial kitchen, health care facility, classrooms and administrative offices. (Click here for more information about WHEDCo’s Energy Retrofit Initiatives.)

Though certainly happy about the changes Bloomberg is proposing, Biberman is concerned about enforcement. She tells me that, from the bills she’s seen, “there are no clear consequences” for building owners who don’t take Bloomberg’s proposed steps.

This got me thinking—what kind of incentives and/or penalties would be most effective for owners facing what they see as potential loss in revenue (even if it is, in fact, a short-term loss and they could actually recoup the costs in as little as five years)?

Did you know that under the Emergency Economic Stabilization Act of 2008, developers can deduct up to $1.80 per sq. ft. for buildings that achieve at least a 50 percent energy savings target (through energy and power cost reductions for the building’s heating, cooling, ventilation, hot water and interior lighting systems)? This deduction is now available through the end of 2013. (Click here for a break down in tax credits.)

FYI, the New York Chapter of the USGBC will be hosting a symposium tomorrow, May 7, with Rohit Aggarwala, director of the Mayor’s Office of Long Term Planning and Sustainability, to discuss the plan’s details. (Click here for details.)

What do you think? What incentives and/or penalties do you think should be incorporated into Mayor Bloomberg’s plan to make it most effective?

(You can contact Erika Schnitzer at Erika.Schnitzer@nielsen.com)

‘Editor’s Notebook’ with Diana Mosher: Can Social Responsibility Increase NOI?

"Editor's Notebook" with Diana Mosher 2 Responses »

May 062009

The debate continues about whether apartment residents will pay more for green living, but c learly demand is growing within certain demographics and interest is quickly spreading to others. And it’s on all of our minds. Recently NMHC’s Kim Duty shared an interesting article “Green Renting: Tenants Desire Eco-Friendly Digs” with members of our newly launched MHN Forum at LinkedIn.

In the meantime, the number of properties offering a nod to green living keeps growing. So much so that the National Apartment Association hosted a new niche conference devoted to this topic last w eek.

One attendee, a small property owner who wished to remain unidentified, lamented that green is still so subject to interpretation. “I was hoping there might be a magic template but we’re still not there yet,” he told me. “The industry is still evolving. [Green] hasn’t translated in increases on the revenue side yet; but, if we manage expenses better, we can derive a benefit.”

He also thinks that once the multifamily projects now in the construction pipeline are finished, we’ll see a two-year drought. This will be a time when owners of existing buildings will ramp up their gr een initiatives. “This will one day result in an industry baseline for existing multifamily buildings,” he said.

As the methods for measuring green continue to unfold, it will become obvious that putting your most environmentally conscious foot forward may already be a part of doing business these days. Especially when the apartment community across the street is already doing so—or plans to in the near future. Do a Google for “green apartments” and see what comes up. Websites like Low Impact Living are catering to green apartment consumers.

The good news is that there are easy and inexpensive ways for apartment owners and their teams to reduce their carbon footprints and offer a healthier living experience.

At the green conference in Phoenix, Heather Kreitz, Vice President, Energy Advisory Service, presented a slew of creative ideas (as well as their marketing value) at “Going Green and Increasing NOI.” For example:

• Close the deal by providing incoming residents with moving boxes; recycle these and re-use for the next move
• Use environmentally friendly cleaning products
• On a larger scale, choose renewable energy sources.

Click here for my VIDEO interview with Heather as well as a conversation with James Brew, Rocky Mountain Institute.

But keep in mind that all the green measures in the world will do little to attract new business if you don’t get the word out to prospects. Make sure they know that you’ve switched to low-VOC paint, that your plumbing fixtures use less water and that you’ve installed Energy Star appliances. Create a “Green Strategy” document and give it the visibility it deserves. From a marketing standpoint, Kreitz compares today’s apartment community’s green attributes to yesterday’s community pool or fitness center. It’s a great closing tool and your leasing agents will thank you.

(You can contact Diana Mosher at Diana.Mosher@nielsen.com)

‘Gimme Shelter’ with Daniel Gehman: Just Wait

"Gimme Shelter" with Daniel Gehman, Harley Ellis Devereaux No Responses »

May 052009

Ah, it’s the last day of my (brief) “staycation.” I’m sure you can relate to the idea of having a huge list of things to do and only accomplishing a few of them. How does this happen?

The simple answer is that those of us who plan to do things are in a select group—those always thinking ahead of the next thing(s) to accomplish, and laying out a plan for how they are to be done. It all sounds so easy on paper.

If your universe is parallel to mine, what you have been experiencing lately is a scrambling from one idea to the next—how you might best use this “slow” time to catch up on the many ideas you have been contemplating, and how you might bring them to fruition.

We architects are the same. Our research and development departments have been in high gear, working diligently to conjure up the “next big thing,” that will help to grease the skids of commerce and get us all rolling as it was in the “salad days.” (Does anyone remember 2005?)

What we’ve been searching for, often in conjunction with our reliable clients, or even with those new groups who have formed from the wreckage of the housing bubble, is the next avenue of unbridled success—what combination of product, approach, and process will bring us again to a position of strength and leadership in the industry? The searching, as it turns out, will certainly do us all good.

Isn’t it a wonderful thing that the fundamentals of the rental housing business will not need to be re-tooled as the American auto industry? (Well, hopefully not.) At its core, the enterprise still produces quality dwellings for a large percentage of Americans.

Every apartment provider has taken a beating over the last many months; many are waiting with “shovel-ready” products to start up when the magical mixture of lower construction costs plus months to delivery hits the catalytic nexus. Many of us believe that will occur in the third quarter of this year. That means we have only a few months to hang on until the next boom cycle gets started in earnest!

Around me I hear reports of how the demand for rental housing, especially in the most impacted markets, continues to build up. Meanwhile, of course, the development folks who have been separated from their previous gig have teamed with others of like mind to form new entities to provide this very necessary asset. Long and short, when the “orders” start rolling in with renewed vigor, they will surpass what we have experienced in the past due to sheer demand.

A wise advisor of mine counseled that on average, the lapse between the S & P 500 hitting bottom, and the employment picture changing to positive is on average nine months. I saw a Yahoo! Headline this morning that said the S & P is in plus territory; this can mean only one thing: gentlemen, start your engines!

Our firm, like everyone else, has preened and adjusted to these bitter times. But the light is on at the end of the tunnel, and I’m persuaded it’s not just another train. It’s time to cozy up to your favorite professional and start talking and drawing the future.

It’s so bright, I gotta wear shades.

(Daniel Gehman is principal at Thomas Cox Architects. He can be reached at DanielG@tca-arch.com)

‘Capital Insights’ with Jack Kern: Former Home Depot Chief Nardelli Hammers Chrysler into Bankruptcy

"The Accidental Economist" with Jack Kern 2 Responses »

May 012009

“An Army is a team. It lives, eats, sleeps, fights as a team. This individuality stuff is a bunch of bullshit.”–General George S. Patton, Jr.

Sometimes you just have to wonder how these guys keep getting the top spot. Former Home Depot Chief Bob Nardelli was well known around the orange themed retailer as a guy with organizational prowess and discipline on his mind. What became known inside the company as the Orange Crush, (with apologies to Syracuse University) the military like precision (is that an oxymoron now?) that Nardelli attempted to instill in the troops, from cashiers to counter clerks was met with derision, defecting customers, (Can you say Lowe’s?) and greatly reduced revenues. Nardelli took his parachute, probably not in the way a lot of employees would have preferred, and left.

Not too long after that, when it was obvious that every other possible candidate for Chrysler wasn’t available, they gave the job to Nardelli. It was, in a sense, the beginning of the end of the march towards the destruction of Chrysler, one of America’s founding auto makers. The company was started by Walter Chrysler in 1925 after buying out the Maxwell Motor Company. Chrysler, a very successful industrialist who, born in 1875 was around for the dawn of the era of the automobile would probably have been aghast at the thought of foreign ownership and doubly upset it was Fiat. Chrysler was born in an age yet to see two world wars, and ultimately his railroad experience and becoming a car man, an affectionate term of the times, made important strides in developing technologies we count on today.

I can’t help but feel a sense of sadness at this recent bankruptcy and fire sale to a car maker that builds vehicles that run faster in reverse than any other direction. It’s been said the best way to beat a Fiat in a race is to just wait until they try to get it started. Stories abound about how Fiat makes cars that double as boat anchors that you can always hear coming, but rarely see them leave.

I understand about the critical technologies issue, about the catastropic loss of employment and how this change in ownership, with Fiat potentially ending up with 51% will prove to have been necessary. I doubt it will be seen as a triumph for the president and certainly it will scare the United Auto Workers into submission. As a nation, we’ve gotten used to Toyotas and Hondas and foreign cars are part of the landscape of modern society. The gains in safe and efficient vehicles are astounding.

But with the loss of Chrysler, we’ve lost something dear to American history. As a company tracing its roots to the very beginning of the industrial revolution, somehow, quietly and without fanfare, an era is passing.

I’m going to take off my hat and show respect for what made Chrysler a great company, founded by a man we just don’t hear enough about anymore, and I hope you will too.

(Jack Kern is the Managing Director of Kern Investment Research, based outside of Washington, DC. He can be reached at JKern@KernIRC.com or 301.601.1900.)