By Suzann D. Silverman, Editorial Director

While the Baby Boomers and Gen Y sit at opposite poles, that doesn’t make it necessary to choose between them as targets for housing or retail. In fact, according to analysis at last week’s Urban Land Institute Spring Meeting, the two groups—those in the process of entering the ranks of seniors and their children—complement each other.

That’s good news, considering they represent the two biggest generational groups in America—and when it comes to housing, the two biggest buyer groups, according to Alan Mark, CEO of The Mark Co. During a panel comparing the two generations, he quoted the Baby Boomers as comprising 47 percent of buyers, with Gen Y at 35 percent, Gen X at 14 percent and the 64-and-older group at 4 percent.

Comparing the two groups is complicated by the fact that the beginning and end of the Baby Boomer generation are more easily identified and their composition is more clearcut. A larger group than their children, they are mostly native born and mostly white, for instance, while Gen Y includes a significant immigrant population, from a variety of countries, making them less unified, noted Robert Lang, director of Brookings Mountain West at the University of Nevada at Las Vegas. That said, Gen Y is a more tolerant generation, not fearing change and, having never been through the urban exodus of the 1970s, more drawn to cities than their parents, who prefer privacy and space.

“What’s different is the pace of change,” added Jamie Gutfreund, chief strategy officer for The Intelligence Group, who noted that the bar continues to rise. She emphasized the need to look ahead to who this group will be as they continue to age. Already, she noted, quoting her Cassandra Report, 82 percent would rather live in a city than a small town, and they are highly entrepreneurial (49 percent want to bypass traditional companies in favor of startups). And they rely on the opinions of family and friends.

Many say they want to live with their parents, yet Mark noted that a lot of them are second-home buyers. Everything about them is different, observed Jeff Kreshek, vice president of West Coast leasing for Federal Realty. “They want to be challenged … they want the experience, but in a very different way.” And they want experience shopping even when they don’t want to interact with people, he observed. In the retail sector, properties that offer a “sense of place” will have a better chance of succeeding, he said, pointing as an example to his company’s Santana Row in San Jose, Calif.

Despite the differences between the two generation, mixing the generations is important, according to Mark, who said the younger group doesn’t want to live only with other members of Gen Y. And he sees room for combination. For instance, both groups like high-rises, although for different reasons. Baby Boomers are ready to give up caring for a house and property, while Gen Y has no time or interest in such responsibility, he explained. And when they move into multi-family housing, they are drawn to different types of units: Gen Y to smaller, more affordable units and the Baby Boomers to larger units. Mark cautioned that those larger units should be placed at the top of the building, where the views are better.

Specific preferences don’t stop there: Baby Boomers like outdoor space (even if it’s not private), a single level (don’t build their space on multiple levels), larger common rooms for entertaining (more important than large bedrooms) and two rather than three bedrooms to encourage their children to visit but not move in. Gen Y also likes social aspects, but they prefer a rooftop deck for gathering (it can also double as a marketing venue for the building), dog runs and stylish finishes.

For more on Gen Y retail preferences, see the ULI Special Report “Gen Y Goes Shopping.”

Global alternative asset manager Ares Management L.L.C. has announced that it has signed a definitive to acquire AREA Property Partners L.P. While terms of the transaction were not disclosed, the deal also includes for the acquisition of the minority stake in AREA Property Partners L.P. held by National Austrialia Bank.

The move, unsurprisingly, will bring some title changes to AREA’s top staff. Lee Neibart, CEO of AREA, will become a senior partner of the Ares Real Estate Group. He will join John Bartling, a senior partner of the Ares Real Estate Group, as the a global co-head of the group. William Benjamin, AREA’s head of Europe and India, will become a senior partner of the Ares Real Estate Group and continue on as head of Europe and India real estate.

William Mack, founder of AREA, will be stepping down as chairman of AREA to focus on managing his family’s real estate initiatives, investments and philanthropic pursuits. Richard Mack, North America CEO of AREA, will become a senior advisor to the Ares Real Estate Group.

The acquisition brings the committed capital in Ares Real Estate Group to $8 billion.  Upon closing the group will have more than 70 investment professionals.

“Our expanded offering, along with the significant resources and collaboration from across Ares management, will make the Ares Real Estate Group a truly differentiated manager with global investment capabilities across the capital spectrum—from debt to equity,” Bartling said in a prepared statement.

As part of the deal, all existing AREA investment vehicles will continue to be managed by legacy AREA professionals. Hodes Weill & Associates acted as strategic advisor to AREA, while J.P. Morgan Securities L.L.C. provided financial advisory services to Ares Management in connection with the transaction.

More to come.

2 Broadway
Photo: MTA New York City Transit/Marc Hermann.

Transwestern will manage a 2 million-square-foot portfolio in the New York City region, including 2 Broadway in Manhattan, for the Metropolitan Transportation Authority.

The high-profile assignment comes about two years after the Houston-based firm expanded into the Northeast and opened a New York City office, led by Patrick Robinson, president of the Northeast division, and Lindsay Ornstein, principal.

“We are thrilled to have the opportunity to work with such a reputable organization,” Jim Millard, principal with Transwestern, said in a news release about the MTA, which is the largest transportation system in the United States. “We’re confident that the disciplines and resources we bring to this major property management assignment in New York City will enable us to deliver legendary service to the MTA. We hope to develop a long-standing, value-enhancing relationship with them going forward.”

The MTA deal calls for Transwestern to manage 2 Broadway, a 1.59-million square-foot, 34-story, Class A office tower in Manhattan’s Financial District. It is the headquarters for the MTA’s New York City Transit and is slated to become the sole headquarters for the MTA as it consolidates office space during the next year. The building also has offices for MTA Bridges and Tunnels and MTA Capital Construction. Built in 1959, the MTA is the sole tenant of the property owned by The Sapir Organization.

Transwestern will also oversee management of the Jamaica Control Center, 141-41 94^th Ave. in Jamaica, Queens, a 165,000-square-foot, seven-story, Class A office building that houses the Long Island Railroad Company, MTA Police Department and the Port Authority of NY/NJ. The 10-year-old building also has a transfer station from the subway to the Air Tran to JFK International Airport.

The third major property in the portfolio is 525 North Broadway, an 87,000-square-foot building located next to the North White Plains Metro-North train station, which has offices for the Metro-North Railroad operations and a key data center. Two other buildings are included in the portfolio assignment – 242 and 250 Old Country Road in Mineola, N.Y., on Long Island.

Millard and Eric Mockler, Transwestern’s President, Mid-Atlantic, will be overseeing property management services for the MTA portfolio. Millard, who has more than 30 years of experience in New York City commercial real estate, joined Transwestern in May 2011 and heads up the Northeast region’s landlord services, agency leasing and tenant advisory groups. The Tranwestern Northeast team now has 36 members and offices in New York City, Parsippany, N.J., and Greenwich, Conn.

“Our next target in the Northeast is Boston. We are currently exploring opportunities in that market,” a Transwestern spokesperson told Commercial Property Executive.

Transwestern has been growing in the U.S. and abroad in the last few years. Besides opening the New York City office in 2011, the privately held firm also entered into a joint venture in Saudi Arabia. A year later, Transwestern formed a global alliance with Paris-based BNP Parabis Real Estate allowing it to serve clients in more than 180 offices in 36 countries. Earlier this year, Transwestern created two new executive positions to help grow the firm’s presence in the U.S. Southwest region and in Latin America.

An innovative system will capture and recycle waste heat at the $750 million, 1 million-square-foot Telus Garden mixed-use development in Downtown Vancouver, announced Telus Corp., the Vancouver-based Canadian telecommunications company and co-developer of the project. 

Operated by FortisBC, the regulated utility will cut the property’s carbon dioxide emissions 1 million kilograms annually by capturing and redistributing low-grade heat.

The innovative District Energy System, created in partnership with project developers Telus Corp. and Westbank, is among the first in Vancouver to use waste heat from a neighboring site to heat and cool a new development. The Telus Garden complex will be powered by waste heat from the company’s adjacent data center and the cooling system of the new office tower.

“The TELUS Garden District Energy System represents a shift in how we think about and utilize energy,” said Andrea Goertz, senior vice present strategic initiatives and communications for Vancouver-based Telus, in a news release. “By recovering energy that would normally be lost and putting it to good use, we are innovating through design to create one of the most environmentally-friendly urban communities in North America. It’s a powerful and unique system, and we are so pleased to be undertaking this landmark project with FortisBC, a company that shares our commitment to environmental sustainability and building healthy communities.”

Designed by Henriquez Partners Architects Telus Garden will be adjacent to Sky Train in Downtown Vancouver. The development will feature a 24-story, LEED Platinum office tower; a 53-story, 425-unit residential tower designed to LEED Gold standards; and retail space. Upon completion, Telus Garden will use at least 30 per cent less energy than a standard development of similar size. The office tower is scheduled for occupancy in June 2014; the residential building will follow in May 2015.

Investment banking services company Guardian and Atlanta-based Executive Asset Management are on the same team now that Guardian has acquired a controlling interest in the residential and commercial real estate management firm. Guardian will merge the firm with its AssetAdvisor division and build on EAM’s status as an expert in disposition strategies, property management and rental solutions for FDIC Loss Share assets.

The marriage is a timely one. “The industry, particularly those sectors involving loss share assets, is very fragmented with many smaller players; we definitely see consolidation on the horizon,” Paul Brenneke, founder and CEO of Guardian Investment Banking & Real Estate, told Commercial Property Executive. “Additionally, asset management requires scale and volume; therefore, joining forces makes sense for both parties.”

Guardian is a big gun—its team has closed more than $10 billion in capital market transactions—but EAM is no small force, having orchestrated the disposition of more than $2 billion on behalf of clients across the country. The newly merged entity will operate as EAM and overlap will be minimal, as Guardian’s expertise has centered primarily on commercial assets, while EAM has focused mostly on residential properties. “Bad bank portfolios are full of all asset types and therefore, having broad based competencies is essential to provide turn-key service in the loss share industry,” said Brenneke.

The companies’ combined expertise and shared operational synergies will likely provide a firm foundation for the new entity’s growth in the rebounding real estate industry, and growth is indeed on the agenda. “We intend on expanding our customer base from banks to funds and other investors that have acquired pools of assets, but don’t want to develop the systems and processes to solve a short-term market problem,” he explained. “We can step in and provide immediate scale and efficiency.”

EAM will probably have its hands full; while the real estate market is quite clearly in recovery mode, it has yet to make a full comeback. “There are still hundreds of billions of troubled assets stuck in the system,” Brenneke noted. “The US is still paying the price for too much leverage and other parts of the world are suffering from similar challenges.  Even though there appears to be some light at the end of the tunnel, especially in coastal urban markets, there will continue to be a push to flush through the challenges before the real estate markets are completely healed.”

Hill’s William Grubich

An expansion is in the works for the Suquamish Clearwater Casino Resort in Clearwater, Wash., and Hill International has won the contract to provide construction management services for the project. The contract was awarded by Port Madison Enterprises, operator of the casino resort and economic agent of the Suquamish Tribe, owner of the gaming destination, which sits a ferry ride across Puget Sound from Seattle.

Suquamish Clearwater’s growth spurt will include a three-story, 74,000 square-foot addition to the casino, as well as the development of a 770-car parking facility and a hotel that will add 100 guestrooms to the existing pool of 87 guestrooms. The five-story hotel may be just the thing to lure more players.

“[At casino across the country], the decision usually for adding a hotel is how big of a hotel do you need to meet peak demand on weekends for customers that are more than, say, a two-hour drive away,” Brent Pirosch, director of gaming consulting with commercial real estate services firm Newmark Grubb Knight Frank, told Commercial Property Executive. “When they’ve been playing and drinking, the drive home is too far away to be convenient. And it tends to be that people who are staying in a hotel have higher gaming revenue than someone who’s staying for a few hours. So how much is it going to cost you to build that hotel and how much incremental gaming revenue can you get from having those people stay overnight–that should be the thought process behind adding a hotel.”

Hill will also manage the tenfold augmentation of the property’s meeting and entertainment space, which will assist PME in realizing its goal of transforming Suquamish Clearwater into the largest convention center in the West Sound region. “We look forward to helping the Resort successfully achieve its ambitious expansion plans,” William B. Grubich, Hill’s vice president in charge of Native American projects, said in a prepared statement.

Net gaming receipts for tribal casinos in Washington have been on a consistent upswing for more than a decade, growing from approximately $272.6 million in fiscal year 2000 to $2.1 billion in 2012, according to the Washington State Gambling Commission.

CPE: In the aftermath of Hurricane Sandy, most of the talk about risk and recovery has concerned water damage and power loss. But wind causes a lot of damage, too. What are the risks to commercial properties from wind?

Steve Clarke

CLARKE: Historically, from a commercial property insurance perspective, fire has been the predominant risk Verisk has dealt with. But with improvements in fire protection, fire codes, electrical equipment and so on, fire—while still the largest portion of the property loss dollar reported to us—has seen wind start to catch up to it. Hurricane Andrew was the event that really started waking people up to the potential for damage from windstorm, but in the mid-2000s—2004 and 2005, in particular—there was an unprecedented series of hurricanes affecting the United States, primarily in the Gulf. From Rita to Katrina to Wilma to Charley, we just saw a tremendous increase in the amount of reported wind losses.

At the same time, we’ve noticed similar trends in the Midwest with tornado losses. Joplin, Mo., is an obvious example. If you look back at the top 20 catastrophes as rated by ISO’s Property Claim Services business unit (see “Making Waves” on page 27), 18 of them are windstorm events. Essentially, leaving out the events of 9/11 and the Northridge earthquake, all of the other insurance catastrophes have been wind events. While most of them are hurricanes, many of them are tornadoes, and the last handful of years have witnessed many of those events: 2012, tornadoes; 2011 had two catastrophic tornado events; and then a whole series of hurricane events. And there’s a likelihood that when the final numbers are in, Sandy may break into that list and probably be fairly close to the top of it.

So when looking solely at windstorm risk to buildings, where is all that damage coming from? It’s basically wind damage to the structure, where the building envelope somehow has been damaged, whether from the tearing off of the roof or the broken windows. Once that building envelope is breached, the inside tends to become subject to an incredible amount of loss of personal property and contents.

In addition to the obvious brick-and-mortar damage to the buildings, some other things come into play with respect to the exposure for commercial properties: Debris removal is a big issue, particularly after a large wind event, where there may be a considerable amount of debris—not just from your covered property but perhaps your neighbor’s or even people a couple blocks away. Their property may be landing on your premises. Those are all things that factor into the overall insurance losses; having to deal with all that debris and its appropriate removal.

CPE: Can you provide a general idea of how the risk level from wind damage compares to those from factors such as water or fire?

Kevin Kuntz

KUNTZ: If you go back 20 years and further, you’ll see, when you compare fire to wind peril, fire was, by a magnitude of three or four times, more costly to the industry than wind. However, as Steve mentioned, the fire side has been trending basically flat. Wind frequency is becoming more prevalent for a couple of reasons: No. 1, I think we’re seeing more wind events in general; and No. 2, the wind-exposed areas, particularly along the coast, are realizing more concentrated values. The concentration of risk along the coast has been increasing. So the concentration of risk along the coast coupled with the increased frequency of events has resulted in wind, over the last few years, bumping up and being equivalent to fire on a comparative basis.

CLARKE: To Kevin’s point on the concentration of values, almost 40 percent of insured value nationwide is in coastal counties, and when you drill in on some specific states—in New York State almost 60 percent of the insured value is in coastal counties, and in a state like Florida, you start finding 80 percent of the insured property value in coastal counties, because, face it, we all love living and working near the beach.

KATZ: This is a big change from what historically has been the case.

CLARKE: If you go back to the 1920s and 1930s, to somewhere like a Harris County, Texas, you actually had a considerable number of Category 3, 4 and 5 storms coming ashore. The thing is, with Harris County of the 1920s, you had a lot of cactus and longhorn steer around the landscape. Today, you’ve got millions of people from Galveston all the way up through Houston, but you really haven’t had that big storm hit, whereas 80 to 90 years ago, you had a half dozen or more of them in about a 10-year span.

When you look at those kind of population figures and then the buildings that go with them, both residential and commercial structures—the commercial properties from offices to malls to manufacturing, you name it—you can see how the insured values have grown exponentially during what has been a time of reduced storm activity. Meteorologists will argue we’ve entered a time they call the “Atlantic multidecadal oscillation,” which they say is part of the normal ebb and flow of our weather systems but may lead to a period not only of more storms but more severe storms. But now we’ve got all those higher property values, so we’re looking at a potentially big thing.

CPE: Can you estimate how costly the damages from wind can be for commercial buildings?

KUNTZ: I think the potential is for complete loss. But to dig into it a little deeper, you have the replacement cost of the building, the contents, debris removal. There also can be an environmental mess: Are we talking about a laboratory that deals with chemicals that are controlled, and has the water that’s come in and out from the hurricane left the structure with these materials in tow, so we have an environmental issue?

Then there’s business interruption, and not just business interruption to the building. Let’s say you have a building of robust quality, and it’s the only one that remains standing on the block. If the infrastructure around you has disappeared or all the people who come to use your business have been displaced—if you’re a restaurant and you’re standing, but all the homes in your area have been blown away—you’re probably not going to do the same amount of business.

CLARKE: Just to add one more point to that … something we’ve been noticing in the last handful of storms is the extra expenses involved in staying open because many businesses cannot afford to not do business: For example, a publication with a daily readership and commitments to advertisers needs to be on the shelf tomorrow. It can’t miss publication. So not only does it have the brick-and-mortar losses to the printing plant to deal with, but then it also has the additional expenses of having to secure alternative locations, which typically comes at a significant expense above and beyond all the other expenses.

In addition, the supply chain is likely going to be an issue in many situations. There are businesses that rely on other businesses to provide raw materials or accept shipments of sub-manufactured goods located in the greater metropolitan area. If those businesses are closed in the greater New York area, where does that plant in Kansas ship its assembled components? So the supply chain reaches well beyond the immediate damage area, beyond just across the country, to reach around the globe, with the global economy we now operate in.

CPE: How well does wind-related damage tend to be covered by insurance?

Mory Katz

KATZ: Every claim and every situation is different and has to be evaluated on its own merits, but it’s generally included in the typical property insurance policy for the kind of risks that commercial property owners have. It’s usually a basic property peril.

CPE: Tell me some more about the research you’ve done into commercial buildings and wind damage. What has stood out most in your findings?

KUNTZ: One thing we did is we had a wind risk map developed where we divided the country into four geographic risk areas, ranging from low to medium to high to severe, based on the actual historical experience for premium and loss—for loss in those areas (see “Wind Tunnel” on page 28). There was no surprise that along the Mid-Atlantic and Gulf Coast we saw there was a history of loss. Tornado Alley through Middle America: We recognized that Kansas and Missouri had their share of tornadoes. But we were shocked how the impact went into the Dakotas, branching out into parts of Colorado and New Mexico.
From my perspective, that was the biggest surprise—the breadth of the exposure in Middle America.

CLARKE: Wind peril can be fairly severe basically east of the Rockies, and that’s just a function of the geography of our country. But one of the things we’ve noticed is that when a catastrophe happens, more often than not it is a wind event or a wind-and-hail event. We saw that recently down in the Greater Phoenix area, with a very significant wind-and-hail event that caused a tremendous amount of damage. We saw it within about the last 16 or 18 months in the Pacific Northwest both in Seattle and the Portland area, where you had significant windstorm events from storms coming in off the Pacific. But for the fact that we haven’t had a significant damage-causing earthquake in this area of the country—and hopefully we don’t—wind is the biggest catastrophe peril right now wherever you are.

CPE: Are there any particular types of buildings at risk? High-rises, for instance? And what about where buildings are situated, how cities are laid out—does that have any impact on the types of buildings that are at greater risk?

KUNTZ: Many of the structural requirements that allow you to build a high-rise building set you up pretty well to resist, at least from a major structural perspective, the impact of wind. However, regardless of the type of structure you have, one of the important things is the building envelope. Once the integrity of the building envelope is compromised, the potential for significant damage and the risk increases. That allows the wind force not only to try to pull off the roof as it goes over but actually push it off from underneath once the building envelope is compromised.

So at Verisk Insurance Solutions we recognize the height of the building is a factor, the basic primary construction class of the building is a factor, along with a number of other different elements: (1) How much glass do I have? (2) If I have a large percentage of glass, is it impact-resistant glass that’s designed to take the effects of debris that’s blowing around in a hurricane? And (3), do we have hurricane shutters that protect our openings? All those things matter.

One of the most important factors in evaluating a structure is what the roof geometry is: Do I have a flat roof? Do I have a peaked roof? A gabled roof? What we basically found out is having additional data on the building allows you to do a better job to evaluate it.

Air conditioning equipment on a roof: That’s important because if that air conditioner unit is blown off your roof in a wind event, it acts like a utility knife and can rip up your roof covering, which then breaks the integrity of your building envelope and allows the effects of wind and water to get underneath. When we go out to survey a building, if you have air conditioners on the roof or other equipment or material that can be used as a tool to break your roof, then we’ll also look at how well it is anchored. Is it properly tied down?

And then to your other point—where the building is located—we look at environmental factors. Is there a high-rise building two stories higher than mine next door that has gravel on the roof, so when the wind blows it’s going to blow the gravel off that roof through my windows? Is it a large, open area where you’re not protected against the wind? Or are you in a hilly area in the bottom of a valley, where you don’t get that much wind?

CPE: How can property owners and developers and municipalities be more proactive in addressing this threat? Is there anything that you think they should be doing differently, or things they should be thinking about more to be more proactive?

ATZ: One of the pieces of information Verisk Insurance Solutions makes available to the insurance industry is about building codes. There’s been some data that shows that building codes make a big difference when you have a wind event. So building codes may not be directly in the control of the property owner, but it is something that people need to be aware of: how effective they are, how well they’re enforced compared to other buildings in the area.

KUNTZ: As Mory said, property owners don’t necessarily have direct influence on the building code unless it’s a new building where they can choose to design additional features into the building that make sense. But we feel the codes are an important part of the evaluation when we look at a building’s ability to resist wind: What are the building codes that are in effect, particularly at the time of construction?
We also try to measure the level of implementation of the building codes. It’s great for a community to say, “We’ve adopted a building code,” but in Community A versus Community B, they do framing inspections, they train their people and have a higher certification, they have a better checklist when they review plans. It’s nice to have a code and adopt a code, but is it a book on the shelf or do we really go out there and diligently enforce the implementation of the code? There is a lot of variation across the country and even within regions in that regard.

CPE: Do you see an overall tendency toward better code management or worse? If you had to give the country an overall grade, what would it be?

KUNTZ: In my opinion, I think the national codes themselves are getting better.

CPE: But it’s something for developers to pay attention to, especially in an economically volatile time like this—taking some responsibility into their own hands so they’re not just counting on the inspectors but thinking about the risks themselves.

KUNTZ: Oh, absolutely. That’s absolutely true.

CPE: How might a building’s wind resistance
be improved?

KUNTZ: There are different characteristics a building has that can affect its ability to resist the wind peril. If it’s an existing building, you’re not going to change the roof geometry, but you might have windows with standard glass you could go back and retrofit either with hurricane shutters or impact-resistant glass. So there are mitigation features you can bake into the already-built environment. Things like skylights and reinforced doors in place of unreinforced doors—those are changes that can be made that will improve a building’s ability to resist the wind.

CLARKE: We’ve all learned lessons from Sandy, and I think one that many building owners are grappling with right now is the fact that a lot of their mechanicals were in the basements. Those are areas that were impacted by the storm. I wouldn’t be surprised if you see some relocation of such physical plant-type items to elsewhere in the buildings. Just be aware if moving stuff up to the roof, that may be a great location when dealing with a flood-prone area, but please make sure those items are appropriately anchored so they don’t increase the hazard.

Maintenance—something as simple as inspecting the flashing on your roof and making sure it is in good repair—can go a long way toward strengthening your building, because it does not take much of an opening for wind to get under there. If one little corner of flashing is pulled back, then that can be all a windstorm needs to start to do more damage than would otherwise happen. So just simple maintenance items go a long way toward protecting your building even further.

One other thing to keep in the back of your mind: There has been a trend toward green buildings lately. And one of the things we’ve noticed is the appearance of solar panels on commercial rooftops, particularly large malls and manufacturing facilities and structures of that nature. When retrofit projects occur that have nothing at all to do with the wind peril, it is important to keep wind in mind, because you could—if not installed properly and anchored and angled properly—actually be increasing your exposure quite a bit when you start introducing all these new green types of technologies, be they solar panels or wind turbines or anything of that nature.

CPE:  What are the biggest changes you expect from corporations relative to their CRE strategies in 2013?

Kishan:  In short, changes in structure, location, process and strategy to drive bottom line impact. This will mean changes in CRE organizations, their suppliers, technology and outsourcing choices.

CPE: What are CFOs’ priorities as we emerge from the recession, and how is this impacting their CRE strategies?

Kishan: CFOs want cost but have greater awareness of the need to balance against operational risk, realistic timelines and growth. In particular, reduction of waste, streamlined processes & making tough business decisions on big CRE deals. We will see more centralized CRE orgs, a premium on talent and CRE leaders who can drive flawless execution.

CPE: How much will that change the CRE orgs?

Kishan:  A lot: rebalancing of global vs. local decision, bolder CRE roles with higher talent and more non-core outsourcing.

CPE:  So how far out do CFOs want to plan for RE needs? Are they planning more for the short, medium or long term?

Kishan:  Real strong focus on x-divisional plans to avert downside risks and stranded costs (on a) 2-4 year horizon; varies by region.

CPE: What are their biggest challenges as it relates to their real estate?

Kishan: Transform the workplace, drive RE plans x-divisionally, consolidate, jettison non-operating surplus, reposition CRE.

CPE: What new responsibilities are corporations seeking from their service providers? 

Kishan:  Joint financial management, broader PM capability, more share of peripheral services, innovation, more ops control, more seamless services, third-generation solutions.

For the Twitter Live Chat version, go to: https://twitter.com/search?q=cpechat&src=typd (#cpechat).

Tod Lickerman, JLL’s Americas Corporate Solutions CEO

In what reportedly is the largest outsourcing contract of its kind by a financial services firm, Jones Lang LaSalle, of Chicago, has been selected by banking giant HSBC as its sole global outsourcing provider of integrated facilities management services, JLL announced yesterday.

The portfolio in question totals 58 million square feet and consists of 11,000 sites across North America, Latin America, Asia/Pacific, Europe, the Middle East and Africa. The portfolio includes 6,000 HSBC offices, with the remainder of sites comprising buildings such as ATM locations and residential properties.

JLL is also one of HSBC’s regional transaction partners, in the Asia/Pacific, Latin America and Middle East–North Africa regions, and has been a real estate advisor to HSBC in North America since 1998. The contract renews existing facility management services in North America, China, Thailand, Mexico and Panama and adds more than 42 million square feet of real estate worldwide to JLL’s responsibilities.

JLL has formed an integrated global account team of experts led by Bill Thummel, Managing Director, Global Accounts, along with Global Managing Director Chris Kiernan and Global Director of Operations Ian King, to serve the expanded global account responsibilities for HSBC.

“As companies demand more consistency and control over their real estate facilities, they increasingly look for a single provider that can deliver on a global basis,” said Jordi Martin, JLL managing director of Integrated Facilities Management. “Being entrusted by HSBC to manage its facilities worldwide shows that this can be achieved.”

“In the Americas, we will leverage our supply chain economies of scale to improve the performance of some 500 HSBC facilities in North America and 4,000 more throughout Latin America,” said Tod Lickerman, CEO of Jones Lang LaSalle’s Americas Corporate Solutions business. “This contract will deliver consistency throughout HSBC’s locations in the Americas and around the globe.”

A breakdown provided to Commercial Property Executive gives the following regional totals around the world:

•  Asia/Pacific: Nearly 2,000 locations, more than 16 million square feet,
•  North America: About 500 locations, more than 6 million square feet,
•  Latin America: More than 4,000 locations, more than 16 million square feet,
•  Middle East/North Africa: Nearly 200 locations, more than 1.5 million square feet, and
•  Europe and South Africa: More than 4,000 locations, more than 16 million square feet.

Aimbridge Hospitality has proven that you can never have too many hotels to manage. The nation’s leading hotel investment and management firm, has added 103 assets to an already impressive portfolio that includes a Who’s Who of nationally-recognized chains, such as the Marriott, Hilton, Hyatt, Wyndham and Embassy Suites.

The former Jameson Inns, located in 12 Southeastern states, will now join Aimbridge’s pantheon of prestigious properties.  The hotels are owned by an investment vehicle that is managed by affiliates of Colony Capital, L.L.C.  Colony chose Aimbridge to manage the Jameson acquisitions and oversee a substantial renovation and rebranding. What’s more, a fund affiliated with the principals of Aimbridge Hospitality and Argonaut Private Equity has acquired a minority economic stake in the hotel portfolio.

“We are pleased to partner with Aimbridge and its proven team, which has already completed the management transition with minimal disruption,” said Thomas Barrack, chairman and CEO of Colony. “They are a natural fit for this project, bringing the operational expertise to move these assets to the top of their class.”

The 103 newly acquired hotels add up to 7,000 total guest rooms and 1,700 associates in Alabama, Florida, Georgia, Illinois, Indiana, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Virginia. They will be managed by Channel Point, a wholly owned and operated subsidiary of Aimbridge.

“We are delighted to invest alongside a firm of the caliber of Colony and we look forward to further enhancing and reinvigorating these properties,” said Aimbridge President and CEO Dave Johnson.

While an extensive renovation of these properties is part of the deal, the exact cost of the upgrades was not disclosed.

Aimbridge Hospitality provides management, asset management, development, renovation and consulting services to more than 180 upscale, independent and branded hotels with nearly 25,000 rooms across the U.S. and the Caribbean.

Headquartered in Los Angeles, Colony Capital is a private, international investment firm focusing primarily on debt and equity investments in real estate-related assets and operating companies. It has invested $48 billion in over 19,000 loans/assets through various corporate portfolio and property transactions. Colony employs more than 250 people in offices in New York, Boston, Scottsdale, London, Madrid, Paris, Rome, Beirut, Hong Kong, Seoul and Taipei.