In the airline industry, consumers can begin and complete the ticketing process entirely online. But the commercial real estate industry has long lagged behind when it comes to employment of such electronic automation. Ultimately, it may not be practical, or even desirable, for the industry’s loan processing to be as advanced, but automation continues to progress, with several successes on the horizon.

“We are on the verge of the technological issues being solved. Once that happens, it will become more interesting for everyone to participate (in the new systems),” predicted Jim Flaherty, president of CMBS.com. Flaherty thinks the commercial property industry is close to the universal adoption of XML, a computer language that renders the data contained in scanned documents, formerly incorporated in, say, pdf or Microsoft Word files, machine readable and automatically transferable into back-office storage systems.

One concern specific to the commercial real estate industry is the question of how to avoid the repeated input of data at various stages of the mortgage loan cycle. As CMBS.com explains, “origination data reaches the lenders in a wide range of formats and levels of completeness.” As data is input throughout the mortgage financing life cycle—from origination through underwriting, closing, servicing and even disposition—it can eat up significant human labor hours, with potential for typing errors or lost information. For example, the mortgage originators receive third-party re- ports in a variety of files. The transfer of information to their computer systems often involves copying and pasting.

To automate the data transfer process in the commercial real estate sector, the Mortgage Industry Standards Maintenance Organization, or MISMO, a “technology standards development” organization for the real estate industries, has identified a need for a common XML language and a data dictionary that ascertains and defines the common terms used in the industry, such as “loan amount” or “credit risk.” With the achievement of these two requirements, data could then be easily transferable from system to system. “MISMO has gone through all the property types and identified key data to understand in each of the sectors,” said Flaherty, who is also a governance member of MISMO’s commercial workgroup.

Currently, in the commercial real estate world, electronic commerce is most matured on the back end—in the loan servicing stages of the loan life cycle—and least advanced on the loan originations side, according to Flaherty. “I think where we are in the cycle is very early,” he said. However, “when the lender takes the application and moves through commitment, closing, servicing and disposition, all that part of e-commerce—that is mature. It is way better than it has been.”

One reason that processing on the loan servicing side is more technologically advanced than on the originations side lies in the nature of loan servicing. The repetitiveness of the loan servicing process lends itself well to, and creates a greater need for, automation, suggested Stacey Berger, executive vice president of Midland Loan Services. “Origination is a one-time event, (but) servicing on a 10-year loan entails hundreds of processing, asset management and payoff events. There are hundreds of discrete actions in servicing over the life of the loan. Originations, by contrast, though by no means simple and easy, is a one-time process,” Berger pointed out.

In the area of loan originations, it appears that Freddie Mac may be among those that are most advanced in placing the system online at the pre-application, application and underwriting stages. At the other end of the spectrum, life insurance applications are still submitted in the form of paper packages that are Fedexed, emailed and “pdf’ed,” noted Larry Stephenson, executive vice president & regional manager for NorthMarq. Falling in between the two groups in technology utilization, CMBS loan originations today employ technology to a greater extent than life insurance companies but less so than Freddie Mac.

There may be several reasons that certain financing sectors are less automated than others. “Multi-family properties can be complicated, but even the most complicated multi-family property transaction is not as complicated as a mall transaction that has 50 leases for 50 tenants. Each individual mall lease differs and displays its own tweaks,” said Stephenson. Indeed, NorthMarq had attempted to develop an automated underwriting system but ran into difficulty in handling the large number of variables in the commercial mortgage loan.

Next Steps for XML, MISMO

In order for the commercial real estate industry to advance computerization further, XML needs to be more universally adopted and the data dictionary completed. CMBS.com’s Flaherty explained that an XML spreadsheet can, for example, incorporate more information by allowing for more than the two dimensions possible in an Excel spreadsheet. MISMO is in fact currently working on developing standards for commercial real estate loan originations that would allow the borrower to submit property information in XML files to the lender. “We are trying to make it as basic and fundamental as possible. MISMO has not been as successful so far because of the massive dictionary. However, the loan originations standard is not as massive.”

MISMO is about halfway through the development of these standards for loan originations, and the standards should be completed in the next few months, reported Flaherty. Meanwhile, at the servicing end, the Dodd-Frank financial reform law requires the adoption of XML for all CMBS investor reporting. “By the spring of 2013, 2014, all back-end investor reporting for CMBS will be in XML,” he said.

At the loan originations end, however, it remains to be seen how many lenders will take advantage of the borrower-input XML technology that will be made available. “Companies may be using (these) tools to underwrite financial statements wherever that is available,” said Mark McCool, executive vice president & head of servicing at Berkadia. “But loan originations is more borrower- than technology-focused. We are on the phone with the borrowers, walking them through the approvals process. That is a more personal relationship, and it is a differentiator and important to us. Additionally, at the end of the day, the originator needs to know every aspect of the loan they are recommending.”

In this regard, commercial real estate financing at the application stage may by choice never reach the automation level achieved by the airlines and many other industries.

Outside of a handful of primary markets and property types, real estate continues to suffer. Yet in many jurisdictions, assessors have failed to decrease taxable values to keep pace with real estate market declines. As a result, savvy owners and managers have been appealing their assessments with ever-increasing regularity, weighing down local and state tax board and court dockets with a ponderous backlog.

In some communities, assessment appeals are now years behind. In litigious markets, the appeals themselves often last several years. Thus, tax cases are taking years longer to resolve at a time when taxpayers needed relief yesterday.

In Ohio, Pennsylvania and New Jersey, to name a few states, tax cases commonly wait on the docket for two or more years, but today some cases are unlikely to be resolved for four or more years.

On the other hand, in states like Florida and Texas, taxpayers are still getting relief at the informal and board levels. These states have annual assessments and are accustomed to a large number of appeals. Moreover, since assessors in those states have tended to keep pace with the changing market in annual revaluations, assessments have already been reduced in many instances.

The length of time it takes to resolve a case in a particular state often reflects at which stage of the appeal process most cases reach a resolution. States with a faster turnaround time are generally those that grant greater leniency for assessors to resolve issues.

Where greater flexibility exists, taxpayers with limited evidence can discuss the macroeconomic changes that took place while offering specific evidence, allowing for a true give-and-take negotiation and resulting in fast, meaningful changes to tax assessments. Where assessors and boards are deprived of sufficient latitude, assessment appeals tend to take on a court-like atmosphere where each fact is argued, often resulting in an appeal of the local board’s decision. This litigation delay is com- pounded when other taxing authorities, such as school districts, intervene in the process.

A tax appeal backlog is a symptom of a system that disfavors taxpayers. There will always be a group of cases that are complex and require further appeal, or that involve taxpayers who are not fully satisfied. But delay is almost always against taxpayers’ interests, while if a great number of taxpayers routinely appeal to a higher board or court, it is clear they did not get a proper result at the lower level.

Backlog is unfortunately viewed as the problem, and as a result administrators address the backlog and not the underlying issue. For instance, some states are shortening the trial time of a case. For commercial cases, the taxes contested are often in the tens or hundreds of thousands of dollars, having the effect of reducing taxpayers’ investment value by millions of dollars.

In Kansas, there has been talk of potentially limiting trials to a half-day. That may be insufficient time for cases involving complex commercial properties. In Ohio, the tax commissioner has proposed a small-claims section to alleviate pressure on court time. Several Pennsylvania counties are turning to arbitration, with great success. Other states look at funding or ease of filing as the problem, and are imposing higher filing fees to either raise funds or dissuade taxpayers from filing appeals.

Navigating the Logjam

The key to successful litigation in a state with significant backlog is to consider that backlog at the outset and to determine if the benefits of a quick result outweigh a more satisfactory result months or years later.

Local counsel is a key to understanding the ebb and flow of court dockets, as well as understanding opposing counsel’s needs and wants, to be able to structure the best deal possible for a taxpayer. In some instances, taxpayers can take advantage of the backlog when there is a large pending refund. It may be possible to negotiate a reduction in the refund by taking it as a tax credit over time instead of having the possibility of that refund being reduced dramatically or taken away completely in a trial.

Finally, in an environment where government fiscal needs may be in direct opposition to taxpayers’ need for fairness and uniformity of taxation, it is helpful to get involved with regional and state chambers of commerce and trade groups. These organizations are working toward solutions to real taxation problems and not just the issue of backlog.

Kieran Jennings is a partner with the law firm of Siegel Siegel Johnson and Jennings, which focuses its practice on property tax disputes and is the Ohio and Western Pennsylvania member of the American Property Tax Counsel, the national affiliation of property tax attorneys. He can be reached at kjennings@siegeltax.com.

Commercial real estate is notorious as a lagging adopter of new technologies, but even so, the industry is coming to appreciate the value of software systems integration. The concept is sprawling and complex—much like the software systems themselves—but it all boils down to replacing formerly separate software systems with a single framework whose functionalities are closely coordinated. Products are now on the market to provide such integrated systems, but since no two commercial real estate companies need exactly the same functionalities, customization is quite common.

However integration is set up, the goal is the same among commercial real estate companies: enabling a company to look after its assets more efficiently by using data more effectively than before. As computerization in real estate evolved beginning in the 1970s (and later, in many cases), data tended to pool around certain functions, such as property management or accounting or leasing. Separate databases tended to reinforce the formation of corporate silos, especially within larger firms with separate staffs in locations that may have little contact with each other.

The phenomenon of silos, of course, has long been decried by corporate thinkers. The formation and hardening of silos is thought to discourage the use of all available talent to bear on solving companywide problems, or in the case of commercial real estate, portfolio-wide ones, as the vested interests within the silos either resist outside “interference” or erroneously believe they have all the tools necessary to solve their problems.

Moreover, the impact is often more than just psychological (as in turf wars or interoffice rivalries). A long corporate history of separate software systems, with native environments based on different operating systems or database architecture or even computer languages, can make it devilishly hard to upgrade an organization’s information technology. Though not in commercial real estate, one infamous example of a nightmarish effort to improve separate software systems has been undertaken by the IRS, which for years was notorious for its mishmash of systems, a situation so bad that at one point the agency did not know how many computers it had or what they were all doing. After 12 years of IT modernization at a cost of about $3.7 billion, the agency still has significant issues with security, e-filing and other matters.

Advantages of Integration

In the early days of computerized commercial real estate, systems separation was simply the way things were done. But by the early to mid-2000s, more sophisticated software systems, along with the universality of online connections, began to offer companies better options for software integration. Databases, and the tools for analyzing data, became a lot more sophisticated, as well—just in time, as it happened, for an upsurge in demand for more upscale analyses of real estate assets of all kinds.

“Since 2007, there’s been strong demand for more information, and for more higher-quality information, because of declining real estate values,” said Rob Teel, vice president of global solutions at real estate software system provider Yardi Systems Inc. “Owners and investors want to know why. They also want deep analyses that will help them see their assets through difficult times. That’s been driving real estate companies to integrate into a single software stack.”

Another factor driving systems integration is the expanding universe of CRE ownership, and their expanded interest in accessing uniform data. As increasingly complex ownership structures evolve, so do the cases in which information has to be distributed among multiple parties with an interest in a portfolio, such as major investors or JV partners. In the past, such parties might have been content with a summary of data from a managing partner, but as computing power has become cheaper and more efficient, their demand for entire buckets of data has grown— the better to do their own analyses of what’s going on with the portfolio. Integrated systems facilitate this flow of data.

Proponents of integrated systems explain that they provide better information to their users, thus empowering them to make better decisions in these difficult times. “Building an integrated backbone is customizable user interface, portfolio accounting and performance data, but it also has features suitable for operations in a number of countries. The system can do value-added tax, or VAT, processing, multi-currency conversion and local language invoices, among other things. “All future investment programs in the U.K., France and Germany will be put onto the system as they come online,” explained Chris Boatfield-Bell, financial controller for European funds at CBRE Investors.

Another example of the successful use of an integrated software sys- tem involves the state of Missouri, which oversees about 30 million square feet of owned and leased properties. The state determined that it needed an integrated, Web-based system for tracking and optimizing its inventory usage and billing, work-order management and energy-efficient initiatives, among other things. It selected Archibus to set up the system.

The state now uses an integrated suite of Archibus real property and lease management, space management and building operations management applications. Since the adoption of the system, the state has realized a variety of benefits, according to David Mosby, Missouri’s director of facilities management design and construction, such as more than $10 million in annual savings from improved billing, space important, because you need the collective effort of all the specialties within your company working on the same page,” said Wise Cho, CFO of Archibus, another specialist in real estate software systems. “That’s not only more efficient from an IT perspective—instead of having multiple solutions to update, there’s only one—but it also fosters the optimization of real estate assets,” both in financial terms and in the best use of physical spaces.

“An integrated system puts the same data, say about occupants or leases or other useful information, across multiple functions,” explained Michel Theriault, principal of Toronto-based facilities and property management consulting firm Strategic Advisor. “Certainly that can improve operational efficiencies, since the data is accessible without mistakes of re-entry or translation from one system to another.”

In an integrated environment, some species of CRE data are more complicated to analyze than others, but the tools now exist for effective analysis, said Teel. “Financial information is fairly straightforward, while lease-level data and KPIs (key performance indicators) are more complicated,” he noted. “But with current systems, it’s possible to drill down into your data to a very granular level.”

Achieving Success

Large financial and tech companies have long been adopters of integrated software systems. More recently, large commercial real estate firms have been, as well. For instance, investment management firm CB Richard Ellis Investors, which has a complex web of investment programs and joint ventures in various countries, approached Yardi when planning an expansion into the United Kingdom and the rest of Europe. The company’s goal was to implement a single global system that would allow it to report seamlessly across continents.

For that purpose, the company picked Yardi Voyager International, which combines property and portfolio management in a real-time, Internet-based system. As befitting an integrated system, Voyager International provides information access from a centralized database, a utilization and lease management. Also, the government of Missouri has already been able to eliminate about 300,000 square feet of leased space, also at a savings.

While CBRE Investors has succeeded in its effort with a sprawling transnational portfolio and the state of Missouri with its midsize yet complex portfolio, the jury is still out on whether companies of any size could benefit, even much smaller ones.

Consultant Theriault is not so sure. “A relatively small company might not need all of the modules that a fully integrated system provides,” he observed. “If you only need one or two functions, it might still be best to go with a standalone software package. The important thing is for companies to get the software packages they need, and not pursue integration for integration’s sake. While integration is an ideal and the right solution for some companies, for others it would be overkill.”

Theriault added, however, that there really isn’t any data on how large and complex a portfolio has to be for a real estate operation to benefit from integrated software systems. “Each case is unique,” he said. “It’s a judgment call for management, after consulting with the IT department.”

On the other hand, Cho believes that even small commercial real estate companies can benefit from systems integration. “The systems can be designed to meet the needs of an owner or manager with only a handful of buildings,” he said. “And as information technology becomes less expensive, I believe that integrated systems will be the norm in the industry for just about everyone.”

At this stage of a career that spans a half century—including 40 years at the helm of the diversified real estate firm that bears his name—Robert Voit is more than entitled to take a victory lap and head to the golf course. Since founding Newport Beach, Calif.-based Voit Real Estate Services’ predecessor firm in 1971, Voit has built a powerhouse that provides tenant and landlord representation, investment management, property management and principal acquisition to select markets in the Western United States.

Today, 45 million square feet of development, acquisitions and property management bear his imprint. Voit Real Estate Services and its predecessors have completed construction projects valued at $1.5 billion and transactions worth $33 billion. Voit has also made his mark as a developer, contributing significantly to the shaping of the nation’s second-largest metropolis through a series of innovative projects. Along the way, Voit’s refreshingly old-school approach to business has earned the trust of elected officials, institutional investors and the public.

“Bob has had great success because he has a great deal of integrity,” explained Brad Rosenheim, a land-use and entitlement consultant who started working with Voit on development projects as a Los Angeles City Council staffer some 25 years ago. “He means what he says, and he fulfills the commitments that he makes. As a result, he has a tremendous reputation for doing good work.”

Rather than calling it a day, however, Voit is relishing the opportunity to recalibrate the firm’s strategy in the face of a market that he calls the most challenging of his long career. Though Voit has lived through numerous market ups and downs during more than four decades in the business, “this is probably the biggest adjustment required in the 50 years I’ve been in commercial real estate,” he said.

For Voit’s team, no less than many other industry players, the years since the fall 2008 financial crisis have demanded soul searching about the company’s direction. The consensus opinion among the senior brain trust was to aggressively expand services in targeted areas such as leasing, financial management and property management. The multi-front strategy that emerged is founded on a single principle: “We wanted to have a platform that will be relevant in the good times and in the bad times,” Voit explained.

In response, Voit has re-focused the company on the service side, working to expand its presence in property management, leasing and investment sales. “I think of us as a real estate operator,” Voit explained. “We want to be able to handle all aspects of commercial real estate for institutional and commercial clients.”

The company has continued to grow in the face of economic volatility. In 2010, Voit rebooted its Phoenix office, which had closed two years earlier in the midst of the capital markets meltdown. The company’s 10th office also made its debut in 2010, when Voit hung out its shingle in Southern California’s powerful Inland Empire. Voit’s nine other offices include locations in Phoenix, Las Vegas and seven more in California.

A centerpiece of the company’s revamped strategy is services related to distressed assets. In 2009, Voit made the pivotal decision to launch an expanded business line dedicated to the discipline. The soundness of that decision has since been confirmed by industry trends. Voit cites studies indicating that sales involving distressed assets in its markets increased from 2 percent of the total in 2008 to 30 percent by 2011. By square footage, distressed properties figured in more than three-quarters of sales in those markets.

Geared toward financial institutions and other lenders, the new practice has enlisted a roster of national and regional heavyweights, like Bank of the West; Iron Point Titan; and LAMCO L.L.C., which manages the legacy real estate assets and other investment interests of Lehman Brothers Holdings Inc. Demand for services has been particularly heavy in Orange County, Sacramento, Phoenix, Las Vegas and San Diego, Voit reported.

The distressed-asset initiative has quickly gathered steam. And during a particularly productive six-week stretch last summer, Voit won assignments to handle 14 distressed properties totaling 944,000 square feet in Orange County, Calif.; San Diego; Phoenix; and Las Vegas. By August 2011, the new practice had completed 11 assignments and was handling more than 125 others. Thanks in large part to Voit’s bet on the demand for distressed services, the company’s bottom line is enjoying a healthy boost. By the fall of 2011, brokerage had improved 22 percent year over year, and revenue had jumped 53 percent.

Going forward, Voit is also eyeing stepped-up activity in the company’s principal investment business, predicting, “We’ll be looking to be more aggressive in acquisitions.” The company is particularly focused on deals in the $5 million to $100 million range and is pursuing core-plus, valueadded and opportunistic buys alike. Rather than going it alone as an investor, Voit intends to continue a career-long practice of joining forces on investments and developments with commercial banks, private investment funds, life insurance companies and other institutional players.

Another growth area is property management, which has grown by about 50 professionals in the past couple of years, Voit said. In a short time, the management business has established a stable of 15 clients. As in other aspects of the company’s activities, its property management work has a geographic focus: It favors California, Arizona, Nevada, New Mexico and Washington. That move raises Voit’s profile in a service line that the company sold to Transwestern a decade and a half ago—a move that hindsight has led Voit to view with some regret.

For Voit, the re-focus and new services bring him full circle. He started in the business on the service side, working his way up from the mailroom at Coldwell Banker to a position as an office leasing broker. But by 1971, Voit was looking for a new challenge. He left Coldwell Banker and launched Voit Corp., a development company that was the ancestor of today’s firm. The company’s first project was an 80,000-square-foot, twophase office project. During the next decade and a half, Voit gradually built the firm into a one-stop shop. He introduced a property management business in 1973 to handle the company’s own assets as well as provide services to third-party clients.

In 1977, Voit and partner John DeWeese founded Valley Commercial Contractors, which has served as the company’s construction unit for the past 35 years. In that time, Valley Commercial has completed projects valued at $1.3 billion. Yet another milestone was the 1987 debut of Voit’s commercial brokerage business, which has completed upwards of $33 billion in lease and investment sales transactions. Remarkably, 14 of the brokers who signed on to launch the transaction unit are still with the firm more than two decades later.

Pioneering Projects

Although Voit has made his mark in multiple real estate specialties, he is probably best known to the general public as an innovative and community-minded developer. “Bob is one of the great visionaries that I know in the real estate industry,” said Rosenheim, the consultant and former Los Angeles City Council staff member. Persistent in the face of daunting odds, the upbeat, engaging Voit is the polar opposite of the “my way or the highway” developer. Colleagues call him an expert listener who seeks input from the community, elected officials and government agencies, then incorporates those concerns into the finished product.

The project that will likely stand as Voit’s signature development, the $500 million Warner Center in Woodland Hills, Calif., began life as the rural retreat of a Hollywood mogul. In 1974, Voit teamed with New England Mutual Life Insurance Co. to develop more than 200 acres of a San Fernando Valley horse ranch formerly owned by Harry Warner, a co-founder of the Warner Brothers entertainment empire. Voit foresaw the area’s potential, and set his sights on what seemed to many at the time like an impractical idea: transforming the Warner property into a mixed-use development and business hub for the seemingly remote western San Fernando Valley.

Over the next decade and a half, the project unfolded in two major components. The low-rise portion, Warner Center Business Park, is a 944,000-square-foot development. Voit complemented that with the 2 million-square-foot Warner Center Plaza, which includes five high-rise office towers. During the past three decades, Voit’s once improbable project has proven to be transformative. Today, Warner Center stakes a claim to being the leading business district in the sprawling, 250-square-mile San Fernando Valley.

Voit’s approach to the development was ahead of its time in other ways. “With his leadership, Warner Center created a very active transportation management association,” explained Rosenheim. Warner Center is considered a model for mass transit in a region that battles traffic congestion and smog, offering a major bus hub and a light-rail station. Those elements give it one of the best occupant-to-vehicle ratios in Los Angeles, Rosenheim pointed out. Voit also set Warner Center apart from the competition by incorporating amenities like day-care facilities, restaurants, service retail and a hotel.

After 20 years of developing and owning the property, Voit began exiting its interests during the mid-1990s. A joint venture of the Alaska Permanent Fund Corp., the state’s public investment management fund, and the Harvard University endowment fund bought a 2.3 millionsquare-foot portion of Warner Center for an undisclosed price in 1995. The following year, CarrAmerica Realty Corp. paid more than $50 million for a 12-building, 343,468-square-foot portion of the low-rise Warner Center Business Park complex. That deal marked the conclusion of Voit’s ownership stake in Warner Center, although the company continued to provide property management services for some time afterward.

The credibility conferred by Warner Center’s success continued to yield dividends long after Voit’s exit from the property. His reputation for business acumen led to a pivotal role in a unique public-private partnership. The project grew out of a proposal in the 1990s by the late Los Angeles City Councilman Marvin Braude. He wanted to build a one-stop shop of city services for constituents in his San Fernando Valley district. The proposal fell short at first but resurfaced a decade ago after Braude’s retirement.

Negotiations with city staff yielded a complex agreement for construction of a 142,000-square-foot facility. The contract provisions featured innovations that have yet to be replicated on a Los Angeles city project. Under standard city procurement rules, planners begin by selecting an architectural consultant, which submits a design to city agencies. Once approved, that design is posted for bids by construction contractors.

Instead, Voit was selected for single-point responsibility, not only building the project but choosing and supervising the architectural team’s work. Voit was allowed to lease the cityowned parcel for 30 years, then deliver the project on a turnkey basis. Former Los Angeles City Councilmember Cindy Miscikowski, a former Braude aide and his successor, cites Voit’s “stellar delivery of product and his reputation” as factors that gave city officials confidence in the firm’s ability to deliver the project on time and on budget. Voit took pains to solicit community input and incorporate it into the project.

In June 2003, Voit completed the Marvin Braude San Fernando Valley Constituent Services Center $2 million under budget and five months ahead of schedule. Upon the project’s completion, the city exercised its option to buy the facility outright. “No hurdle was too big to overcome,” Miscikowski added. “Many another developer would have walked away or said, ‘Sorry, it isn’t worth the brain damage.’ I can’t think of another developer who would have stayed with it.”

She also suggests that the project played a role in easing tensions that once threatened to pull Los Angeles apart at the seams. By the mid1990s, a sense of alienation from the rest of Los Angeles sparked a secession movement aimed at establishing the San Fernando Valley as a separate city. Miscikowski speculates that development of the high-profile Braude Center sent a much-needed message to Valley residents that they are a valued part of the city. By the time the project was delivered in 2003, she noted, discussion of secession had begun to die down.

Voit’s development projects have contributed to community-building in other respects, as well. One such endeavor started with the 1993 departure of General Motors Corp. from its longtime manufacturing facility in Van Nuys, a community in the southern San Fernando Valley. Los Angeles City Council member Richard Alarcon, who represented the area, sought to redevelop the property in a way that would shore up the community’s sagging economic fortunes. He negotiated a deal with General Motors that would re-zone the property as approximately one-third retail and one-third industrial. For its part, GM retained slightly less than one-third of the property for a testing facility, and five acres were set aside for police and fire stations.

To develop its 66-acre section of the site, Voit planned a $75 million mixed-use project on adjacent parcels. The firm took the lead on the 800,000-square-foot industrial portion, and teamed with Selleck Development Group on building 370,000 square feet of retail dubbed Van Nuys Center at the Plant.

In completing such difficult and complex projects, Voit has demonstrated a rare combination of qualities. Though a master at bringing an extraordinary vision to life, he also approaches his work with remarkable grace and style. When it comes to development projects, Miscikowski said, that means “integrating the elements of the community into the elements of the building.” For a lifelong builder like Bob Voit, there might be no finer legacy.

As advances speed up, they are ascending to a higher plane. Hardware has been reduced to two dimensions and software has increased to four. Communication is occurring ever faster, and systems are increasingly being aligned for greater efficiency. A case in point: After years of debate, the finance industry may be close to universal adoption of XML, the common computer language that CMBS.com, MISMO and others have worked diligently to create so data can be easily transferred.

For all its promise, the implications of XML adoption are far from simple: Originations may have too many unique aspects to make universal implementation likely—or desirable. But XML use will certainly make servicing a much smoother process.

Exciting new tools and strategies are surfacing in other areas, too, ranging from software integration to truly intelligent buildings to experiments with more efficient sustainable design. And as Realcomm founder & CEO Jim Young notes in his featured guest column, this reflects a trend that is practically occurring in real time, as the industry has shown stepped-up interest in some innovations during the past few months.

To ring in another year of improvements aimed at advancing the industry, CPE is dedicating a major portion of the January issue to technology. Throughout the pages that follow, you will find insights into cutting-edge experimentation and how technology is impacting a variety of business areas. Special features include Young’s retrospective look at 2011 in a section that also features highlights of the Realcomm Marketplace, and a Q&A with Steve Messaros, chief information officer of Liberty Property Trust. Messaros discusses the company’s forward-thinking integration of real estate, information technology and human resources and the measures this forward-thinking company has been able to put in place as a result. Other articles look at finance, property management tools and companywide software integration.

Encouraging as these trends are, progress in the industry extends beyond technology. While ups and downs in this volatile economy have slowed hiring, real estate firms in a number of categories continue to add to their rosters. Some companies are rewarding achievement at record levels, with further increases a distinct possibility. To help you benchmark against other industry companies, we are pleased to offer the annual CPE-FPL Hiring & Compensation Report, featuring data and analysis from FPL Advisory Group’s Bill Ferguson and Jeremy Banoff.

At this early stage of the new year, it is difficult to predict which direction commercial real estate will take in 2012. European debt crises, political stalemates and municipal bankruptcies make for a potent brew of variables. But as this issue’s reports indicate, innovations today can help the industry perform better—no matter what the world economy may bring.

With the acquisition of the former Miami Heart Institute, Lionheart Capital L.L.C. has just gotten its hands on a prime waterfront property in Miami. The real estate investment firm acquired the 700,000-square-foot facility from Mount Sinai Medical Center.

“The market response was exceptional because of the location; it really drew people in,” Ike Ojala, director with Holliday Fenoglio Fowler L.P., the real estate services firm that marketed the asset on behalf of the seller, told Commercial Property Executive.

Sited at 4701 N. Meridian Ave. in a residential neighborhood roughly one mile from the Mount Sinai Medical Center, the Miami Heart institute encompasses a seven-story hospital building and two parking structures. Features unique to the property are a waterfront dining facility and a 241-seat auditorium within a conference center.

“There was a good amount of interest from a variety of buyers,” Ojala noted. Obviously, the location is world-class. You’re on Miami beach with absolutely stunning views of the Ocean, Biscayne Bay and the Miami Skyline. And it’s in a very nice residential area.”

Investors from all walks — developers and redevelopers, seniors housing-type users and the usual suspects — had their eye on the Miami Heart Institute.

Financial terms of the transaction have not been publicly disclosed. While the property fetched a great deal of attention, when commercial real estate services firm Jones Lang LaSalle had marketed the asset during the economic downturn in 2009, there were apparently no takers. At that time, JLL had speculated that the facility would sell for somewhere in the neighborhood of $50 million, according to the firm’s press release announcing the property’s availability for purchase.

The Miami transaction is part of a larger trend, with hospitals and healthcare properties seeing increased transaction volume. “Hospital merger and acquisition activity will be a major theme in the healthcare industry in 2012,” Mindy Berman, managing director of healthcare capital markets at Jones Lang LaSalle Inc., said. “This activity involves not only hospital to hospital combinations with numerous permutations on the theme but also combinations with highly prized physician practice groups.  All of this M&A activity comes with a lot of real estate baggage.”

San-Francisco based DivcoWest has put its Fund III investment vehicle to the test, rapidly snapping up new properties – and the latest acquisition is Prominent Pointe I & II, a two-building Class A office project in Austin, Texas. Totaling 261,243 square feet, building was sold for a reported $53 million. Austin-based Aquila Commerical arranged the transaction on behalf of the seller, Aspen Properties.

The Austin purchase is the fifth acquisition for DivcoWest’s Fund III since its inception in late 2011. In December, the fund purchased a five-property Silicon Valley office portfolio for $40 million and, in November, the firm partnered on a joint venture with Stockbridge Capital for the $47 million buy of Genessee Executive Plaza in the University Town Center submarket in San Diego.

Stuart Shiff, the CEO of DivcoWest, said his firm has been targeting high-value assets in the Austin market, especially in the technology arena. “Austin, as one of the premier tech-oriented markets in the country, is one of our natural targets for investment,” he said.

A fourth-quarter report by services firm Cushman & Wakefield Inc. shows that the office sector – especially in the tech sector Shiff mentioned – has continued to outperform the nation in general. The city’s unemployment rate stood at 6.6 percent at year’s end, compared with Texas’ rate of 7.5 percent and the national rate of 8.2 percent. “Throughout the beginning of 2012, look for (office) vacancy to decline, absorption to remain positive and rental rates to steadily increase,” the report noted.

Prominent Pointe I totals 153,312 square feet and was completed in 1986, with substantial improvements completed in 2007.  Prominent Pointe II totals 107,931 square feet with a 671-space covered parking garage and was completed in 2008.

In order to best take advantage of its trophy property at 1177 Avenue of the Americas in Manhattan, the partnership of Silverstein Properties and California State Teachers’ Retirement System has chosen Jones Lang LaSalle Inc. as its leasing agent for the Class A, 1 million-square-foot office tower. The building, formerly known as the Americas Tower, will undergo a re-development program as part of the leasing efforts.

Calling the re-development “extensive,” Paul Glickman, a vice chairman with JLL, noted that the building’s tenants draw from a variety of industries and include PricewaterhouseCoopers L.L.P. and The Carlyle Group. The building was completed in 1992 and sits on Sixth Avenue between West 45th and West 46th streets. JLL also noted that approximately 248,479 square feet of office space is available at the property in three separate blocks.

Silverstein Properties, as per usual, has been in the news for its moves in the New York market. In December, the firm named Martin Burger as its co-CEO in order to drive new business outside of home base in the five boroughs. As recently as last month, the developer was also at the center of some debate as to the height of 3 World Trade Center, which is currently under construction and active leasing.

California retirement systems have been making some moves of late; in mid-2011, the California Public Employees Retirement System transferred $570 million of assets to a new management firm in order to better manage its portfolio.

As of 2010, CalSTRS was the largest pension fund in the country and eighth-largest worldwide.

At its Commercial Real Estate Finance/Multifamily Housing Convention & Expo 2012 in Atlanta this week, the Mortgage Bankers Association forecasted that the economy will grow by a small amount in 2012 while interest rates will rise; the volume of commercial property will continue to expand; and there will likely be no loan-refinancing crisis as the volume of mortgage maturities continues to fall and composes a small proportion of outstanding loans.

MBA forecasts that real GDP growth will decrease from 2.7 percent at the end of 2011 to 1.8 percent in the first quarter and remain at 1.8 percent in the second and third quarters, before ending 2012 at 2.0 percent.

Speaking at a general session at the conference, Jay Brinkmann, MBA’s chief economist and senior vice president for research and education, said that the GDP increase to a 2.7 percent rate in the fourth quarter from 1.8 percent in the third quarter is partly a result of a large business-inventory buildup. Brinkmann said consumers are still exhibiting an unwillingness to make purchases, although corporations have increased their spending.

Brinkmann said there has been a trend of employment growth starting in spring 2010, but the employment increases have fallen far short of replacing jobs lost during the recession. He noted that employment actually contracted by 2.2 million jobs in January, and that the U6 unemployment rate, which takes into account discouraged workers not seeking employment, is actually 15.1 percent. MBA forecasts the official unemployment rate to fall marginally, from 8.6 percent this quarter to 8.5 percent in the second through fourth quarters.

Brinkmann expressed caution about the sovereign debt crisis in Europe, which he said is already in, or will experience, a recession this year. However, any Europe-wide recession may lead to a contraction, but not recession, in the United States.

The 10-year Treasury and the federal-funds rates will increase somewhat this year, Brinkmann predicted. Those who desire financing may want to consider locking in interest rates earlier rather than later, as Brinkmann projects that the 10-year Treasury yield will steadily notch up from 2.0 in the fourth quarter 2011 and first quarter 2012, to 2.5 percent by the end of the year. Brinkmann said he does not expect QE3 action by the Federal Reserve in 2012.

In its inaugural forecast of the finance markets, MBA projects an increase in commercial and multifamily originations of 17 percent in 2012. MBA said that the commercial and multifamily originations will hit $230 billion in 2012, and continue to rise to $290 billion in 2015. “Our forecast anticipates continued strength in lending by life companies and the GSEs, increased lending by banks and others, and a slow but steady return in CMBS activity,” Jamie Woodwell, MBA’s vice president of Commercial Real Estate Research said. “Low loan-maturity volumes over the next few years, coupled with moderate sales transaction activity, will mean that a relatively robust supply of mortgage capital will be a catalyst for deal activity.”

Speaking at the general session, Woodwell pointed out that overall commercial and multifamily originations increased by 64 percent between 2010 and 2011, and by 13 percent between the third quarters of 2010 and 2011. However, originations fell in the fourth quarter from the third quarter due to the European sovereign debt crisis In the spring and summer. Woodwell also noted MBA’s originations index hit record levels for life insurance companies in the second and third quarters of 2011, and for Fannie Mae and Freddie Mac in the fourth quarter. Compared to the same period in 2010, in the fourth quarter loans for banks increased by 122 percent, though from a low base, he said. CMBS financing, however, experienced a fall of 50 percent during that period.

Maturing non-bank loans will also decline between 2010 and 2014 before rising sharply to peak in 2016 and 2017, according to MBA. Woodwell said that $150.6 billion, or 10 percent of commercial and multifamily mortgages held by non-bank lenders and investors will mature this year, representing a 3 percent decline from the $154.7 billion that came due in 2011, and an 18 percent decline from 2010.

“MBA first conducted this survey in 2008 in response to concerns that there was a wave of commercial mortgage maturities that would swamp the market. That survey, and each one since, has shown that the volume of commercial and multifamily mortgages maturing each year represents only a small portion of the commercial mortgage universe,” Woodwell said.

Eleven percent of CMBS loans, worth $72 billion, will see the end of their terms in 2012. Woodwell said the amount of CMBS mortgage expirations will likewise decline in 2013 and 2014. MBA survey was based on $1.46 trillion of non-bank loans. Banks and thrifts hold an additional $793 billion in mortgages that are not covered in the survey, according to MBA.

Blackstone is no stranger to huge deals, and its latest transaction makes it the owner of 3.5 million square feet of industrial property in the United Kingdom. Prologis Inc. sold the 13-property portfolio for an aggregate $335 million.

“We were pleased with the amount of interest this portfolio garnered as the combination of quality assets and lease term appealed to multiple investors,” Philip Dunne, president of Prologis Europe, said. “We have sold this portfolio as it no longer fit within our investment strategy, and offered us the ability to redeploy our capital.”

The portfolio comprises 13 properties located in England’s Midlands and Yorkshire. The properties are 100 percent leased with an average unexpired lease term that exceeds nine years.

Blackstone has been picking up large parcels of property in multiple sectors of late. In early January, the firm — in a partnership with DDR Corp. — spent $1.4 billion on a 47-property retail portfolio across 20 states. In December, Blackstone purchased 36 shopping centers from Equity One Inc. for $473 million, including the assumption of $177.4 million in debt. In October of last year, the firm purchased $1.1 billion of office assets from Duke Realty Corp., netting it 10.1 million square feet of property across 82 buildings.

The U.K. industrial market is similar to its Stateside counterpart, ending the year on a mixed note as events in Europe threaten to erode the confidence that rose toward the end of 2011. According to a fourth-quarter report by services firm Cushman & Wakefield Inc., manufacturing surveys at year’s end pointed to improved performance in December, but the strong showing didn’t erase the weaker outturns for October and November – when many producers reported their worst quarters since the middle of 2009.