The BOMA Magazine

JANUARY/FEBRUARY 2009

Leaders in Commercial Real Estate

Plus:Legislative Outlook

BAEs Tackle Economic Challenges

Enter the New Age of Benchmarking

Global Squeeze: The Financial Crisis Knows No Borders

CatRentalPower_TC_BOMAmag_NovDec1 1 10/8/2008 12:54:20 PM

January/February 2009 Volume 5, No. 1

For advertising rates and information, contact Paul Hagen at Stamats Business Media 319-364-6167.

Call for Nominations: Vice Chair, Secretary/Treasurer and Executive Committee MembersBOMA International’s Nominating Committee is seeking candidates for the position of vice chair and secretary/treasurer and for five members of the Executive Committee to the Board of Governors. For further information, please contact Bob Denney, chair, BOMA International Nominating Committee, c/o Ann Coslett, BOMA International, 1101 15th St., NW, Suite 800, Washington, D.C. 20005, telephone (202) 326-6325; fax (202) 408-2699; e-mail [email protected].

Commercial Real Estate Woes Go GlobalStephanie J. Oppenheimer, APRThe screeching halt of real estate investment is being heard around the world.

20 24

Legislative OutlookKaren W. Penafiel, CAECommercial real estate will work with a larger democratic majority in ’09.

26

BAEs Confront Economic ChallengesLindsay TiffanyLearn about the solutions that came out of the BOMA Association Executive Leadership Conference.

DEPARTMENTS

Volume 5, No.1 The BOMA Magazine Janu-ary/February 2009, (ISSN 1532-4346), Copy-right 2009. 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 202-326-6300; Fax 202-326-6377; www.boma.org. Periodicals Postage paid at Wash-ington, 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.

5

6 MESSAgE FRoM ThE ChAiRBOMA’s value proposition.

8 LEgiSLATiVE UPDATEA look back at 2008—from the TRIA extension to the passage of critical tax extenders.

10 STATE & LoCAL UPDATEPhoenix Mayor Phil Gordon gives a thumbs up to the 7-Point Challenge.

12 CoDES & STANDARDS UPDATEASHRAE restarts development of Standard 189.1 for green commercial buildings.

14 LEADiNg ThE WAyLowe Enterprises’ Joe Markling discusses strategies for driving efficiencies and his quest to make California more business friendly.

16 ARoUND ThE iNDUSTRyBOMA and Clinton Climate Initiative roll out Energy Performance Contracting Model, AlliedBarton honored, BOMA/Spokane garners 7-Point Challenge press coverage.

28 SECToR WATChMain Street, USA is reclaimed through mixed-use.

32 TRENDS TRACkERConstruction industry looks to opportunities in the face of grim forecast.

34 gREEN SCENEGreen Survey: Greening buildings a priority despite economy.

36 RESEARCh CoRNERThe new age of benchmarking is here— go online with the EER.

40 EyE oN EDUCATioNDanny ProskyAre MOBs just what the doctor ordered or should we seek a second opinion?

44 BUyERS’ gUiDEThe latest industry products and services.

46 CoNFERENCE CoNNECTioN—New! Fareed Zakaria to headline Monday general session at the BOMA International Conference in June, five reasons why you keep coming back.

6 BOMA January/February 2009

BOMA’s Value PropositionAs the new administration takes office and the 111th Con-

gress gets to work on what looks to be an aggressive first 100 days, the priority of every BOMA member is to continue to remind our leaders of the value of commercial real estate, both to small business communities and to the economy as a whole. Let’s remind them that the best way to climb out of a recession and jumpstart the economy is to create incentives

to help business owners, such as keeping capital gains taxes low; let’s remind them that real estate is a critical economic engine that pays 70 percent of local tax revenue and employs nine million Americans; and let’s remind them that the success of commercial real estate resonates well beyond our industry’s boundaries—from tenants to vendors, the impact is felt throughout Main Street.

Message froM the Chair

Richard D. Purtell, RPA

Chair and Chief Elected Officer

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., Noel Popwell

Designer: Amy Belice

Published by: Building Owners and Managers Association (BOMA) International

BOMA International OfficersChair and Chief elected officer Richard D. Purtell, RPA Grubb & Ellis Management Services, Inc. Cincinnati, Ohio

Chair-elect James A. Peck, RPA, FMA CB Richard Ellis Albuquerque, N.M.

Vice Chair Ray H. Mackey, Jr., RPA, CPM, CCIM Stream Realty Partners, LP Dallas, Texas

secretary/ treasurer David M. Stucky City of San Diego San Diego, Calif.

President and Chief operating officer Henry H. Chamberlain, CAE, APR BOMA International Washington, D.C.

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 neces-sarily reflect the opinion of BOMA International, its members or its staff.

Here are three ways you can help BOMA

remind our newly elected President

Barack Obama and legislators of com-

mercial real estate’s critical role in a

strong economy:

1. Start by taking your message straight

to state and local lawmakers. As the

Obama campaign showed us, suc-

cess begins at the grassroots level. A

groundswell starts at the bottom and

works its way up to the top.

2. Support BOMAPAC. It’s simple; if we

want to keep legislators who under-

stand and fight for commercial real

estate’s issues in office, we have to

work hard to help re-elect them.

3. Attend the National Issues Confer-

ence (NIC) in Washington, D.C.,

March 23-24. Join us on Capitol

Hill and talk one-on-one with your

senator or representative about how

commercial real estate is the back-

bone of a thriving economy.

But the value of our industry extends

beyond the strength of our advocacy

platform—it begins and ends with the

competency and success of each of you.

Having the tools and resources to not just

stay afloat but thrive in a down economy

is paramount. Bringing you those tools

is priority No. 1 for BOMA International

and BOMA local associations across the

country.

This year’s BOMA International Confer-

ence and The Office Building Show will be

our industry’s most important gathering

in years, as we come together to share

ideas and identify the solutions that will

help us grow during challenging times.

Join us in Philadelphia on June 28-30 as

we rebuild together. To do that, we have

developed our most comprehensive edu-

cational programming ever, each session

concentrated to help you enhance value

in your buildings and across your port-

folios. Knowing that budgets are tight,

we will not be raising conference prices

this year. It’s a small investment, but the

returns are immeasurable.

Value may be the most sought after

commodity in today’s market. At a time

when nearly every asset class seems to be

losing value, BOMA’s promise is to help

you retain the value in your buildings and

stay ahead of the competition.

Thank you for advancing our great

industry.

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legislative UPDate

Amid All of the election excite-ment (where the world saw voters choose Barack obama to be our next president), and against the backdrop of worsening global financial chaos, the 110th Session of congress quietly adjourned. But before they did, they passed the emergency economic Sta-bilization Act of 2008, which included the controversial financial rescue plan or “bailout” and a package of tax extend-ers, three of which were top priorities for BomA international members and the commercial real estate industry. that victory crowned the two-year ses-sion (2007-2008) that also saw passage of an extension of the federal terrorism insurance backstop program, among other things.

following is a recap of action on BomA’s key issues during the 110th Ses-sion of congress. (for a look ahead at what we expect to see in 2009 in the first year of the obama Administration, see “legislative outlook” on page 24.)

Leasehold Depreciationon oct. 3, 2008, President Bush signed

into law the emergency economic Sta-bilization Act of 2008, which included a provision to retroactively extend the 15-year depreciation timeline for lease-hold or tenant improvements for an additional two years (Jan. 1, 2008-dec. 31, 2009). leasehold improvements, also known as tenant improvements, include changes to walls, floors, ceilings, light-ing and plumbing to meet the needs of a new or existing tenant. in the com-mercial real estate marketplace, with

the average lease running from five to 10 years, such reconfigurations are commonplace.

Prior to 2004, tenant or leasehold improvements were depreciated at a rate of 1/39th per year until the improvement went “out of service.” in 2004, legislation was passed to reduce the depreciation timeline to 15 years, which more accu-rately reflected marketplace realities. this had expired on dec. 31, 2007, and its extension represents a tremendous win for BomA and the commercial real estate industry. According to the con-gressional Budget office, this legislative victory represents a savings to the com-mercial real estate industry of $500 mil-lion over two years.

Brownfields Remediation Tax Incentive

on oct. 3, 2008, President Bush signed into law the emergency economic Sta-bilization Act of 2008, which included a provision to retroactively extend the brownfields remediation deduction (expensing) for an additional two years (Jan. 1, 2008-dec. 31, 2009).

Brownfields are real property, the expansion, redevelopment or reuse of which may be complicated by the pres-ence or potential presence of a hazard-ous substance, pollutant or contami-nant. tax incentives designed to encour-age the redevelopment of brownfields sites expired on dec. 31, 2007. the two-year extension of the deduction is a win for the commercial real estate industry and for the environment. According to the congressional Budget office, this

legislative victory represents a savings to the commercial real estate industry of $600 million over two years.

Energy-Efficient Commercial Buildings

on Aug. 8, 2005, President Bush signed the energy Policy Act of 2005 into law. BomA international scored a huge victory for the real estate industry when congress agreed to include a tax deduction for energy-efficient upgrades to commercial buildings in the new law. this law was extended in legisla-tion passed in 2008 and now applies to energy-efficiency upgrades placed in service from Jan. 1, 2006-dec. 31, 2013, in both new and existing buildings (including offices, retail, warehouses, rental housing of four stories or more and municipal buildings).

Specifically, the bill provides for an accelerated deduction of up to $1.80 per square foot for energy-efficient upgrades that achieve a 50-percent reduction in annual energy cost to the user, com-pared to a base building defined by the AShRAe/ieSnA 90.1-2001 Standard. Partial credit of up to $0.60 per square foot is also available for upgrades to each of the three energy-using subsystems of the building—the lighting; the heating, cooling, ventilation and water heating systems; and the building envelope. According to the Joint committee on taxation, this legislative victory repre-sents a savings to the commercial real estate industry of $887 million over five years.

110th Congress Adjourns with Victories for Commercial Real Estate

January/February 2009 BOMA 9

Terrorism Risk Insurance Act (TRIA)

following the 9/11 terrorist attack, many owners of commercial properties were advised that their policies would not be renewed or that their new policies would exclude terror/war risks. With-out adequate insurance, it is difficult, if not impossible, to operate or acquire properties, refinance loans and to sell commercial-backed securities.

Since 9/11, BomA and our coali-tion partners in the coalition to insure Against terrorism (ciAt) have worked tirelessly to promote and implement a federal backstop program. We scored huge victories when congress passed the terrorism Risk insurance Act of 2002, and again, in late 2005, when congress voted to extend tRiA for an additional two years. on dec. 26, 2007, just days before the Act was once again set to expire, President Bush signed h.R. 2761 into law to extend the program for an additional seven years through the end of 2014.

in addition to extending the federal program, the terrorism Risk insurance Program Reauthorization Act of 2007 (tRiPRA) expands the definition of “act of terrorism” to allow the certification of acts of “domestic terrorism,” clarifies the operation of the $100 billion annual program cap and changes the manner in which the mandatory portion of post-event policyholder surcharges would be collected. it also requires the U.S. Gov-ernment Accountability office (GAo) to conduct a study of the availability and affordability of insurance coverage for nuclear, biological, chemical and radio-logical (nBcR) acts of terrorism.

National Real Estate Organizations Address Treasury on Credit Crisis

in response to growing concern for the health of the commercial real estate industry in light of recent estimates that more than $400 billion of debt will mature by the end of 2009, 12 national real estate associations, including BomA international, sent a joint letter to trea-sury Secretary henry Paulson and other key leaders detailing the urgency of the credit crisis and lack of confidence in the financial markets. the letter also recommends the treasury department and federal Reserve take several actions to stem the crisis, including the exten-sion of the term Asset-Backed Securi-ties loan facility (tAlf) to guarantee, finance or purchase highly rated, asset-backed securities collateralized by newly or recently originated commercial real estate mortgages.

the letter garnered national media attention, with stories published in The Wall Street Journal, The Washington Post, cnn and several other national and trade media outlets. BomA is help-ing coordinate media coverage, and the Real estate Roundtable held a press con-ference call on dec. 22, 2008, to provide further information to the media. dur-ing the press conference, Real estate Roundtable President and ceo Jeffrey d. deBoer stressed that the industry isn’t asking treasury to ensure financ-ing for every mortgage coming due for refinancing, but just the safest securities, which, in turn, will create leverage in the market. “We’ve talked to major players at the treasury and the federal Reserve,” said deBoer. “it’s very complicated, but

policymakers understand it and we are encountering a positive reaction. this is about preventing a bailout so credit-worthy borrowers can access the credit market.” Added deBoer, “it is critical for policymakers to announce their inten-tion to make sure credit markets func-tion so debt coming due will be able to be refinanced. We’re trying to prevent a catastrophe for the financial system and state and local governments.”

the letter was sent to Secretary Paul-son on nov. 26, 2008. Proposed solutions are expected to take at least a few months to introduce as part of a comprehensive plan. the topic will be discussed in full at the Winter Business Meeting, Jan. 16-19, 2009, in indian Wells, calif., where BomA will be discussing formal policies on an economic recovery plan.

to read the letter to Secretary Paul-son, visit BomA international at www.boma.org.

to read the 5-Point Plan to restore credit capacity for commercial real estate, visit the Real estate Roundtable at www.rer.org.

The 2009 BOMA International National Issues Conference

during the 111th Session of congress that gets under way in January, we expect to see even more legislative challenges than during the 2007-08 session. With democrats in control of the White house and increased majority in both the house of Representatives and the Senate, legislation can be expected to move much faster than in recent years (see “legislative outlook” on page 24).this means that BomA’s grassroots will need to be stronger and more proactive than ever. We need you!

the 2009 BomA international National Issues Conference (nic) is set for march 23-24, 2009, at the hyatt Regency on capitol hill in Washington, d.c. the nic provides a unique oppor-tunity for BomA members to personally take commercial real estate’s message to legislators in our nation’s capital. newly elected legislators and long-time repre-sentatives alike are seeking input from commercial real estate professionals, and this is your chance to speak out and make a difference.

Registration for the 2009 nic is now open at www.boma.org. See you in d.c.!

“The two-year extension of the brownfields remediation tax deduction represents a savings to the commercial real estate industry of $600 million over two years.”


state & local update

The 2008 elecTions proved To be a “blue” year, as democrats took both the White house, congress and achieved gains at the state level. according to the National Conference of State Legisla-tures, the results signaled a solidifying of regional power and a decline in partisan parity across the nation. democrats now control both chambers in 27 states and have strengthened their hold on the leg-islatures in the northeast (except for the

pennsylvania senate). republicans fared better in the south and took control of the oklahoma and Tennessee legisla-tures for the first time. The party gained seats in the region despite a nationwide net loss of legislative seats.

newly elected lawmakers face trying times in 2009, as the collapse of the u.s. subprime mortgage market continues to reverberate far beyond Wall street to the nation’s cities and states. as a result,

states faced a loss of income from capital gains, dividends and stock that greatly impacted government budgets. Many states, including california, called spe-cial sessions to shore up budget deficits. according to ray scheppach, executive director of the national Governors asso-ciation, state budget shortfalls could reach $80 billion in Fy 2010. state and local lawmakers will turn to higher taxes to offset these budget shortfalls, which will likely have an impact on the com-mercial real estate industry.

BoMa/Houston launches partnership with usGBc

building on its commitment to sus-tainability and energy efficiency, boMa/houston launched a partnership and industry collaboration with the hous-ton chapter of the u.s. Green build-ing council (usGbc). both organiza-tions have agreed to partner on educa-tion, training and the sharing of best practices.

economic issues to Top state and local agendas in 2009

National Conference of State Legislatures

State Legislatures Post-Election 2008

Democrat-27

Split-8

Nonpartisan

Republican-14

National Conference of State Legislatures

State Legislative Party Control Pre-Election 2008

Democrat-23

Split-12

Nonpartisan

Republican-14

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citing the need to increase awareness of green practices and promote the edu-cation of industry professionals, boMa/houston president John Kelley (of Thomas properties Group) comments, “This is indeed a win/win partnership for both organizations. The usGbc is recognized nationwide as the expert in promoting leed® and developing green building practices. boMa/hous-ton and its members have been strong proponents of the epa ‘s enerGy sTar® program and feel strongly in advocat-ing green practices for commercial buildings.”

earlier this year, boMa/houston announced its support of boMa inter-national’s 7-point challenge, an indus-try-wide effort to reduce energy con-sumption in commercial buildings by 30 percent by 2012.

“usGbc is committed to reaching as large a support base as possible. This means it is critical for us to be able to build solid collaborations with other like-minded organizations,” says lora-Marie bernard, executive director of usGbc-houston. “boMa/houston is clearly

one of the most important examples of this relationship, on both the local and national levels. The organization’s com-mitment to sustainable practices and its membership base makes it a unique fit that we hope to nurture over the com-ing years.”

phoenix Mayor endorses BoMa International’s 7-point challenge

phoenix Mayor phil Gordon recently endorsed boMa international’s 7-point challenge in recognition of commercial real estate’s and boMa/Greater phoe-nix’s commitment to sustainability. boMa/Greater phoenix has been at the forefront of advocating cre’s efforts to decrease energy consumption in the state, and it was one of the first boMa local associations to endorse the 7-point challenge.

“as a pioneer in energy, water and natural resource conservation, phoenix

is dedicated to the spirit of the boMa 7-point challenge,” says Mayor Gordon. “We encourage our private-sector part-ners to join us in this effort to create a better phoenix and to meet the 7-point challenge.”

phoenix has been a leader in energy efficiency since the late 1970s. it adopted a goal of achieving 15 percent of the energy used by public buildings from renewable energy sources by 2025. The city has an aggressive facility energy conservation program and regular build-ing systems training for operations and maintenance staff—its staff is currently completing a greenhouse gas inventory of city operations and expects to set a reduction goal later this year.

commenting on the Mayor’s endorse-ment, sue hughes, president of boMa/Greater phoenix and a property manager with Wells Fargo corporate properties Group, says, “boMa/Greater phoenix is very excited to have Mayor Gordon endorse boMa’s 7-point challenge. This means a great deal for our industry and our association as a whole.”


codes & standards update

ASHRAE And itS pARtnERS, the U.S. Green Building Council (USGBC) and the illuminating Engineering Society of north America (iESnA), have announced they will reconstitute the project committee for the development of Standard 189.1, “Stan-dard for the design of High-performance Green Buildings Except Low-Rise Residential Buildings.” According to ASHRAE, this move has been made to “…ensure that directly and materially affected parties have all appropriate opportunities to partici-pate in the development of this standard.” A new project chair will also be appointed to guide the development effort going forward.

throughout the two years the original project committee has been in place, BOMA international and several other groups have criticized the lack of representation by a host of directly impacted groups, such as building owners, while applications for committee membership by BOMA and others representing key decision-makers have consistently been rebuffed.

the move also follows the publication of two separate public review drafts and receipt of several hundred comments on each draft by BOMA and dozens of other affected groups and indi-viduals. BOMA submitted multiple comments on both public review drafts, including in each a call for the ASHRAE leader-ship to reconstitute the project committee to include those representing the most materially and directly impacted indi-viduals and groups. BOMA’s comments specifically suggested adding representatives of the building owners and managers who would be responsible for the additional costs to implement

asHrae restarts development of standard 189.1 for Green commercial Buildings

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the requirements in the standard, as well as builders and construction profession-als who would be tasked with providing the required equipment, controls and systems called for in the standard.

A call for members was issued in november, and ASHRAE hopes to announce the reconstituted commit-tee in december. BOMA has submit-ted its application for a voting seat, as have a number of other individuals and groups representing interests heretofore not included on the committee. the new committee will review the work done by the previous committee and issue a third public review draft for comment as soon as possible. depending on subsequent drafts and public comments, BOMA esti-mates that the project could produce a final standard in late 2009 or sometime in 2010.

BOMA International Reaccredited as an American National Standards Developer

BOMA recently received notice of reaccreditation by the American

national Standards institute as an AnSi standards developer. BOMA currently develops standards for the measurement of office and industrial buildings and has launched efforts to develop floor mea-surement standards for gross building area, retail and multi-residential build-ings. the Gross Building Area standard was released in late 2008, and revised editions of the office and industrial stan-dards, as well as the initial editions of the retail and multi-residential standards, are due to be rolled out in 2009.

President Bush Signs ADA Amendments Act of 2008

the AdA Amendments Act of 2008 was passed by Congress and signed into law by president Bush on Sept. 25, 2008. the stated purpose of the legislation is to provide a clear and comprehensive mandate for the elimination of discrim-ination in the disability area, and was a bi-partisan effort in both the House and Senate to roll back several Supreme Court decisions making it difficult for many employees to qualify for disability

protection. the Act broadens the defini-tion of “disability” and became effective on Jan. 1, 2009.

the new law does not require employ-ers to make changes in hiring proce-dures nor does it change the accommo-dations required by the AdA pursuant to the AdA Accessibility Guidelines. it does, however, expand the number of people potentially covered by the AdA by expanding the meaning of “major life activity” in the current AdA defi-nition of disability as “one involving a physical or mental impairment that sub-stantially limits one or more major life activities.” the Act states that, in addi-tion to activities previously defined in the AdA, “major life activity” includes the operation of a major bodily function such as the immune system, normal cell growth, digestive, bowel, bladder, neu-rological, brain, respiratory, circulatory, endocrine and reproductive functions. Such afflictions as epilepsy and diabe-tes would now specifically be covered by this Act.

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leading the way

Industry Perspectives from Joe MarklingSenior Vice President, lowe enterprises

Joe Markling is senior vice presi-dent at lowe enterprises, where he is responsible for the lowe california com-munity Fund and is the national director of asset management. He is extremely active with BoMa california and BoMa/greater los angles (gla) and, as cur-rent chairman of the board, Markling spearheaded BoMa/gla’s new strategic direction and is helping align BoMa at the local and state level. He was recently appointed to the executive committee of BoMa international as well.

how is lowe enterprises dealing with the current economic downturn?

lowe enterprises has a deep back-ground in working out distressed assets and portfolios—it was that experience that led the firm to expand into value-added real estate investing back in the early ’90s, as the strategies and skills required are so similar. We expect to see opportunities where that expertise will be highly beneficial. We also expect to see some excellent opportunities on the investment side as this cycle continues. While no one wants to see this type of

downturn in the national economy, the lowe organization has a history of pros-pering during trying economic times.

We’ve also taken this opportunity to roll out national platforms for our asset Management, property operations and acquisitions activities, replacing our prior regional structure. this structure will leverage our best people, align skills to the activity without regard to geog-raphy, enhance knowledge sharing and allow for greater consistency in key busi-ness processes across our platform. this platform will be more efficient by staff-ing for peak loads on a national basis.

our second initiative is the imple-mentation of a shared accounting serv-ices platform. We have combined our property accounting, client reporting and corporate accounting groups into a single shared services environment. this provides greater efficiency and con-sistency and eliminates redundancies and duplication of work.

what is BOMa/gla doing to create value for CRe professionals during this time?

at the commercial real estate (cre) executive level, we are reinforcing the business proposition for BoMa, and the new part of that strategy is heav-ily weighted toward advocacy. that is the reason i am involved, and where i believe BoMa membership is accretive to my company and our investors. at the property manager level, the focus is on education. growing in knowledge not only makes managers more valuable to their existing owner, but it keeps their careers moving up. We are also target-ing vendor/associate members. We have invested a lot of time reaching out to those members, thanking them for support and finding new ways for them to get their name and proposed services in front of our members. in all areas, we are trying to break the mold of “doing it the way we have always done it”—“business as usual” is not how it’s being done anymore.

what are some of the key legislative issues/battles in California?

some have called california an “ungovernable state” because it’s hard to keep everybody happy. Business, and commercial real estate in particular, has not traditionally had a voice in policy development. i am convinced we need to proactively take a “seat at the table,” and preferably provide the resources and leadership to earn a place at the head

in all areas, we are trying to break the mold of ‘doing it the way we have always done it’—‘business as usual’ is not how it’s being done anymore.


table. otherwise, we will be subject to decisions and changes that will inevita-bly increase the cost of doing business and changes the value proposition we bring to our tenants and owners com-pared to competitive locations. that will not be good for california. i’m encour-aging other BoMa members to become active in our advocacy efforts, not just by writing a check, but by participating in meetings and having their voice heard.

energy costs and consumption is clearly a huge issue. a few years ago, BoMa california commissioned a study that was used primarily to fight rate

increases targeted at commercial build-ings. in addition, there was discussion in the legislature to require commercial buildings to reduce energy consump-tion significantly over the next few years. With this study, we were able to prove that office buildings had decreased energy usage by a significant amount over the last several years and entirely through voluntary means. Most build-ings have embraced new technology and reduced consumption because it makes good business sense. our message is: “don’t penalize us for the responsible actions we’ve already taken.”

Recruiting and retaining talent continues to be a priority for our industry. how do we get on top of this issue and what are you doing at BOMa/gla?

When you talk to non-broker cre professionals, including me, you will find that many of us “fell” into the pro-fession. today’s college grads want to be developers and brokers because those are more visible and perhaps “glamor-ous” positions. i’m big on encouraging them to look at property management as a tremendous learning opportunity that can be a stepping-stone to asset management and other opportunities in commercial real estate. Understand-ing the basics of property operations provides great credentials to move on to many other roles in this industry; a good property manager can become an asset manager, then turn around and transi-tion to a broker or developer. BoMa/gla started an internship program for undergraduates at Usc, and many of the students have been directly hired from their internship positions after gradua-tion. right now, we are identifying other colleges and universities that have dedi-cated real estate programs, so we can expand this valuable program.

the BOMa international Conference and the Office Building Show is coming to greater los angeles in 2010. what can attendees expect?

greater los angeles is a fascinating place, but it often suffers from nega-tive perceptions and gets a bad rap. i’m looking forward to showing folks how diverse, complex and exciting this city is and giving them a flavor of la from the business perspective. We are the gate-way to the pacific rim with a wonder-ful blend of business and leisure assets, multiple skylines, downtowns and busi-ness markets. and, of course, we have the best climate in the world!


Around the industry

BOMA InternAtIOnAl And the ClIntOn ClIMAte InItIAtIve (CCI) have developed the BOMA energy Per-formance Contracting (BePC) model, a pioneering model contract and sup-porting documents that allow build-ing owners and operators to execute sophisticated energy-efficiency retrofits to existing buildings. BOMA and CCI, in collaboration with major real estate companies and energy service compa-nies (eSCOs), identified the historical barriers to energy-efficiency investment in the commercial real estate sector and developed a standardized, user-friendly contracting model that allows building owners and operators to successfully exe-cute larger, more sophisticated retrofits and bring greater operational improve-ments in investment real estate.

the new BePC model revolutionizes the process by allowing capital invest-ments that improve buildings’ financial and environmental performance to be paid for out of the energy and operational savings created by those improvements. the savings are financially guaranteed by the eSCO performing the work, reduc-ing risk and enabling deeper potential investment. While energy performance contracting has been offered by eSCOs for more than two decades as a self-financing mechanism to pay for energy-efficiency retrofits and capital improve-ments, the complexity of the contracts and long timelines have impeded their widespread use in private commercial buildings. Another deterrent was that lenders historically required a lien/per-sonal guarantee from the owner.

In creating BePC, BOMA and CCI have

eliminated many of the common bar-riers to energy-efficiency retrofits. the new contract model and CCI’s partner-ships that provide lower project costs and funding sources create an opportu-nity to reduce the time it takes to com-plete these types of retrofits, from 18 to 36 months to 12 months or less. Further-more, since the contracts are standard-ized, real estate professionals need not become experts in performance con-tracting or energy performance guar-antee provisions.

the benefits of BePC are significant compared to energy performance con-tracting previously offered:

• Thefinancingmodelisstructuredsothere is no upfront capital outlay, no lien on the building and no personal guarantees required.

• Theownercontrolstheprocessandspecifies all project criteria, stream-lining project development.

• Thestandardizedmodelminimizescosts, including up-front legal costs, man-hours, project management and component costs.

• Thetemplatedocumentsareeasilyedited to incorporate specific goals and objectives.

• Anindustry-vettedmodelmeanshighconfidence in project implementa-tion without having to be an expert in performance guarantees or energy efficiency.

• The potential for commercial realestate firms to self-finance is available, using the energy savings produced by the retrofit to reduce operating costs even after amortizing the cost of the improvement.

• Building performance is assuredthrough a performance guarantee by the energy service company, guaran-teeing performance throughout the life of the agreement.

As building owners and operators adopt the contracting model and imple-ment energy-efficiency retrofits, BOMA will be the unbiased resource and solu-tions provider to facilitate voluntary, business case-driven market transfor-mation of the built environment. CCI will serve as a liaison between eSCOs, owners, operators and financial part-ners to ensure continuity and to focus on the mission and long-term program performance. At the operator or owner’s request, CCI will serve in a consultative role, advising on best practices, intro-ducing suppliers and other providers and supporting the project development where needed.

BOMA International is proud of our collaboration not only with the Clinton Climate Initiative, but also with major service provider partners, real estate organizations and other leaders, and formally thanks trane, Siemens, John-son Controls, honeywell and also Jona-than Furr, senior counsel at holland & Knight, who provided independent legal and ePC contracting expertise to the development of this program (all contact information for these and other partners can be found at www.boma.org).

the BePC and supporting documents feature a variety of information, includ-ing advice on best practices in project development and execution, a series of model documents that can be used to streamline the project development process and a number of additional resources that can be accessed for assis-tance in executing an energy-efficiency project.

the BePC and supporting documents are available at www.boma.org.

BoMA and CCi develop energy Performance Contracting Model

BOMA Immediate Past Chair Brenna Walraven (second from right) and Arah Schuur (far right) with the Clinton Climate Initiative take questions from reporters during a press conference last June announcing the collaboration on the BOMA Energy Performance Contracting (BEPC) model.


BOMA Recognized as One of Green ElitePopular d.C. news publisher Bisnow on Business awarded BOMA the 2008

Green leadership Award in recognition of BOMA’s commitment to energy efficiency and sustainable initiatives that have helped member organiza-tions lower energy consumption, reduce greenhouse gas emissions and save on energy costs. BOMA was recognized for several initiatives, includ-ing: the BOMA energy efficiency Program (BeeP); the 7-Point Challenge to achieve market transformation; the industry’s first green lease guide, the Guide to Writing a Commercial Real Estate Lease, including Green Lease Language; the Sustainable Operations Series (SOS) program, a new educa-tion program which builds on BeeP and includes additional practical ways to green building operations; a collaboration with the Clinton Climate Ini-tiative to develop a groundbreaking energy performance contract model to help building owners perform major energy retrofits to the existing building marketplace; and a partnership with the department of energy in the newly established Commercial real estate energy Alliance (CreeA), which will pursue energy-efficiency technologies that will transform energy use in the commercial building market.

Green Seal Partnership Takes Facilities Maintenance to a New LevelGreen Seal, the major eco-labeling organization in the United States, has developed

the Green Facilities Partnership, a program designed to recognize and provide assis-tance to organizations working to implement environmentally friendly operations and maintenance practices. Green Seal works with an organization to design a Green Facilities Action Plan and provides support and analysis as the facility implements the plan. the Green Facilities Partnership has three tiers of recognition—Green Facilities Partner, Green Facilities leader and Green Facilities Champion—that a facility can achieve. recognition is based on how well an organization implements a plan based on its particular opportunities and challenges; the Partnership is not a standard-based certification program.

For more information, visit www.greenseal.org.

BOMA/Spokane Garners Great 7-Point Challenge Press Coverage

BOMA/Spokane received outstanding press coverage as a result of its adoption of the 7-Point Challenge. Gordon hester, director of commercial management, Kiemle & hagood Co., BOMA/Spokane, recently discussed the Challenge at the Spokane Mayor’s Forum on Sustain-able Business, a televised forum that highlighted the industry’s efforts to go green. hester was also interviewed by the local public radio station on Spo-kane’s adoption of the Challenge and how the industry is voluntarily leading the way on operational efficiency and sustainability.

For more information on BOMA International’s 7-Point Challenge, visit www.boma.org/AboutBOMA 7pointchallenge.

BOMA Writes Prescription for Maximizing Value in a Down Economyrecognizing that it is more critical than ever for property professionals to stay on

top of their game, BOMA has created “rx—the resource exchange,” a one-stop shop for everything you need to stay competitive. the new Web-based menu of resources lists numerous publications, interactive tools and educational programming on every-thing from building operations and tenant relations to sustainability and budgeting. there are also extensive professional development resources to help you differentiate yourself in a tight market, including information on networking, sharpening skills and career building. Find your prescription for maximizing value in today’s down economy at www.boma.org/AboutBOMA/Rx.

Give Your Tenants ENERGY STAR @ Work

the environmental Protection Agency recently launched ENERGY STAR @ Work, an online tool to promote

energy efficiency and green prac-

tices in the workplace. the site features an animated virtual office

with links and tips on improving energy performance. Click on the animated window to learn how to harvest daylight or click on the water cooler to learn how to make it more energy efficient. this is a great energy-saving tool to pass along to tenants. For more information, visit www.energystar.gov.

Continued on page 18


Around the industry

Industry Economists Discuss Recession Survival Strategiesraymond torto, Ph.d., global chief economist with CB richard ellis (CBre), joined

a panel of economists recently for a GlobeSt.com Webinar on surviving the real estate credit crisis. the panelists discussed strategies for weathering the crisis and made pre-dictions on future job losses and when we can expect a turnaround. torto predicted that the current office vacancy rate of 13.4 percent (CBre statistics) could jump to 16.2 percent by the end of 2009, and, when factoring in negative absorption, that number could climb to more than 19 percent. torto described the current recession as the “classic liquidity trap,” in which there is a lot of capital but no traction, and said strong policy and fiscal stimulus is imperative to turning things around.

torto is the Opening luncheon keynote speaker at BOMA International’s 2009 Winter Business Meeting in Indian Wells. Calif., January 16-19.

Other panelists at the GlobeSt.com Webinar included ed Friedman, senior econo-mist with Moody’s economy.com; hessam nadji, managing director, research services with Marcus & Millichap real estate Investment Services; and howard roth, global and Americas real estate leader with ernst & Young.

Look For It: BOMA•Kingsley REPORT on Benchmarking in the March/April Issue

Benchmarking building performance is more important than ever in today’s market; it can help save on operating expenses and help you stay competi-tive with buildings in your area. the next issue of the BOMA•Kingsley REPORT will tackle all aspects of benchmarking in the commercial real estate industry and offer key insight on how to look at benchmarking from the portfolio, asset and property management perspectives. look for the BOMA•Kingsley REPORT on benchmarking in the March/April issue of The BOMA Magazine.

Tammy Betancourt Appointed Chair of Texas State Board of Plumbing Examiners

texas Governor rick Perry recently named tammy Betancourt, executive vice president of BOMA/houston, as chair of the State Board of Plumbing examiners. Betancourt is one of two public members of the board and will serve through 2013. “It is an honor and a privilege to serve the citizens of the great State of texas and the commercial real estate industry,” said Betancourt on her appointment. the board enforces plumbing regulations and oversees examinations and licensing of plumbers and plumbing inspectors in the state.

SERVING YOUR CUSTOMERS FALL 2008Practical Industry Intelligence for Commercial Real EstateBOMA Kingsley REPORT

BACKING IT UPServing customers requires organizational commitment, not just words.Page 5

AT YOUR SERVICEAn editorial message from BOMA International and Kingsley Associates.Page 3

CONTENTSBROUGHT TO YOU BY:

SERVING YOUR CUSTOMER’S CUSTOMERSThe needs of occupiers are paramount, even when someone else holds the purse strings. Page 8

NEXT ISSUE: Benchmarking

THE SCIENCE OF CUSTOMER SERVICETaking a systematic approach to a “soft” skill.Page 11

AlliedBarton Security Services Recognized for Training Programs

AlliedBarton Security Services, the industry’s premier provider of highly trained security personnel, has earned national recognition for its training pro-grams for the fourth consecutive year on Training magazine’s top 125 list. the annual Training top 125 ranks compa-nies based on their employer-sponsored training and development programs. the ranking for the 125 leading organizations will be revealed during an awards gala held February 9th at the training 2009 Conference & expo in Atlanta, Ga.

FEMA and Code Council Sign MOUthe International Code Council and the department of homeland Security

Federal emergency Management Agency (FeMA) are teaming up to reduce the loss of life and property caused by natural disasters. A memorandum of under-standing calls for FeMA and the Code Council to support the maintenance, adoption, outreach, training and enforcement of disaster-resistant building safety codes to reduce human and economic losses resulting from natural hazards including hurricanes, earthquakes, tornados and flooding. Under the agreement, the Code Council will provide direct assistance to FeMA on a range of programs designed to reduce losses during natural disasters. FeMA will participate in the Council’s code development process, using its data to help develop future codes that increase public safety. the organizations also will jointly develop a strategy to promote code adoption to enhance disaster resistance in the built environment.

learn more at www.iccsafe.org.


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Commercial Real Estate Woes Go GlobalBy Stephanie J. Oppenheimer, APR

AnyonE lookinG foR EvidEnCE that the U.S. commercial

real estate industry has taken a hit from the financial crisis grip-

ping the globe need look no further than the level of foreign

investment in U.S. real estate: According to Real Capital Analyt-

ics (RCA), 2008 foreign investment figures from January through

July 2008 came in at $7 billion, compared to a total of $52 billion

invested in the United States in 2007.

“This is obviously a dramatic slowdown, and, if we continue

at the rate we’re going today with foreign investment, we’ll be

down to ’03 levels, which finished the year at about $10 billion,”


Leasing: The Calm Before the Big Storm?

At first glance, leasing fundamentals

are clearly slowing, but many asset types

still appear to be holding fairly steady

for now, mainly because this real estate

downturn is primarily a result of debt

markets rather than by oversupply and

an over-stuffed pipeline. As a result,

many markets are approaching supply/

demand equilibrium with relatively low

vacancy rates and rents that haven’t yet

dropped dramatically. But, because com-

mercial real estate tends to lag the rest

of the economy by six to 12 months, it is

widely expected that the ultimate con-

sequence of today’s economic environ-

ment will be the industry’s worst year

since the 1991-1992 downturn. At press

time in late 2008, Reis, inc. reported

negative net absorption of more than 19

million square feet of space, the high-

est it’s been since late 2001 and early

2002, when reverberations from the

9/11 attacks were felt in the real estate

industry. Without a doubt, 2008 losses

of more than one million U.S. jobs has

had an impact, and it’s likely to worsen

as commercial real estate fully catches

up with the rest of the economy.

“Many other asset classes adjust all at

once, but with real estate it always feels

a little like getting sent to the principal’s

office when you’re a kid,” explains Geof-

frey dohrman, CEo of institutional Real

Estate, inc. (iREi). “you know you’re in

trouble and will have to pay up, but for

now you’re just sitting there, waiting for it

to happen. you don’t know exactly when

he’s going to call you back to his office or

what he’s going to do … and it’s the sit-

ting and waiting that’s just so horrible.”

The Investor BluesMeanwhile, the mysteries of the when

and how are on full display on the invest-

ment side of the business—where the

effect of the credit crunch and global

financial crisis is currently being felt the

most strongly. And the picture, unfor-

tunately, is a decidedly gloomy one.

Throughout the Americas, RCA reported

that third-quarter ’08 sales volume was

at just $30 billion, compared to $131 bil-

lion during the same time period in 2007.

in the Asia Pacific region, third-quarter

says James fetgatter, CEo of the Associa-

tion of foreign investors in Real Estate

(AfiRE). “Granted, 2007 was perhaps

inflated due to a couple huge invest-

ments out there [specifically, separate

investments by an Australian firm and

a french firm at approximately $9 bil-

lion each], but even 2005 and 2006 each

boasted investments of about $25 billion.

The drop-off is particularly noticeable

with some of our most dependable inves-

tors, such as Australians. They’ve been

one of our top investors for five years

and, in 2007, accounted for 26 percent

of all foreign investment in the United

States. [in 2008], they’re investing only

0.4 percent of that amount. Germans,

while still active, were at 22 percent of

their previous year’s totals through July

2008. Really, no matter how you look at

it, transactions in the United States are

way down.”

of course, investment in American real

estate is hardly a barometer by which to

gauge the entire industry, particularly

an industry that can be viewed from two

main perspectives: the leasing side and

the investment side.


volume dropped from $66 billion the

year before to $18 billion; and in Europe,

the Middle East and Africa (EMEA), vol-

ume came in at $54 billion, down from

$84 billion during third-quarter 2007. All

told, RCA was expecting commercial real

estate sales in 2008 to be less than half of

last year’s $514 billion level.

investors are also backing out of

transactions at a fast clip; according to

Cassidy & Pinkard Colliers, more than

$14.5 billion in deals have been scrapped

in the United States this year alone.“The

numbers just dropped off a cliff as we

moved into 2008,” says Ray Torto, global

chief economist for CBRE Torto Wheaton

Research. “The reason is simple: Real

estate is expensive—it’s not like buying a

$100 share of stock. it’s millions of dollars

we’re talking about, and most investors

need to finance those kinds of capital

expenditures. The credit crunch—which

stemmed from the collapse of the sub-

prime home mortgage market in 2007

and worsened with each foreclosure and

failure of major financial institutions—

essentially caused banks to tighten

up and stop lending. And with that, it

became a very simple matter. Without

financing, investing in real estate dried

up dramatically.

“Adding to the industry’s woes is that

nobody—nobody—wants to buy some-

thing at the wrong price in this market,”

Torto adds. “A buyer recently said to me,

‘i could buy today, but tomorrow’s prices

will be cheaper,’ and i can’t blame him for

that attitude. Call them bargain hunters,

trend observers or market participants …

but nobody wants to buy and then have

the market drop further, so people are

sitting on their hands. it’s really a crisis

of confidence in which banks aren’t con-

fident and investors aren’t confident, and

it won’t change until buyers and sellers

feel they’ve found price equilibrium in

today’s world. it’s not good for the econ-

omy or the brokerage firms, but it’s real-

ity … and it’s being replicated all over the

globe. Some markets, like the Uk, are a

little ahead of us in that they’ve come

down faster, while others, like Hong kong

and Shanghai, are behind us and haven’t

come down as much. But, overall, most

countries are experiencing what we are

here in the United States.”

debt capital is severely impacting the

health of the industry, as well: “A year

ago, investors could have gotten a loan-

to-value ratio of up to 90 percent or even

more, or interest-only loans,” dohrman

says. “you simply didn’t need much

equity. Today, you need at least 40-per-

cent equity and a 60-percent loan. if you

do the math, assuming the same cash

flow as you had before, you’re looking

at two-percent yields, and no one wants

that. So, the result is that no one is mov-

ing forward on investments because the

deals just aren’t advantageous.”

in their Emerging Trends report, the

Urban land institute (Uli) and Price-

waterhouseCoopers also indicated that

total expected returns on private equity

real estate investment in 2009 will likely

register in negative territory for the first

time in nearly two decades.

Meanwhile, people who have owned

commercial real estate as independent

investors are feeling the pinch in other

areas of their finances, and it’s having

a domino effect on their real estate

investments. in december 2007, there

was an estimated $42 billion in under-

investment; 10 months later, that had

completely flipped. “Real estate values

haven’t gone down that much yet, but

there’s no money to do additional invest-

ments,” dohrman adds, “and when you

consider that Americans have lost up to

$1 trillion in the value of their stocks and

bonds, it’s understandable that they just

don’t have very much left over to allocate

to real estate.”

Another factor to consider is where

investors are holding their funds; if a for-

eign investor is keeping funds in a new

york bank waiting for an opportunity in

new york, not much has changed. But, if

they’re in london with all their funds in

pounds, as of november 2008, they had

seen a 15-percent reduction in purchas-

ing power over the previous 30 days.


Will Stimulation Packages Thaw the Deep Freeze?

not surprisingly, global crises like

these get global attention, and coun-

tries throughout the world have put forth

fiscal recovery plans much like the U.S.

$700 billion Emergency Economic Sta-

bilization Act of 2008 in order to help

financial institutions and investors alike.

And, while the majority of real estate

experts do believe they’ll help, most

view the recovery plans not as a long-

term solution but as a fix that will help

settle financial markets and increase

investors’ confidence that markets are

stabilizing.

“The idea behind these kinds of bills

is to thaw lending, but it’s going to take

a while for the benefits to really work

into the system,” says Glenn Mueller,

real estate investment strategist for the

dividend Capital Group and professor

in the fl Burns School of Real Estate

and Construction Management at the

University of denver. “The bigger ques-

tion is how long will it take? A month, a

quarter, a year? i think six months to a

year is most likely.”

“They’ll help for sure,” dohrman

agrees, “but it’s a bit like the triage proc-

ess on a battlefield. it will determine who

survives, who doesn’t and who can wait.

like first aid, though, it’s not a solution to

the root cause of the problem, which has

more to do with regulatory flaws and the

underwriting process in lending. These

measures will stop the bleeding, give us

the time to fix the underlying causes and

enforce discipline.”

looking forward, blue skies are not

impossible to find. According to fetgat-

ter, there is plenty of optimism that more

money may be poised to come back into

the United States because of the inherent

advantages the U.S. market offers. “We

may not be able to offer enormous mar-

ket stability in the short term,” fetgatter

says, “but transparency and stability are

certainly U.S. hallmarks over the long

term. That makes international inves-

tors feel that they can get better returns

from established American real estate,

unlike emerging markets, where there

simply aren’t sufficient rewards right now

to counterbalance the risks.”

But regardless of when we’ll start see-

ing capital pouring back into commer-

cial real estate, there are some strategies

to help weather the storm. dohrman

advises property managers to focus

first and foremost on operations. “keep

your tenants happy in your buildings

and focus on operations management,”

he says. “Extend leases as quickly as you

can, and remember that now is not the

time to nickel and dime your best ten-

ants. We’re in the eye of the hurricane,

and things are going to get crazier, so

think about strategy now, when you have

the time to think. it’s probably too late

to pay down your debt and de-lever, but

find whatever equity you can, be realistic

about valuation and don’t wait for events

to force you into something. Take control

while you still can.”

Mueller urges patience, noting, “it’ll

come back, but remember everything

is relative. The longest recession, which

lasted five quarters, was in the early

1970s. in 2003, the recession lasted only

2.5 quarters. i’m guessing this recession

will be someplace in between … particu-

larly with so much money being pumped

into the economic system through stimu-

lation packages. i’m anticipating that the

employment declines that started in the

beginning of 2008 may extend through

the second quarter of 2009, but then we’ll

start back on the upward swing.”

As for the mythical crystal ball that

everyone at some point wishes they had?

Torto points out that it may very well be

right under your nose. “i view commer-

cial real estate as ‘the economy in a box.’

What goes on in the economy is reflected

in our buildings—whether it’s job growth

or unemployment, retail expansion or

retraction. As a result, most of us have a

better grip on the economy than we give

ourselves credit for.”

lastly, keep it all in perspective. As

dohrman notes, “We had a long party,

and everyone knows that the longer the

party, the longer it takes to clean up.”

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



O n November 4th, voters not only elected a democrat to

the White House, but they also elected a greatly changed

Congress. Throughout the 110th Session of Congress (2007-08),

the democrats enjoyed a majority in both houses of Congress;

however, the numbers were close enough in the Senate to ensure

that nothing passed without at least some cooperation from

republicans. If Senate democrats tried to pass legislation strictly

along party lines, republicans could filibuster, or debate the leg-

islation indefinitely, and 60 votes are needed to end a filibuster

and call a vote.When the 111th Congress takes office in 2009, the commercial real estate industry

will find it working with an almost filibuster-proof majority in the Senate. At press

time, the Senate democrats had picked up at least seven seats, bringing their total to

58 (including independents), with 41 seats safely in republican control and one race

still undecided in Minnesota. Even if the republicans prevail in Minnesota, assuming

no seats change party due to political appointments, the democrats would need only

two republicans to cross party lines on any given issue to reach the magic number

of 60 and thus end any potential filibuster. In the House, the democrats increased

their majority by 19 to control 255 seats to 175 republican seats, with a number of

races yet to be determined.

In working with the new Congress and President, BOMA International will face new

challenges, especially in the area of taxes, environment, energy and unionization.

BOMA International will work to educate the new Congress and Obama Administra-

tion on these and other issues that impact the commercial real estate industry.

So what can we expect to see when the 111th Congress kicks off this month? Though

newly elected President Obama’s past positions on legislative issues and his election

platform may suggest he leans pretty far left, Congress-watchers are predicting he

will reach to the middle moderates for guidance on many important issues, espe-

cially the ongoing problems with the economy and capital markets. The sentiment

of members of Congress, however, appears to be more along the lines of “now we will

finally be able to get things done,” suggesting that legislation—good and bad—may

move much quicker than before.

Here’s a look at BOMA’s key issues and what we may expect to see in the new Con-

gress. (For an overview of legislative actions on BOMA’s priority issues during the

110th Congress, see “Legislative Update” on pages 8-9.)

Legislative Outlook

Tax IssuesThroughout most of 2008, when the

economic downturn seemed to be pri-

marily contained to the residential real

estate markets, it was widely assumed

that an increased democratic majority

in Congress, in combination with Barack

Obama in the White House, would

potentially lead to significant increases

in a number of tax areas affecting the

commercial real estate industry. With

the widespread downturn in the econ-

omy affecting such a large number of

industries, wildly swinging stock mar-

kets and a devastated global economy,

however, experts anticipate a more mod-

erate approach. Upper-income earners

will definitely not be off the hook, and

this tax change will likely happen very

quickly. BOMA will continue to state

the case that the commercial real estate

industry should be included in any eco-

nomic stimulus package.

BOMA’s key tax issues continue to be

capital gains, leasehold depreciation

and carried interest. The new Adminis-

tration had been expected to increase

the maximum rate on capital gains and

qualified dividends, from the current

15 percent to possibly as high as 25 per-

cent, but it may hold off on this in 2009

due to the state of the economy. The cur-

rent 15-percent rate expires at the end

of 2010, however, and, absent Congres-

sional action, it will revert to 20 percent.

Small businesses and start ups, on the

other hand, may see their capital gains

tax rate cut to zero.

Commercial Real Estate to Work with Larger Democratic Majority in ’09

By Karen W. Penafiel, CAE


For more information on legislative issues, con-tact Karen Penafiel at [email protected] or (202) 326-6323.

We Need Your Help!BOMA has a huge job ahead of us to

protect your interests on Capitol Hill,

but we cannot do it alone. We need every

BOMA member to do his or her part to

assist us in communicating real estate’s

message to our elected leaders. Here’s

how you can help …

• Respondto“CallstoAction”by

calling or writing to your members

of Congress via BOMA’s Legislative

Action Center, http://capwiz.com/

boma/home.

• SupportBOMAPAC,BOMAInter-

national’s political action com-

mittee, www.boma.org/Advocacy/

BOMAPAC.

• AttendtheNational Issues Confer-

ence in Washington, D.C., on March

23-24, 2009, to meet with your legis-

lators (see related article on page 9).

• Communicatewithyouradvocacy

staff on issues confronting you and

your business.

By working together, real estate’s voice

will be heard on Capitol Hill.

Card Check/ Unionization

During the last session of Congress,

Senate republicans were able to prevent

the passage of “card check” legislation.

With the new makeup of Congress, this

will likely be one of BOMA’s first legisla-

tive battlegrounds. The proposed leg-

islation would eliminate secret ballot

elections from the unionization proc-

ess. For the first contract, if parties are

unable to reach agreement within 120

days, then the dispute will be sent to

arbitration, the results of which would

be binding for a minimum of two years.

Workers would be unable to vote on the

contract, as is the case currently.

Energy-Efficient Buildings

BOMA International has aggres-

sively worked with Congress for the

past several years to work on voluntary,

incentive-based programs to improve

the energy efficiency of both new and

existing buildings. We have vigorously,

and to date successfully, fought against

the imposition of any mandates with-

out a return on investment. In the last

session of Congress, we were successful

in removing language that would have

set arbitrary targets to greatly ratchet

up the energy-efficiency requirements

oftheASHRAE90.1Standard.Wefully

expect to see this proposal resurface in

any “moving” legislative vehicle. Newly

elected President Obama has stated

that he supports the goal to make all

new buildings carbon neutral by 2030,

as well as a national goal to improve

new building efficiency by 50 percent

and existing building efficiency by 25

percent over the next decade to meet

the 2030 goal.

For all new federal buildings, Obama

supports the goal of a 40-percent

increase in efficiency within five years

and zero emissions by 2025. For exist-

ing federal buildings, he would like to

see investment in cost-effective retro-

fits to achieve a 25-percent increase in

efficiency within five years. Overall, he

would like to see appropriate resources

dedicated to achieve a 15-percent reduc-

tion in federal energy consumption by

2015 and phase out traditional incan-

descent light bulbs by 2014.

Climate ChangeNewly elected President Obama sup-

ports the implementation of an econ-

omy-wide cap-and-trade system as part

of any climate change legislation. His

plan would require 100 percent of pol-

lution credits to be auctioned to ensure

that all industries pay for every ton of

emissions they release, rather than giv-

ing valuable emission rights away to

companies on the basis of their past

pollution. In the last session, more than

a dozen climate change bills were intro-

duced in the House and the Senate, one

of which passed the Senate Committee

on Energy and the Environment before

falling victim to a Senate filibuster. This

is definitely an important issue to both

newly elected President Obama and

Congress; however, it is unclear if this

will fall into his “first-tier” issues or get

tabled while the Administration tries to

resolve the economic crisis.

In late 2008, Congress voted to retro-

actively extend for two years the 15-year

leasehold depreciation timeline and

immediate expensing of brownfields

clean-up costs. Both will now expire at

the end of 2009 and it is unclear what

action, if any, the new Administration

and Congress will take.

Last year, several democrats in Con-

gress actively supported increasing the

tax rate on carried interest from the

capital gains tax rate of 15 percent to

be taxed as ordinary income in order to

offset revenue losses from other popular

proposed tax cuts. This is an issue that

BOMA will continue to watch.


ABOVE, Nancy Ferrara, BAE of BOMA/Dayton, lends her perspective during one of the interactive discussions.ABOVE RIGHT, Joe Marchant shares insights from his experience as long-time BAE of BOMA/Dallas.

The economy was at the top of the agenda at the 17th annual BOMA Association

Executive (BAE) Leadership Conference, as BAEs gathered in Washington, D.C,

to discuss how to take local programs and initiatives to new levels. The meet-

ing, held Oct. 16-18, 2008, provided local executives an opportunity to network

and share information in the face of an increasingly bleak economic forecast.

Strategies for attracting and retaining membership were at the core of the dis-

cussion, along with strategic planning training and briefings on new BOMA

initiatives, such as the accredited building program, the new and enhanced

Experience Exchange Report (EER) and a panel discussion on the Foundations

of Real Estate Management program.

Membership challenges were at the forefront of the dialogue. With many

companies facing major layoffs and air-tight budgets, BAEs expressed con-

cern over membership retention and growth. Together, they brainstormed

niche areas to target for new member-

ship. Many suggested ramping up efforts

to increase membership and outreach

areas, such as engineers, corporate facili-

ties, mixed-use, students and architects.

Several BAEs also mentioned success in

creating special interest groups in spe-

cialty areas, including medical office

buildings and energy managers.

While all acknowledged that there

are serious challenges, the situation

also provides a unique opportunity for

BOMA local associations to offer timely

support and resources for their mem-

bers. Many noted that it is now, when

times are tough, that their member-

ship will look to BOMA for support—

for new education courses, networking

and career development. Several BAEs

shared their ideas for new programming

based on the challenges property own-

ers and managers are facing in a down

economy; topics included dealing with

tenant bankruptcy, dealing with a tenant

audit of an escalation bill and addressing

universal budget constrictions.

BOMA/Atlanta’s Gabriel Eckert spoke

to his peers about the success his local

BAEs Develop Solutions in Face of New Economic ChallengesBOMA Association Executive Leadership Conference Advances Local InitiativesBy Lindsay Tiffany


association was seeing with the Founda-

tions of Real Estate Management course.

“Companies find it more comprehensive

and cost effective to train their employ-

ees through the course than to institute

their own training programs,” said Eck-

ert, who also sees potential in creating

a course on human resources manage-

ment aimed at property managers who,

through a promotion or new position,

find themselves managing people with-

out any management background. Many

agreed that, while it may be a challenging

time, the strength of local associations

is in adapting to provide members with

timely solutions.

A panel discussion expanded on the

implementation of the Foundations of

Real Estate Management course and

was moderated by BOMA International’s

Senior Vice President Pat Areno. Janice

Parham, BOMA/Cleveland; Jeanne Clark

of AOBA (Apartment and Office Buildings

Association of Washington, D.C.); and

Pat Schwarze, BOMA/Greater Chicago,

spoke on the specifics of the program

and answered questions on the struc-

ture of the course, hiring instructors and

the building tours that are a part of the

course. The lively forum concluded that

the program was a major asset to local

associations and member companies.

Kingsley Associates’ Vice President

Phil Mobley joined BOMA Interna-

tional’s Vice President of Education and

Research Lorie Damon to brief BAEs

on the new, exclusively online Experi-

ence Exchange Report, BOMA’s trade-

mark publication with benchmarking

income and expense data. They unveiled

the new user interface and demonstrated

the ease with which users will be able to

query and analyze the data. “Everything

will be dynamic, searchable and custom-

izable,” added Mobley. “And the timing

couldn’t be better—people need to know

how they are doing compared to their

peers in these market conditions.” They

also enlisted the BAEs to help increase

member participation in submitting the

data and making the information even

more precise and useful for members.

The program also included sessions

on strategic planning, trademark and

copyright law and other association best

practices. Robert C. Harris, CAE, Har-

ris Management Group, a renowned

facilitator of association leadership

training, drilled into the fundamentals

of successful strategic planning. Harris

stressed that developing and implement-

ing a cohesive, up-to-date vision and

mission statement is critical to taking

an organization into the future. Patrick

Jennings, senior associate at the law firm

Pillsbury Winthrop Shaw Pittman, LLP,

gave a refresher course on the basics of

copyright and trademark dos and don’ts.

The program concluded with a recep-

tion at BOMA International’s new “green”

office.

Jeanie Merideth with BOMA/Tucson helps keep spirits light.

Marc Intermaggio, BAE with BOMA San Francisco, takes the floor, as BOMA Interna-tional Chair Dick Purtell and BOMA International Presi-dent Henry Chamberlain listen.


sector watch

With its ubiquitous suburbs lined with malls, retail strips and office parks, some say America has become a nation of sprawl and crawl where the daily func-tions of our lives—work, errands, enter-tainment—are compartmentalized, each requiring a separate car ride, a full tank of gas and an suV-sized load of patience. things are beginning to change, though, as more and more Main streets and town centers are popping up; the only catch is that they are nowhere near an actual Main street or town center. they are the mixed-use urban hubs (that are mostly located in the suburbs) that are slowly but steadily changing our nation’s land-scape and bringing the all-in-one, live-work-play environment back to Ameri-ca’s towns and communities.

but how did we lose our Main street

identity in the first place? it’s been a steady progression over the past 50-plus years, aided by post War World ii zoning regulations and a population that grew from approximately 200 million to 300 million in that time. We became a land of malls and parking lots as single-use retail establishments replaced the town centers that once defined America. “After the War we lost our compass,” explains Yaromir steiner, a keynote speaker at the Mixed-Use Development Conference in Chicago this past November and CEo of steiner + Associates, inc., a mixed-use development company. “We forgot about urban planning and we used zoning as the sole way of designing our cities.”

steiner and his team have been bring-ing town centers back for the past sev-eral years with developments like Easton

Mixed Use: The New Main Street, USABy Laura Horsley

Town centers have made a comeback in recent years, such as Easton Town Center, which is located outside of Columbus, Ohio.

town Center outside of Columbus, ohio, and Zona rosa in Kansas City. Dealing with zoning hang-ups and garnering community buy-in were among the ini-tial barriers, but those headaches are dis-sipating for steiner and other developers as city officials and planners are recog-nizing the benefits of mixed-use. At a project under development in hampton, Va., steiner was pleased to find that the city was well ahead of the curve. “there was an existing mall there and the city of hampton projected the regional mall would be converted into a mixed-use town center. it was even in the master plan of the business district.”

While city planners are not always that far-sighted, more are seeing the business sense of mixed-use. roy higgs with Development Design Group, who



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worked with steiner on Easton town Center and other projects, has also noticed the change. “We’re seeing a lot more public officials pitching up and getting excited about these projects. they’re saying ‘i need that in my com-munity, too.’ ”

higgs believes retailers have been an influential part of this trend. “We’ve watched retailers very carefully to see what they’re up to and what they’re

looking for,” explains higgs. “it used to be that they wanted the shop in front in a certain location and 300 cars outside the front door, but those formulas have fallen away. You measure retail success by the volume of business you do per square foot and they’re managed to do higher volumes of business in those kinds of locations [town centers] at argu-ably lower costs.”

office is often an essential part of the

mix in these developments as retail and office tend to have a synergistic rela-tionship. the office component pro-vides the captive audience retail loves (especially during a weak economy) and the retail component offers valu-able amenities—be it restaurants, cof-fee shops, fitness centers, dry cleaners, etc.—that companies would not be able to offer their employees in a traditional suburban office park. the office compo-nent is very popular at Fairfax Corner in Fairfax, Va., a development that higgs’ team designed. says higgs, “it used to be that no one wanted to build offices above shops because you didn’t have an office address, but that has all changed. office and retail are very complementary construction, and there’s a very low pre-mium to do it compared to residential. it’s a whole sea change we’re seeing.”

sector watch

Read an expanded version of this article at www.boma.org.

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• while mixed-use seems to be everywhere and is growing, it is still less than 3% of the over-all market.

• the latest trend in mixed-use is recreational and sports amenities—think live theaters, comedy clubs, BMX, ice rinks and even surfing.

• the trend extends beyond U.s. shores: 40% of Develop-ment Design Group’s business is international.

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trends tracker

By Lindsay Tiffany

ConstruCtion exeCutives gathered in Washington, d.C., oct. 22-23, 2008, for Mcgraw-hill’s Outlook 2009 Executive Con-ference, a two-day conference focused on what 2009 will hold for the aeC (architecture, engineering and construction) industry. the program was packed with economists and construction experts who spoke about how the recent credit crisis and eco-nomic downturn will affect construction this year. Much of the news does not bode well for construction, but experts suggested that there are still several reasons to be optimistic.

the Construction Outlook 2009 Report, presented by robert Murray, vice president of economic affairs, Mcgraw-hill Con-struction, suggested that total construction starts in 2009 will

despite the grim numbers many markets are facing, there are a few key factors that indicate opportunities on the hori-zon. the growth of green construction despite the economic downturn was one. u.s. green Building Council President rick Fedrizzi gave a presentation on green construction trends for 2009, stressing that the green revolution will be a big part of the solution to the economic crisis. he estimated that nearly 40 million “green-collar” jobs will be created by 2030 as the result of the green movement. Fedrizzi concluded that “green build-ings are here to stay,” and that the benefits of green buildings are substantial, not only in terms of financial success, but also in such occupant benefits as increased productivity in offices and manufacturing facilities, increased sales per square foot for retailers, faster healing in healthcare facilities and improved test scores in schools.

the changing of the guard in Washington come January 20 is another reason for optimism, according to Michael J. Mandel, chief economist with BusinessWeek. Mandel explained that a new presidential administration and Congress will bring an increase in construction opportunities around the country, with infrastructure and industrial construction to experience the most demand. the obama administration is also expected to create an enormous fiscal stimulus, with increased spending in energy and the environment, education, manufacturing and public services and systems.

immigration is also expected to have a positive impact on the aeC industry. recent statistics show that immigration will continue in high rates, which will help absorb much of the excess in the housing sector and create new need for institutional and commercial buildings and infrastructure.

the message to attendees throughout the conference was that it will take time for the economy to recover, but better times are ahead. this year is about bracing for tough times and being well-positioned for the opportunities to come.

Construction Industry Looks to Opportunities Despite Grim Forecast

Institutional buildings seem to be the brightest spot in construction right now, having been up 7% in 2008 and predicted to drop only 3% in 2009.

be down seven percent, after a 12-percent decline in 2008, with declines projected in every sector, including single-family hous-ing, multifamily housing, commercial buildings, institutional buildings, manufacturing buildings, public works and electric utilities. institutional buildings seem to be the brightest spot in construction right now, having been up seven percent in 2008 and predicted to drop only three percent in 2009. health-care facilities have been unscathed in the past few years, and the market is predicted to soften minimally due to the lack of available credit.

While the office sector has largely avoided the boom and bust cycle of other markets, construction starts for offices were down 10 percent in 2008 and will be down 12 percent in dollars and 15 percent in square feet this year. With vacancy rates just start-ing to creep up, the decline should be relatively mild compared to other sectors, the report predicts. Murray emphasized that executives should keep in mind the cyclical nature of the busi-ness and predicted that, even by modest estimations, conditions should improve considerably in 2010.

Executive Conference Focuses on Green Building and New Political Guard

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Green Scene

greening buildings is still a priority for commercial real estate professionals, although the plummet-ing economy may be squeezing bottom lines. that was among the findings of the “2008 green survey: existing buildings,” the second annual survey produced in collaboration with boMa international, incisive Media’s Real Estate Forum and globest.com and the u.s. green build-ing Council (usgbC). the survey results, which were announced during a press conference in boston at Greenbuild on nov. 19, 2008, found that 80 percent of respondents allocated funds to green initiatives in 2008.

during the press conference, boMa international Chair richard d. purtell, rpa, portfolio manager with grubb & ellis, and Chair-elect James a. peck, rpa, FMa, senior director for Cb rich-ard ellis in albuquerque, n.M., related the survey results to many of the green practices they are implementing across their respective company portfolios. Commenting on a survey question that found that a majority (52 percent) of respondents are using green clauses in their leases to some degree, purtell noted, “although green leases are a rela-tively new idea, respondents overwhelm-ing indicated that they expect to do this soon or are in the planning stages.” boMa recently released the industry’s first green lease guide to meet this grow-ing demand.

other key survey findings include:Energy conservation is the most

widely implemented green program in respondent properties, followed

by recycling, water conservation and energy star® product programs.

sixty (60) percent of those polled offer educational programs to assist tenants in implementing green programs within their space, up from 49.4 percent last year.

almost 70 percent of survey partici-pants have implemented some type of benchmarking system to monitor energy usage and efficiency, while 80 percent say that their efficiency efforts have helped defray rising energy costs.

almost 65 percent of respondents feel that their green investments have generated a positive ROI, up from 60.8 percent in 2007.

the survey focused on the applica-tion of green methodologies and tech-nologies in existing commercial build-ings, and on the financial and market-ing benefits of these efforts. to obtain a copy of the complete survey and results, visit www.boma.org/AboutBOMA/TheGREEN/

A recent energy-savings survey conducted by FMLink, BOMA International, USGBc and the Association for Facility engineers (AFe) found that more and more facility manag-ers are implementing re-commissioning and energy audits to measure and improve their buildings’ energy performance.

Other survey findings show:41% of building operating plans included a

In TheIr WOrdS—SUrvey reSpOndenTS SpeAk OUT On Green prIOrITIeS

Here are just a few of the hundreds of responses received from commercial real estate professionals who took part in the “2008 Green Survey: Existing Buildings.”

Q: Is Greening your portfolio a priority for your company?

“it makes great business sense regard-ing operating efficiency. We have reduced power consumption by 11 percent over the last four years.”

“Although I am only lukewarm on the green building movement, I acknowl-edge that it has hit a tipping point, and you better get with the program or you will be passed by the herd.”

Q: have you Allocated Funds for Green Measures/programs in your current Fiscal year?

“Funding for greening new construc-tion is now budgeted into every proj-ect. Funding for existing buildings was included in previous years’ budgets.”

“Funds have been allocated for energy- and water-savings programs. Additionally, we have created finan-cial incentives for property managers who deliver the greatest consumption savings.”

Q: Are you Adding Green clauses in your Leasing documents?

“We are in the beginning stage of revising our standard lease to incorpo-rate green provisions.”

“2009 will be the year of the green lease.”

Greening Buildings a Priority Despite Economy

FAcILITy MAnAGerS Are TAkInG An AGGreSSIve OperATIOnAL ApprOAch TO enerGy SAvInGS

professionally developed, energy-strategies staff education program.

59% of respondents have occupancy sensors in their general office space.

Most energy savings successes were the result of aggressive low-cost operational strategies rather than major capital projects.

For a full survey analysis, visit www.fmlink.com.

SecOnd AnnUAL SUrvey ShOWS Green FUndInG On The rISe By Laura Horsley


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research corner

It’s offIcIal: We’re In a recessIon. the business climate commercial real estate professionals are experiencing now, and probably will continue to experience for at least the next several months, could be the industry’s tough-est since the 1990s. the industry man-tra has changed from “buy and flip” to “hold and cherish,” as building owners and managers figure out how to squeeze every ounce of value out of their build-ings to retain tenants and keep costs low. But, despite the gloom and doom headlines fueling the media every day, there are real opportunities for property professionals who follow the new man-tra and make their buildings stand out in the crowd.

Benchmarking building performance is one of the keys to not just surviving but thriving in a recession. richie faulk-enberry, senior vice president, director of property management for lincoln Harris, a full-service real estate com-pany headquartered in charlotte, n.c., uses the Experience Exchange Report (EER), the industry’s premier income and expense reporting source, to bench-mark several buildings in the charlotte region. “these market conditions make it that much more imperative for every building owner and manager to gauge asset value in their respective market,” explains faulkenberry. “With vacancies increasing, EER data provides an organi-zation with a barometer where they can

instantly know how they’re financially positioned in the market.”

for third-party management compa-nies like lincoln Harris, benchmarking is one way to help ensure job security and fuel business growth. faulkenberry notes, “at lincoln, we are better posi-tioned if we run a more financially fit and managed asset for an owner because there’s a greater likelihood that an owner will choose lincoln Harris as its service provider for other assets.”

from the owner’s perspective, bench-marking data can flag trends and diag-nose competition in different markets. Perry schonfeld, MBa, cPa, principal for lBa realty llc, finds the EER has enhanced lBa’s operating business

When the Going gets Tough, the Tough get Benchmarkingenter the new age of Benchmarking with the online EER By Laura Horsley and Noel Popwell


knowledge across the board. “as lBa has ventured into other real estate markets, the EER has been extremely valuable to benchmark local operating costs and provide a guide to not only underwrit-ing but toward designing future oper-ating budgets,” says schonfeld. “In a tightening market, this is critical given that, today, landlords are competing for tenants in a declining market rent envi-ronment, so the only way to maintain margins is to attack the cost side of the equation.”

submitting has never Been More critical, or easy

last year, the EER represented more than 5,000 buildings or roughly one bil-lion square feet of office space. In 2009, the EER will move entirely online—in both data collection and data report-ing—making it a much more flexible and nimble resource, allowing end-users to pinpoint and extract exactly the infor-mation they need. this ease-of-use is also reflected in a new streamlined sub-mission process that makes it easier to enter data for multiple buildings.

faulkenberry strongly encourages lincoln Harris property managers in the charlotte region to submit their income and expense data to the EER because it ultimately leads to a better end product, and also because it allows lincoln Harris property managers to truly know their financial data. says faulkenberry, “It’s one thing to go through the budget proc-ess and pull your numbers together, but when you examine all the components of data that go into the financial fitness of a building—your capitalization threshold, your parking stalls, your parking ratios, etc.—it really gets them to look at the big picture of the asset and gets them more involved actively managing their building.” In fact, faulkenberry makes it mandatory for his property manag-ers to benchmark at least one building they manage.

the EER is completely voluntary and open to any commercial office building in the industry—regardless of whether it’s owned or managed by a BoMa mem-ber. all submissions are kept confiden-tial and data is reported on an aggre-gate basis—this year, for 300 U.s. and

8 Great reasons to Participate in the 2009 online eer survey• Smarter than your average benchmarking tool. no need to

worry about those easy-to-make input errors. If you make a mistake,

the system will spot it and prompt you to fix it.

• Flexibility factor. fill out the survey at your own pace. If you can’t

fill out the form in one sitting, not to worry; the online version let’s

you save and come back later.

• Great free stuff. for participating, you’ll receive the expense

Performance comparison report, which shows data from your build-

ing compared to three other buildings.

• Be a part of history. there’s a reason the EER has been around

for almost 90 years—it’s the best benchmarking tool in the industry.

Help us make history again as we take the EER online.

• Budget better. More benchmarking data means more accurate

budgeting, trending and planning. and, it saves you time by

eliminating the need to collect the information from your peers at

neighboring buildings.

• It’s green. the survey and the final report are online this year.

somewhere, a little patch of rainforest thanks you.

• Save some green. submitters will be the first to know that the

reports are available online. and, though the new online EER will

allow purchasers to purchase only the data they need at sharply

lower prices than BoMa used to offer for the book or cD, submitters

will receive discounts beyond that.

• And the best reason of all … you’ll be a part of something really

important. the more participants, the more reliable the data, the

better the end product.

canadian cities, as well as special stud-ies for specific types of assets (including Medical office Buildings). for schonfeld, the reasoning for participating is simple; companies should participate in the sur-vey to help guarantee the best possible end product, one that will ultimately help them understand their competi-tive position. “Knowing your competi-tive position in a market is paramount to how you compete and what operating adjustments you may need to make.”

schonfeld believes the online EER will be a dynamic product that will be an asset to lBa realty in several ways. “the access to information will be eased across our portfolio by all locations and managers, and all disciplines will utilize the information more than ever given


the efficient manner in which the infor-mation is made available. acquisition personnel will be able to easily sense a building’s historical competitive posi-tion, as well as how to position the asset prospectively. the fact that the informa-tion is online also allows the leasing dis-cipline to utilize the product on the land-lord side for service and scope assess-ments.” the new online EER will not only allow customized searching features, but will also allow users to download infor-mation to PDf or excel formats, and it will include a variety of graphic rep-resentations of the data, which can be directly imported into budgets, presen-tations and other forms where building performance must be presented.


share Data. Improve Performance. achieve excellence.That’s what the experience exchange report is all about. For 89 years, commercial office build-

ing owners and managers have shared their income and expense data. The 2008 eer encompassed more than 5,000 build-ings and one billion square feet of space in more than 300 cities across the U.s. and canada. Become an eer ambassador and plan now to submit your portfolio in

2009. For more information about the eer, please visit www.boma.org/Research/. Watch your e-mail box and your mailbox for an announcement of the 2009 sur-vey’s opening.

research corner

The Kingsley connection

Innovation and real progress are almost always the result of great part-nerships, and the new online EER is no exception. for nearly 90 years, BoMa has produced the EER and, in that time, the EER has become widely recognized as the industry’s benchmarking stan-dard. to transition the EER to an online format, BoMa turned to Kingsley associ-ates to help revolutionize the way prop-erty professionals benchmark building performance and manage assets. as an industry leader in research and consult-ing services, Kingsley associates brings exceptional knowledge of the inner workings of commercial real estate.

“Kingsley brings a lot to the table,” remarks faulkenberry. “collaborating with Kingsley adds even more validity because they have such a terrific repu-tation. their tenant survey model will bring an even greater level of acceptance to owner and management companies. It’s also nice to leverage their name and

technical know-how, meaning there will be less trial and error and more chance for a homerun right off the bat.”

Benchmarking building performance may not allow an organization to reces-sion-proof its portfolio, but it can give an organization the knowledge to know exactly what it needs to improve in order to stay competitive. With the EER’s detailed analysis of each major income and expense category in most buildings’ budget, it can be an extraordinary tool for evaluating operational performance, identifying areas for improvement, rene-gotiating service contracts and highlight-ing cost savings that both tenants and owners will care about. and, in today’s economy, knowledge means more than power—it might just mean survival.

the 2009 EER survey will open in January 2009 and can be accessed at: www.boma.org/2009EERsurvey. the deadline to submit building infor-mation for the 2009 EER is March 20, 2009. look for BoMa postcards and e-mail reminders to announce that the survey is available.

RPA/FMA/SMA/SMT ACCELERATED COURSESDesign, Operation & Maintenance, Part I March 4, 2009Budgeting & Accounting March 25, 2009Fundamentals of Facilities Management April 22, 2009Design, Operation & Maintenance, Part II May 13, 2009Real Estate Investment & Finance June 3, 2009Law & Risk Management July 29, 2009Electrical Systems & Illumination Aug. 19, 2009Leasing & Marketing Sept. 23, 2009Facilities Planning & Project Management Oct. 7, 2009Environmental Health & Safety Issues Nov. 4, 2009

Attend the BOMA International Conference and The Office Building Show at the Pennsylvania Convention Center in Philadelphia, June 28-30, 2009. For conference program and registration details, visit www.bomaconvention.org

MARK YOUR CALENDARS

Turn to page 46 of this issue for a preview of this year’s highlights.

Purchase the BOMA Green Lease Guide today at www.boma.org/greenlease

High performance buildings need high performance tenants.

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> Enforceable tenant responsibilities.

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> Includes a Microsoft Word version of the lease document on CD-ROM for you to customize the lease language for your own use.


EyE on Education

HealtHcare real estate is now widely viewed—in industry pub-lications and even the general media (see for example, National Real Estate Investor and The New York Times)—as a likely panacea for investors looking to improve their flagging returns. after all, the logic goes, people get sick in difficult economic times as well as good ones—healthcare is “recession proof” because the demand or need never goes away. Historically, that logic may have held, and certainly many developers, real estate firms and healthcare reits have grown healthy businesses through mar-ket ups and downs. Most of them con-tribute their success to understanding not only the nuances of real estate, but, more importantly, to knowing the com-plex and oftentimes complicated drivers of healthcare business. those people—those who have spent their careers devel-oping, financing, underwriting, leasing

MOBs: Just What the Doctor Ordered? Here’s a Second Opinion

and managing medical office buildings and healthcare facilities—aren’t feeling quite as sanguine about the prognosis for this sector in the near future.

a closer examination of the health-care industry itself reveals some trou-bling financial trends—trends that could spell trouble for even medical office development. while it’s certainly true that demand for healthcare is immune to market conditions, access to health-care is not. the record job losses will certainly contribute to already histori-cally unmatched numbers of uninsured and underinsured people who may seek healthcare, but will increasingly be unable to pay for it. while not-for-profit healthcare systems that wish to receive reimbursement from Medicare and Medicaid are required by law to pro-vide at least 30 percent of their services to “charity care,” they can ill afford for that percentage to exceed that threshold.

and, physicians who provide care to Medicare and Medicaid patients have not seen their reimbursements from the federal and state governments keep pace with their costs, which directly impacts their ability to pay rent. “we have seen a significant jump in physi-cian rent receivables following a delay in reimbursements earlier in 2008,” notes scott Kuklish, executive vice president, PM realty Group, which specializes in healthcare real estate. while the new incoming presidential administration and congress have indicated that they want to make healthcare reform a pri-ority, it’s not clear yet what shape that reform will take—or how it will impact healthcare providers, physicians or patients.

Moreover, hospitals and healthcare systems are not immune to the current credit crunch. through the recent build-ing boom, hospitals have relied on the bond markets and auction rate securi-ties to finance many of their capital proj-ects, but both the bond and securities markets have been badly battered in the recent roiling of the capital markets. even financially healthy hospital systems are finding it difficult to get deals done. “it’s likely that construction projects that are already under way will be completed, though some have already been stopped. i don’t expect that we’ll see many new projects being started in the coming year,” notes neil carolan, chief physi-cian development officer, carondelet Health network. instead, hospitals will have to find ways to use existing facilities to meet growing demand.

Many industry experts expect to see hospitals revisiting monetization—the sale of their medical office buildings to a third party, often to a real estate com-pany. “Monetization may be an appeal-ing strategy by those who chose previ-ously not to pursue it. Monetization can provide a significant capital influx to hospital systems that seek to raise cash or improve their financial ratios,” explains Gordon soderlund, senior vice president, strategic relationships, the dasco companies, a medical office developer and acquirer. But monetiza-tion requires that real estate companies can line up financing. even when they can, the nature of deals has changed—from tighter underwriting standards requiring stiffer loan to value (ltv) ratios (currently up to 60 percent) to alternate sources of financing. (nowa-days, financing may be local or regional,

By Danny Prosky


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and it may involve more than one lender in a deal.) Many industry experts expect that we’ll see a wave of smaller transac-tions, perhaps monetizations that occur one campus at a time.

like most in the industry, those who specialize in healthcare real estate are bracing for challenging times ahead and a longer-than-desired recovery. caro-lan expects that, as healthcare systems struggle to meet the pressures of increas-ing demands and controlling costs, they will increasingly look to medical office buildings, clinics and other non-acute-care venues as more cost-effective sites for delivering healthcare, and that may well spell opportunity for real estate firms. But, he’s also quick to note that, with so much at stake, hospitals will look for firms that understand the business of healthcare, who have a track record in healthcare real estate. in other words, they’ll seek a specialist.

about the author: Danny Prosky is executive vice president, healthcare properties with Grubb & Ellis Realty Investors and 2009 co-chair of BOMA’s Medical Office Buildings and Health-care Facilities Committee.

Register today!The financial health of healthcare systems and the opportunities and risks for healthcare real estate will be center stage at BOMA’s annual Medical Office and Healthcare Real Estate Conference, June 25-26, 2009, at the Marriott Philadelphia Downtown.

Developed and hosted by BOMA’s Medical Office Buildings and Healthcare Facilities Committee, this conference brings together a wide cross-section of those involved with healthcare real estate—hospital and health system executives, devel-opers, investors, lenders, property and facility managers, brokers, architects and even physicians—to discuss the issues that drive the busi-ness of healthcare and healthcare real estate.

For more information and to reg-ister, visit www.boma.org/TrainingAndEducation/MedicalOfficeBuildings/

Education and Events calendar

January 14: sos course 4: How Green Is My Building? Tools for Measuring the Total ROI of Sustain-ability, webinar, 2:00pm et, contact [email protected]

January 16-19: Winter Business Meeting and Leadership Conference, renaissance esmeralda resorts & spa indian wells, calif., www.boma.org/Events/wbm

January 30, February 6, 13, 20, 27: Foundations of Real Estate Man-agement, offered through BoMa/dallas, www.bomadallas.org/, call to register: (214) 744-9020.

February 18: Preparing for and Managing Tenant Bankruptcy, webinar, 2:00pm et, contact [email protected]

March 10-13: Emerging Leaders in Real Estate, Harvard University, cambridge, Mass., contact [email protected]

March 18: sos course 1: Making Sense of Sustainable Operations, webinar, 2:00pm et, contact [email protected]

April 2-5: BOMA Southwest Con-ference, Houston, texas, www.houstonboma.org (click on “events”), contact: tammy Betancourt, [email protected]

April 8: BeeP seminar 4: No- and Low-Cost Operational Adjustments to Improve Energy Performance, webinar, 2:00-4:00pm et, contact: [email protected]

April 23-26: BOMA Southern Region Conference, norfolk, va., www.bomavirginia.org, contact: ann coley, [email protected]



EyE on Education

always available e-SeminarsPreparing Buildings for Sheltering in Place (in Partnership with BoMi)

Property conditions assessments (in Partnership with BoMi)

Mold in commercial Buildings (in Partnership with Healthy Buildings international uSa and intellum)

For detailed information on BoMa educational offer-ings, visit www.boma.org/TrainingAndEducation

For detailed information on upcoming industry events, visit www.boma.org/Events

May 13: sos course 2: Strategies for Reducing and Reusing Building Resources, webinar, 2:00pm et, contact [email protected]

June 10: BeeP seminar 5: Valuing Energy Enhancement Projects and Financial Returns, webinar, 2:00-4:00pm et, contact [email protected]

Jun 25-26: Medical Office Build-ings and Healthcare Facilities Conference, Marriott Philadelphia downtown, Philadelphia, Pa., www.boma.org/TrainingAndEducation/MedicalOfficeBuildings

June 28-30: BOMA International Conference and The Office Build-ing Show, Pennsylvania convention center, Philadelphia, Pa., www.bomaconvention.org

calendar (continued)


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buyers’ guide

PRODUCT DETAILS

Kimberly-Clark’s Kleenex Naturals Tissues: Sustainability and ComfortKimberly-Clark Professional has introduced Kleenex Naturals into its line of premier hygiene products, a facial tissue made with a blend of soft, virgin fiber and 20-percent post-consumer recycled fiber. The new product uses SoftBlend fiber to create a high-quality, soft facial tissue that also exceeds EPA minimum standards for post-consumer fiber content in facial tissue. Kleenex Naturals facial tissue is available in the brand’s flat and boutique boxes.

For more information, visit www.kcprofessional.com

McGraw-Hill Publication Covers A to Z of Building GreenMcGraw-Hill’s newly released publication, The Green Building Bottom Line: The Real Cost of Sustainable Building, explores what it takes to build green, providing detailed accounts of the true costs associated with sustainable buildings. Readers will get an insider’s perspective on the challenges and opportunities involved in sustainable development, on everything from attracting financing for development and working with architects and contractors to coordinating and marketing a green project and negotiating a green lease.

For more information, visit www.mhprofessional.com

McQuay Ups Efficiency with Templifier Water HeatersMcQuay’s has developed Templifier™ water heaters, a unique line of scroll-compressor water heaters that reduce energy costs and increase efficiency by recovering waste heat and making it available for space heating and domestic hot water. Ideal for hotels, hospitals, healthcare centers, schools, athletic facilities and manufacturing plants, McQuay Templifier units with scroll compressors range from 500 to 3,000 MBh and can heat water up to 160 degrees F, compared to 140 degrees F in competitive units. Templifier water heaters can be more than five times more efficient than fossil-fuel boilers or electric-resistance heaters.

For more information, visit www.mcquay.com

Enhanced UGL Unicco GreenClean Program Addresses SustainabilityUGL Unicco has expanded its GreenClean® initiative to encompass energy, water, operations and maintenance, as well as several other categories, to help customers achieve their sustainability goals. A forerunner on the green scene, UGL Unicco GreenClean was first launched in 2004 and fundamentally changed the way the company purchased equipment and supplies, managed worksites and measured performance. UGL Unicco GreenClean now addresses sustainability on more levels through a broader portfolio of services. For instance, the effects of cleaning operations on energy usage have resulted in new site-level policies and procedures to reduce energy usage on a case-by-case basis. Additionally, to meet the needs of customers in the United States and Canada, the list of approved cleaning supplies now includes not only Green Seal-certified products, but also products approved by Environmental Choice.

For more information, visit www.ugl-unicco.com

Watt Stopper/Legrand’s Power Packs Offer Greater FlexibilityWatt Stopper/Legrand has developed the BZ-50 and BZ-150, two high output, universal-voltage, plenum-rated, RoHS-compliant power packs that provide customers with greater design flexibility and increased energy-savings potential. The BZ-150 is the first power pack that can be field configured for manual-on operation to support either a manual-on or bi-level automatic-on control strategy. Both high-performing power packs accept 120, 230 or 277V power at 50 or 60Hz and provide a 225mA output. By producing a universal-voltage power pack, Watt Stopper/Legrand has minimized the number of SKUs its distributors need to stock, and simplified the design and construction process for specifiers and contractors.

For more information, visit www.wattstopper.com

Skylight from Carlisle Enhances Energy SavingsCarlisle SynTec’s DryLight® is a skylight with fully encapsulated glazing that’s designed to provide enhanced energy savings and extended warranty coverage when installed on commercial buildings. The durable bond between DryLight’s frame and its dome reduces the leakage typically associated with traditional skylights.

For more information, visit www.carlisle-syntec.com

buyers’ guide to building Products and services


PRODUCT DETAILS

Bosch Adds 9-22mm Varifocal Lens to FlexiDome Camera SeriesBosch Security Systems, Inc., a full-line manufacturer of high-quality security solutions, has expanded its FlexiDome camera series with the introduction of a 9-22mm varifocal lens that adds 20 new models to the line. The 9-22mm varifocal lens is ideal for recognizing objects up close, providing wide area coverage up to 31.2 degrees horizontal and 22.8 degrees vertical (and telephoto coverage up to 12.8 degrees horizontal and 9.6 degrees vertical), and enables surveillance system operators to identify a person positioned up to 130 feet away from the camera. The lens, which is IR-corrected to keep FlexiDome Day/Night cameras in focus at all times, has enhanced sensitivity and faster reaction to light changes.

For more information, visit www.boschsecurity.us

TectaGreen Roofing System Features Installation OptionsTecta America’s TectaGreen continuous green roof system is modular and can be pre-planted or installed and filled on-site in units. Known for environmental performance, flexibility in design and overall plant health, these modular systems include plants that are tolerant of the rooftop environment, and growing media blended and engineered for sustainable green roofs. The system is made of recycled-utility, high-molecular-weight polyethylene.

For more information, visit www.greenroof.com

Jamestown’s Solid Solutions™ Offer Green, Convenient Water TreatmentsJamestown Technologies has introduced SOLID SOLUTIONS, a series of solid-based, drum-free, leak-free, spill-free, green water treatments. The line includes corrosion inhibitors, dispersants and microbiocides for cooling, boiler and closed-loop water systems. The SOLID SOLUTIONS containers are inserted into an economical wall-mounted panel that dilutes the solid using normal pressure tap-water. The operating costs associated with the SOLID SOLUTIONS system are comparable to standard liquid treatments. The system also increases safety, is eligible for LEED credits and was a nominee for the EPA Presidential Green Chemistry Award.

For more information, visit www.jamestowntech.com

Measure Energy Consumption and Emissions with E-Mon’s SubmetersE-Mon D-Mon® Green Class submeters are a cost-effective way to benchmark and monitor energy usage. Because they offer utility-grade metering accuracy, they are ideal for measuring and verifying energy-related initiatives for programs such as LEED, and compliance with the EPAct. Green Class submeters provide helpful information, such as kilowatt-hours in dollars, current demand load, power and net usage and much more.

For more information, visit www.emon.com

Technical Concepts’ Hands-Free Retrofit Adds Improved HygieneThe AutoDoor™ Opener from Technical Concepts is a cost-effective system that automates virtually any new or existing non-latching washroom door, allowing for a touch-free exit from public washrooms. The door opens when an exiting patron places a hand in front of the touch-free sensor. An optional second sensor makes entry into the washroom touch-free as well, further improving hygiene.

For more information, visit www.technicalconcepts.com

Trane’s IntelliPak™ II is Designed for Multiple-Story Building ApplicationsThe IntelliPak II packaged rooftop system, designed and manufactured by Trane for multi-story industrial/commercial facilities, uses HFC refrigerant, which is environmentally friendly and non-ozone depleting, as well as required by the Clean Air Act. The system includes variable-air-volume boxes and integrated controls, and a fresh-air-measurement feature has been added to ensure proper ventilation levels.

For more information, visit www.trane.com


conference connection

At A time when international relations, politics, the energy crisis and the con-stantly changing state of the global econ-omy headline the news nearly every day, BOmA international is bringing one of the most renowned foreign policy experts to the BOMA International Conference, June 28-30 in Philadelphia, to help put the issues of the moment in context with the issues facing the commercial real estate industry. Dr. Fareed Zakaria, edi-tor, at Newsweek international and CNN host, will share his insight on the politics and culture of the global economy, solu-tions to the energy crisis, global threats and U.S. foreign policy.

Described by Esquire as “the most influential foreign policy adviser of his generation,” Dr. Zakaria is widely respected for his ability to spot eco-nomic and political trends around the world. He has interviewed a broad range of world leaders—Barack Obama, Henry Kissinger, Condoleeza Rice and tony Blair, to name a few—on his weekly international news program Fareed Zakaria, GPS, on CNN Worldwide, and

Fareed Zakaria to Headline Monday General Session

five reasons Why…the BOMA International Conference and The Office Building Show is THE Most Important Industry Event in 2009

1 Value, Value, Value. The country is in a recession and commer-cial real estate is feeling the pinch. The BOMA International Confer-ence has the experts, resources and educational tools to help you manage your buildings more effectively, retain tenants, motivate your team and stay competitive. The real-world solutions you walk away with will enhance the value of your property so you can do more than just survive this economy; you can thrive in it.

2 Questions ansWered, solutions ProVided. Opera-tional excellence is more important today than it has been in years. The solutions providers at the The Office Building Show will show you how to reduce operating costs, identify cost-saving energy-efficiency solutions and enhance property value. But don’t expect the “hard-sell” environment of many trade shows. The Office Building Show is the ideal place to build cooperative relationships with the industry’s best product and ser-vice providers.

3 Plug-in. When times are tough, networking and sharing ideas with peers is more critical than ever. If two heads are better than one when it comes to solving problems, just imagine what a few thousand can accomplish.

4 a Break to Your Bottom line. The rumors are true; we are not raising registration fees for 2009. We know that budgets are tight, so we are offering more flexible regis-tration options to make this critical investment even more affordable.

5 Because You loVe it. The industry’s best education, dis-tinguished speakers, peer network-ing, cutting-edge strategies and solutions—there’s a reason you keep coming back. It’s the best conference around. for the conference program and registration

details, visit www.bomaconvention.org

he has written for several distinguished news publications, including The New York Times, The Wall Street Journal, The New Yorker and The New Republic. He is the author of the international best-seller, The Future of Freedom, a global analysis of how democracy has changed every aspect of our lives, from econom-ics and technology to politics and social relations. His most recent book, The Post American World, is about the “rise of the rest”—the growth of China, india, Brazil and other countries. it was an instant New York Times best-seller when it was published in may 2008.

Born in india and educated at Yale and Harvard, Dr. Zakaria has served as an analyst for ABC News, a roundta-ble member on This Week with George Stephanopoulos and host of Foreign Exchange on PBS. He has appeared on The Daily Show, Charlie Rose, The News-Hour and BBC World News. His honors include the Overseas Press Club Award and nominations for two National maga-zine Awards.

June 28-30, 2009 Philadelphia, PA

The BOMA International Conference

and The Office Building

Show

Every^


For Quality Assurance Through Education.

“BICSI provides a higher level of learning. When you work with someone who has gone through BICSI training, you know the job is going to be done well, especially if that person is BICSI-certified.”

Angel MaisonetTelecommunications ManagerTampa International Airport

EducateNever Stop Learning

Stay informed and keep your skills fresh, visit www.mybicsi.org/70.

BOMA-Jan-Feb 09.indd 1 12/1/2008 10:47:34 AM

Elevating Expectations in a Down Market. At Fujitec, we are committed to complete customer satisfaction. From instant cost-saving solutions to delivering uptime, safety and reliability, our service team of experts is “Elevating Expectations” in America’s busiest and most successful buildings every day.

Fujitec offers the unique ability to provide value to customers through: the Strength of Fujitec’s culture of integrity; product Endurance via unmatched engineering quality; and Flexibility in service, maintenance and modernization.

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