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National Energy Performance Rating

Have you obtained National Energy Performance Ratings for your commercial buildings? Improving building energy usage can have beneficial effects to the bottom line.  Your buildings may also qualify for retrofit rebates.

Commercial buildings have the ability to achieve energy savings, which translates into cost savings for both ownership and tenants.  In order to maximize a building’s energy efficiency, a baseline of energy usage must be established as a comparison to benchmark.

The EPA’s Energy Star, National Energy Performance Rating System provides building owners with a rating system on a 1 – 100 scale that gives relative meaning to energy use.  With a National Energy Performance Rating, enrolled buildings are qualified to receive retrofit rebates.

Why Obtain a Performance Rating?

California Assembly Bill 1103 became effective on January 1, 2014 and requires owners to disclose energy usage at the time of sale, lease to single tenant, or refinance of non-residential buildings.

Today’s commercial real estate market and tenants demand energy-efficient space.  The good news for owners is that energy-efficient buildings mean lower energy costs and increased net operating income.

Meissner Jacquét provides energy management and sustainability services  that help building owners maximize their commercial energy performance.  Let a member of our team perform a sustainable building analysis, make a recommendation, and devise a capital plan.  To schedule a consultation, please call (858) 373-1234.

Drones Taking Off Everywhere

The use of camera-equipped drones sounds like something out of a spy novel.  While it’s true that the military uses drones for generating intelligence and engaging in spycraft,  drones are increasingly being used for commercial purposes.  Will there be drones hovering over commercial properties everywhere in the near future?

In recent years, real estate “drone tours” have become popular marketing tools for some high-end residential property listings.  Instead of a simple photo gallery and video tour of a home, drones enable a bird’s eye view that tells a story from a different perspective.

The commercial use of drones has also been popular with real estate developers, where a property’s relation to its topography, local roads, and neighboring properties can best be mapped out from an aerial perspective.

Besides real estate, drones–more formally known as “unmanned aerial vehicles” (UAVs)–are being used for other commercial purposes.  Companies have realized that drones can be valuable delivery mechanisms as well as marketing tools.  In December, Amazon CEO Jeff Bezos made headlines when he announced that his company would start offering 30-minute deliveries via drone-like “octocopters.”

And speaking of 30-minute deliveries, Domino’s recently posted video of the “DomiCopter” delivering two pizzas in the United Kingdom.  Last year, the “Burrito Bomber,” the outcome from a couple of hungry engineers from Yelp, showed off its ability to deliver tasty burritos to the consumer’s doorstep.

But while the technology exists to deliver burritos and DVDs by air, the regulatory side is still playing catch-up.  The Federal Aviation Agency (FAA) has banned the use of small drones for commercial purposes at levels below 400 feet. Last year it brought a case against the only person it has attempted to fine so far, for “operating a drone recklessly” while filming a commercial for the University of Virginia’s medical school.  Earlier this month, a ruling by a federal judge dismissed the case and ruled that the FAA’s policy notices issued as a basis for the ban weren’t enforceable because they were not produced through a formal rule-making process.

When looking at legal issues, a UAV pilot must consider not just FAA policies but also state and local laws. The FAA has been primarily focused on safety, while state and local governments have been focused primarily on privacy issues. For instance, it is illegal to fly any remote-controlled aircraft in the city of Santa Monica, CA.

The judge’s ruling opens up a broad discussion about how, if, and when the commercial real estate world will embrace the use of drones. Or will they pass over the opportunity because of persistent fears about the risk, the legalities, or the concerns about the cost?

A few large real estate agencies, such as Neoscape, have already built drones as part hobby, part R&D. Traditionally firms have had to rent helicopters or climb cranes to finish building renderings or take photos for marketing purposes. A camera-equipped drone will likely grab these images or video more conveniently, not to mention more cheaply.

“Every decade or every year or every day, there’s something new that people want to look at, that everyone wants to do,” says Carlos Cristerna, an associate principal and the director of visualization at Neoscape. “It seems like these days, drones are the thing.”

However, only companies willing to jump into a relatively unknown venture are making any moves in the directions of drones use. Before seeing drones flying overhead becomes commonplace, there are many regulatory hurdles to jump.

Realtor Magazine recently summarized the safety and legal issues: “Drones present very real and very difficult issues, including safety and privacy. The safety issues are clear: People operating drones have to be trained, and systems have to be in place to help protect people nearby should something go wrong. On privacy, a regulatory system has to be in place to help reduce the chances of drones being used to take unauthorized photos and video.”

The FAA is behind schedule in defining regulations for the use of UAVs.  But the reality is that using drones for beneficial civic or commercial purposes, instead of military actions, is a growing trend.

“Medical supplies, wildlife monitoring, cargo, firefighting — it’s a pretty long list of things that drones can do,” according to drone expert Misty Cummings, an associate professor at MIT and one of the Navy’s first fighter pilots. “It’s reinvigorating a dying aerospace industry.”

Meissner Jacquet Employee Elected as BOMA San Diego President

BOMA California is a federation of eight metropolitan Local Associations within California, and serves as the collective membership’s legislative and regulatory advocate.  Each Local Association nominates up to five of its members to serve on the BOMA California Board of Directors. In January, Meissner Jacquét’s very own Senior Portfolio Manager, Kristin Howell, was elected to President of BOMA San Diego for 2014.  Kristin’s seat as President on BOMA San Diego’s Board of Directors allows her to have a direct voice and impact in the setting of policies of BOMA California.

The first week in February, Kristin, along with BOMA San Diego’s executive committee members, had the opportunity to travel to the BOMA International Winter Business Meeting and National Issues Conference in Washington DC to represent BOMA San Diego, to meet with other BOMA affiliates and share ideas in an effort to become better building operators, and to have a positive impact on the commercial real estate industry and San Diego’s economy.

Both local and national issues facing the commercial real estate industry were discussed.  The BOMA International Political Action Committee (PAC) is an important defense for the commercial real estate industry and funds have been utilized locally at BOMA San Diego. A current example is PAC’s contribution of $40,000 towards the current fight against the Linkage Fee issue in San Diego.

Meissner Jacquét is proud to have Kristin represent our company, BOMA San Diego, and the commercial real estate industry, and we congratulate her on her leadership role as President of BOMA San Diego.

Is Your Building Intelligent?

The so-called “Internet of Things” is seen as the next step in the evolution of a digital web of interconnected systems. Buildings are a natural focal point for digital evangelists who offer the promise of a technological utopia. But what does this vision of the future mean for commercial properties and their owners?

The rise of intelligent buildings seems like science fiction.  But the ubiquity of the Internet and the ever-expanding array of connected devices have created a world of interconnected systems.  For some commercial property owners, investment in building automation systems (BAS) has delivered operational efficiency, building security, and flexible management of building systems.

Over the last two decades, social and economic trends have encouraged developers to pursue projects that feature sustainable design while also future-proofing buildings. This focus has led to the design and installation of building automation systems that help with energy efficiency and “green” initiatives. A BAS plays a critical role in managing disparate building systems. The system provides vital fire and life safety, substantial energy savings in lighting and HVAC, essential security and controlled access, and overall technological ease to the building’s tenants–which is essential for attracting premium rental rates.

According to a recent report from Navigant Research, the building automation and controls industry will be radically reshaped by digital technologies in the coming years, ensuring that buildings will become even more “intelligent” as they become holistically integrated entities that can be managed on-site or even off-site via the Internet.

“Open and integrated systems, converged with modern information technologies, present both risks and rewards for industry stakeholders,” says Eric Bloom, principal research analyst with Navigant Research. “Because building control systems are usually changed only every few decades, much of the existing building stock is still dependent on older technologies – a reality that will change over time as digital controls replace outdated systems.”

Two key digital changes the BAS world has recently seen in its more sophisticated models are comprehensive, data-driven desktop support systems and the ability to access and control  your BAS remotely via  iOS®, Android™ and Windows® based tablets. Both the desktop and the tablet control vehicles offer the ability to diagnose building system performance and to look at the building’s data history. They also have enhanced graphics that provide for a better user experience  and overall navigation ease – a very important feature when faced with critical problems that need to be solved quickly. A top-notch BAS design takes into account that property owners and commercial real estate managers  must always have complete control of their buildings.

Experts in the energy world are excited about what will happen next.  There is a growing appetite for more robust building usage data, for example, which in turn reveals insights into how a building functions and how its performance can be improved over time.  Building analytics software is another development that commercial property owners should investigate.

In the next twenty years, intelligent buildings will become so prevalent that they become the social norm.

“Initially, building automation systems addressed only HVAC systems,” explains Jack McGowan, president of Energy Control Inc., an OpTerra Energy Group company. “Today, there are technologies to incorporate fire/life safety, access controls and other building subsystems. Intelligent technologies have almost become like commodities.”

The rate of technological change is inexorable.  And the emphasis on sustainability and expectations of technological comfort by commercial tenants will only add to the pressure to adapt.  Is your building prepared to thrive in an automated future?

A New Year, A New Drought

California’s Governor recently declared a State of Emergency regarding the state’s current drought conditions.  The release announced the water shortfalls have landed it in the driest year in recorded state history.

Governor Brown’s drought declaration aims to help California better prepare for the dire consequences, which points to a shortage in water supply and increased risk of fire in both urban and rural areas. The declaration calls for all California citizens to conserve water in every way possible.

Professionals in the commercial real estate industry must take action on the drought declaration by determining how to conserve water in their respective sectors.  As a full-service, commercial real estate property management company, Meissner Jacquét is acutely aware of the toll that hot, dry days can take on our clients’ commercial assets.  In order to beat the heat, Meissner Jacquét’s commercial real estate managers take preventative measures to ensure that managed buildings are compliant with fire safety codes, that water is conserved through landscaping and irrigation retrofits, and that cooling systems operate efficiently.

As retrofits can be costly,  Meissner Jacquét enlists the service of professional vendors to audit our clients’ landscape, irrigation, and cooling systems and offer practical advice regarding water-saving and efficiency recommendations, while engaging applicable incentives and rebates that focus on reducing overall cost.

San Diego’s Linkage Fee

The Linkage Fee has been a hot topic among professionals in the real estate industry and citizens in San Diego.   Professional organizations, such as the local San Diego chapters of NAIOP and BOMA, aided the Jobs Coalition in their efforts to put a stop to the significant hike that the San Diego Housing Commission posed to the Housing Impact Fee Ordinance, or commonly referred to as the “linkage fee,” “workforce housing offset” or “jobs tax.”

The Jobs Coalition, consisting of more than 50 regional organizations and businesses, believe that the fee increase is a jobs-killing tax.  The Ordinance was originally instituted in 1990 to fund affordable housing for low-income workers whose jobs were created through new commercial development in the City of San Diego.  The fee is charged to developers on a per square foot basis.  The San Diego City Council recently voted to approve a measure to restore the fee to its original 1.5 percent, which could result in cost hikes from 377 percent to 744 percent.

Currently, the City of San Diego is the only city in the County charging this fee. Opponents of the linkage fee gathered over 53,000 signatures in January in an effort to put the measure before voters on June 3.  If the linkage fee is increased, the restored percentage would impact projects receiving final approval after June 30, 2014.

The Housing Commission says that the increase should result in additional revenue earmarked for affordable housing, as currently the lack of affordable housing is preventing companies from moving to San Diego.

Emerging Trends in Real Estate 2014

The steady recovery of the nation’s economy will have a beneficial effect on the San Diego Industrial real estate market in the long term. The city is listed among the top contenders for positive real estate growth in the Emerging Trends in Real Estate 2014, the published report based on a survey of 1,000 credible professionals, produced by PriceWaterhouseCoopers and the Urban Land Institute. The document states, “San Diego’s recovery is forecast to strengthen in 2014 and 2015, though it faces the largest downside risk among California’s metro areas from federal budget austerity. Office is the San Diego property type that respondents feel is a “buy” in 2014.”

In general, studies show that industrial properties in San Diego have a great future. The ULI study reports “Investment and development prospects for the R&D industrial subsector, though not among the top rated, nonetheless are expected to improve, likely fueled by growth in the medical and technology fields.” A collaborating report, produced by Avison Young, asserts that of the 36 office markets followed  across North America (including San Diego), 24 markets saw vacancy rates drop  during 2013, with a greater number of U.S. markets seeing a gain. The report states, “San Diego is forecasted to see one of the largest declines in vacancy of all markets in 2014 (-230 bps to 14.9% and -270 bps to 12.6%, respectively). San Diego has experienced several consecutive quarters of positive absorption – a trend that will continue, as 92% of office space under construction is committed.”

Overall, commercial property investment activity among U.S. markets is trending higher and San Diego is poised to ride the wave. The nation is still in economic recovery, but it is trending in an upward direction with companies and investment firms opening their pocketbooks (that were clenched tightly during the recession) to buy business property.

Generation Y (people born between 1979 and 1995 and the most ethnically and racially diverse generation ever known in the US) is a key to predicting and planning commercial development type and growth. At this stage of their lives, Gen Y shows a marked preference for city living, compact development and staying on the move. As they age, Gen Y may trend towards the suburbs, but at this point they want to live (even if for a relatively short term) in an urban setting with work, stores and home all within walking distance. Future real estate development will parallel their movements.

Lot Management

Lot Management is a locally-owned, locally-grown commercial property maintenance company located in San Diego servicing San Diego, Orange, Los Angeles, Ventura and Riverside Counties.  Their team of experienced facility engineers supports property owners and real estate managers.  Since 1986, Lot Management has aligned their services with the specific ownership objectives for each property they service.  Lot Management is a member of The Red Cow Family of Companies.  Red Cow is a family of commercial property enhancement companies that provide owners and managers with creative maintenance and improvement solutions.  Their “Bundled Companies” Strategy provides an efficient platform for the procurement of recurring services, general property maintenance, asphalt & concrete repair, and commercial general contracting.

The Red Cow Family of Companies provides value through:

  • A single point of contact for multiple services on each property
  • Multiple levels of supervision with a willingness of our employees to support those in other divisions
  • Greater efficiencies which can result in lower costs
  • An easier problem resolution process  with quicker reaction time to reported issues

Lot Management’s mission is “All hustle.  No hassle.  Done right.”

For more information, please visit www.lotmanagement.com.

Outlook Positive for Real Estate Financing

The national trend towards economic health is creating new opportunities for lucrative investment in office and industrial space throughout the state of California.  U.S. exports via the Sunshine State ports are on the rise and companies are once again thinking about expansion. The likelihood that investing in and financing industrial properties will pay off to the good is also bolstered by a corresponding economic wellness in the Eurozone, Japan, and China.  It is clear that the demand for warehousing space in southern California port cities will increase as the volume of trade increases.

In fact, the industrial and distribution sector is leading the way in both investment and development forecasts in 2014, according to the Urban Land Institute (Emerging Trends in Real Estate 2014). Experts anticipate that the growth in this sector will rise almost as high as the superstar apartment sector did last year.

“If you are a long-term investor, the industrial sector just keeps doing well, even if it’s not glamorous,” commented an industrial real estate investor in the ULI report.

According to The Allen Matkins/UCLA Anderson Forecast California Commercial Real Estate Survey and Index Research Project, nationally:

  • Office occupancies are forecast to improve 0.2% in 3Q14, with rents improving 0.7% quarter-over-quarter.
  • Industrial occupancies are forecast to improve 0.1% in 3Q14, with rents improving 0.7% quarter-over-quarter.

In the ULI survey, San Diego sits as #15 on the “U.S. Markets to Watch” list with a projected investment increase of 6.47% dovetailed nicely with a projected development increase of 5.91% and homebuilding upsurge of 6.71%.

Bottom line, investing in or financing commercial real estate—especially industrial real estate—is increasingly seen as a smart move, rather than a risk.