Building & Facilities Operations

More for reasons of necessity (working remotely, and working with a number of start-ups for a spell) than intent, I haven’t used Microsoft Outllook for over four years.  I did used Outlook  via an Exchange server and that was truly one of the most painful experiences I have ever had- Slow. Difficult. Stumbling, bumbling searches – Microsoft at its most painful.  I have been using web based e-mail, mostly Gmail, for several years and have adapted to its way of managing email communication; it is light, fast, offering powerful search and adequate formatting capabilities.

Recently, I set up Microsoft Outlook on my laptop and have been reminded about what makes it good and not so good.  It feels firm and solid – the app sits on your computer, formats are clean and complete and attachments attach instantly.  On the other hand, search is limited, managing contacts is painful and, to stay organized, you have to put emails in folders, which I stopped doing years ago.  You cannot synch your calendar with another Outlook user unless you are on a common Microsoft Exchange server.  But the fact is, Outlook is the email platform that most folks in business use: it is the standard, having the weight of most business users behind it.

Once a technology, particularly a communication technology, is adopted by a market, the power of the network effect makes it very difficult to displace, even when superior offerings become available.  Now that Facebook has over 500 MM users, it is highly unlikely that another software provider will come up with a more compelling social media platform that gets traction (witness MySpace’s recent struggles).  The engines we use to power our cars have not changed fundamentally in over 100 years: their installed base, support infrastructure and cultural expertise will make it difficult and expensive to shift the market to other propulsion systems (e.g. electric motors).

Most new technologies – like Building Engines – do best when they can adapt/integrate into existing systems (like Outlook).  Change for an organization in this case is evolutionary, not disruptive.  This mode of change is much easier on organizations, which have to struggle with radical changes in their business environments (witness the financial collapse and recession in the last two years) and typically do not want to self -inflict large amounts of stress voluntarily.  Building Engines has been designed to support this kind of easy, evolutionary change through easy integration into existing tools and processes.

When it was first released in 1997, 13 years ago, Microsoft Outlook was leading edge, very advanced and offered a huge improvement in email communication.  Now it is a little long in the tooth, but we will likely be using it for a while.

What embodies risk within your real estate portfolio?  Is it the damage that could be caused by water, mold, wind, rain, or aging?   Is it a slip, a trip, or a fall?   Is it a prolonged elevator entrapment; a disgruntled tenant employee who acts out; a media blitz on your building, or a public demonstration?  Is it the failure to have valid insurance protection in place through your tenants and vendors?   Risk transforms to damage and costly repairs or claims.  Litigation is costly, both from an insurance and time perspective.

Do not wait to react.  Be proactive and follow these ten simple best practice points for risk reduction and preparedness.

1.      Assemble a Response Team:  Make sure that you have ownership and management representation on that team.  It should include some risk and liability expertise and remember to think outside of the building – e.g. the Government is a critical part of your team, as are fire, police and the local Department of Health.

2.      Outline Key Risks in Advance:   Remember that threat levels are unique to each building.  Think through what might happen to your building before it happens.  Get experts involved to help you see what you cannot.  Look at historic data to help your recognize likely events and insure your greatest areas of risk.

3.      Create A Response Plan: Write it down and publish it to those that should know. Match your risk to your response team.  Train backup employees to perform emergency tasks.  Create a business continuity plan – Make sure you tenants have a continuity plan.  Determine offsite crisis meeting places.  Test your plan to reveal and accommodate changes

4.      Run simulations:  Make sure that all employees-as well as executives-are involved in the exercises.   Practice crisis communication (employees, customers and the outside world).  Invest in an alternate means of communication.  Form partnerships with local emergency response groups.  Evaluate your performance – Continuity exercises should reveal weaknesses.

5.      Focus on Responsiveness:  Most claims result from failed responsiveness.  Put the right assets in place so that you can respond quickly.   Redundancy is key to reliability and response.  Immediate response enables real time advice, real time reaction and injury or damage mitigation.

6.      Capture all Relevant Data:  Data and information is your best defense.  Only with data can you make informed decisions.  Train you teams to identify incidents and record them.  Keep Data up-to-date and available.  Make it accessible from anywhere so that you can retrieve it quickly when needed.

7.      Leverage Technology:  Responsiveness relies on information and speed.   Redundant systems prevent data gathering and communications failure.  Establish preset response protocols for every situation.  Build your Response Team and your Response Plan into the technology.  Keep contact information up to date.  Go mobile while leveraging multiple communications points.

8.      Train Your Team and Analyze Your Response: Three rules of Team Preparedness = Practice, Practice, Practice.  Do a post mortem analysis of every incident.  Look for trends and opportunities.  Adjust your Response Team and Plan to fit the building risk profile.

9.      Involve Local Teams and Authorities: Police, Fire, DHS and DHLS are key partners in any response.  Relationships are critical to responsiveness.  Imagine calling your local Fire Department and the Chief knows who you are. Know your neighbors so that they know you.  Have regular meetings with Response Teams in adjacent buildings.

10.  Keep it current: Take your partners, colleagues and neighbors to lunch once a year. Review your plan annually. Practice regularly.  Never stop testing or improving your plans, practices and procedures and the technologies that support them.

The Green Movement in Real Estate is growing darker.  All new certification schemes, like all new growth, have that light green tinge when they begin that denotes suppleness. While it makes them amendable to change, it provides little armor when the going gets tough.  As a result, many rating systems mature to a darker shade.

The USGBC’s LEED rating system is by far the most recognized and most used green building rating system in the world and the UK’s Building Research Establishment Environmental Assessment Method (BREEAM) is frequently used in Europe.   As standards like LEED and BREEAM mature, that light hue darkens to a more serious and robust one – characteristic of maturity and staying power.  According to Pike Research, that day has come.

Pike projects that by 2020, 53 billion square feet of space worldwide will hold some type of green building certification, up from 6 billion this year, and 73 percent of green-certified building space is in a commercial building – a number expected to grow to 80 percent by 2020.   The majority of green certifications will be held by existing buildings instead of new construction, the report says.  One American Row in Hartford, CT recently obtained Leadership in Energy and Environmental Design for Existing Buildings Silver status, making it one of the few LEED-EB certified buildings also listed on the National Register of Historic Places.

The bigger question is how a building maintains LEED certification status once it has achieved it.   Without a comprehensive scheme for posting and managing LEED related tasks – the lifeblood required to sustain any certification level – that LEED or Green status will fade to brown and join the detritus of other failed programs.  Technology – operations management systems that post and sustain LEED related tasks throughout the year are integral to maintaining LEED status.  Keeping it Green and maintaining affordability requires energy and organization as well as robust data collection, communications and reporting.  Think of these systems as the arterial system for your LEED targeted building management practice.

Without one, your LEED status will die on the vine.

The economy’s health is returning and, like young leaves in springtime, new jobs are beginning to bud.  Yet, the recovering economy is not in steady bloom.  The detritus of a long and blustery economic winter litters the real estate topography, shadowing the sun of increased demand.  The recovery has its good days and its bad days – its strong weeks and its weak ones – like the intermittent cold rainy mornings and warm sunny days we all experience when life returns in April and May.   However, like summer, recovery is inevitable.  Yes I said it, inevitable.   The recovery will happen – faster in some markets, slower in others – but those that prepare for it will prosper first and profit most.

The world of commercial real estate is caught in this seasonal economic struggle- typically two full quarters behind the highs and lows of the broad economy.  Today, cap rates are slowly compressing with perceived property values increasing in advance of any real return in demand.  Businesses are beginning to hire again, but only in certain sectors where growth is fueled by the promise of returning economic health. The blossoms are held back by debt struggles abroad; tragedy in the Gulf and aftermath of a long, dormant economy.

Tight budgets and cold economic winds have forced owners, managers and tenant occupants to use creative survival tactics.   Smart commercial real estate companies are reaching out of the shadows and into the sun with concentrated marketing efforts that flag new and aggressive opportunities for their prospective tenants.   A cost efficient reach into the sunlight through new, web-based identity tools, real estate centered search engine optimization and building awareness tools are an excellent and cost efficient means for supplementing the traditional broker channel.

New economies bear new tools and new methodologies for doing business. Proactive owners fearlessly invest in these ideas, enhancing their assets’ identities and significantly improving the chances of swift and prosperous recovery.   They are leveraging powerful new technologies that have emerged from lean economic times.  The promise of new growth will come to those who act.  Those that wait may confront a late and deadly Frost.

Nature’s first green is gold,
Her hardest hue to hold.
Her early leaf’s a flower;
But only so an hour.
Then leaf subsides to leaf.
So Eden sank to grief,
So dawn goes down to day.
Nothing gold can stay.

Robert Lee Frost

In real estate technology, the law of conservation of value is simple.   Like matter, value is neither created nor destroyed.   Valuable solutions to difficult real estate management problems such as chronic outages, unbalanced staffing, low NOI  and high energy cost all exist.  Divining those solutions – bringing them to light and presenting them in an effective and usable format- is what effective real estate technology firms do.  They isolate value.

The essential elements of value in real estate technology are software, hardware, service, support and, importantly, the subject matter expertise – the real estate know how – applied to all of the above.   The relative value shifts from one element to the other depending on a number of external forces; yet the weight of that value,  its importance to the client, remains the same.

The weight of value has been shifting lately.   A short time ago, the highest value was found in the software component.  Powerful internet-based systems present uniquely accessible solutions that can be accessed from anywhere.   But “anywhere” is no longer unique, no longer the difference-maker.  Internet-based systems are now the standard – systems extended through powerful, easy to use mobile platforms.   If your organization does not have one in place, then you are swiftly becoming a relic of the old way to manage a portfolio of properties.   The power has shifted away from software and with it the value of any internet-based system.   The highest value lies in the real estate know-how required to the design and build that software correctly, to deploy and support that software effectively, and the industry acumen required to ensure that the software solves and continues to solve the challenge at hand.

How do you find the highest and best value?

Don’t look for some long list of functionality.  Don’t look at some staid and gargantuan system that hasn’t changed in years.    Ask your colleagues which vendors are best.   Ask the clients of the vendors you are considering.   If those clients don’t love the service and support that they receive;  if they don’t talk about responsiveness, cooperation, collaboration and vision;  and if they don’t see their vendor as a partner helping to lead them into the future of real estate related communications, then you are missing the value.

Americans love “The Office” with Steve Carell – a quirky, strife and breath sitcom about working in an office environment for an aptly named company called Dunder Mifflin. The plot originally centered on an office that faces closure when the company decides to downsize its branches. Now there’s a funny scenario for you. I personally don’t get the characters’ humor, but my grasp of TV sitcom humor is looser than David Letterman’s belt.

There is or was also a critically acclaimed film called “Office Space”. It told the comedic tale of company workers who hate their jobs and decide to rebel against their greedy boss – another unique tale. There is even a cartoon about the office called “Dilbert”, or maybe that’s about an insecure guy with a bad tie, I don’t know.

My point is that Americans love the office, and why not? Where would our country be without water cooler romance; cubicle wars and meetings – meetings and more meetings? Americans, after all, are people too. Human beings need interaction. Seeing, touching, or just hanging out with other beings from our species seems essential to a fulfilled life. Save the Dog Whisperer and Jane Goodall, it appears we need human contact and collaboration to be happy.

So what is all this nonsense about the death of office space and the inevitable move to the virtual work environment? Sure, I get it. The Internet made it cheaper to move your workforce home. It saves money on travel, avoids commuting, reduces overhead and allows our employees to “work” more efficiently and effectively when surrounded by the things that make them comfortable. We all need to pretend to work at home from time-to-time when focusing on that important company project like weeding or shearing the llama.

In truth, nothing can replace the interaction that takes place in a person-to-person exchange. To assume so would seem to discount the importance of the human face or gesture when combined with vocal inflection. Ask a decent poker player, artist, or elderly parent the value of human interaction and you’ll get a straight answer.

I am not discounting the value of working at home every so often. The virtual office is here to stay, that’s for sure, but it will never replace the tried and true forge of cubicles, dry wall and fluorescent light. From close personal interactions comes the tempered steel of collaboration. The idea that office space is going the way of newspapers and music CDs seems to ignore the fundamental fact that humans need to physically interact. After all, the practice of “officing” in office buildings is just over one-hundred years old. Surely, office space undergoes evolutionary phases – not all of which have been successful – but evolution is not death.

Take the virtual officing experiment conducted at a well known LA advertising agency in the early nineteen-nineties. The concept was that no one had a personal desk and all desk space was available. When an employee arrived at the office, he grabbed his laptop and found the best available space. Productivity suffered to say the least and the employees rebelled. In the end, the concept evolved into the open floor environment we see everywhere.

“The virtual office ’sounded good in theory, but ultimately violated human tenets,’ said Lee Clow, the [chairman of TBWA\Worldwide]. He added, ‘People need a sense of place and belonging.’ The idea behind the virtual office was that telecommuting would allow people to work anywhere, anytime, and that they would use the outgrown building only for teamwork. As it turned out, most staff members needed or wanted to work under the same roof.” ‘Virtual Officing’ Comes In From the Cold, New York Times, December 17, 1998).

Owners and managers need to keep communications lines open with their tenants so that they can both hear and also adjust to those changing needs. Providing a communal space for like-minded, complimentary skilled-workers is essential to the success of any business, and besides, it’s a lot of fun. Or as Jim says in The Office, “my roommate really wants to meet everybody here in the office because I’m pretty sure he thinks I’m making you guys up.” See us at: http://www.buildingengines.com/

“If you know what women want, you can rule!” says Bette Midler in the film “What Women Want” and Mel Gibson (Nick Marshall) proceeds to prove her right when he suddenly can hear everything that every woman he meets is thinking. We should be so lucky.

Imagine now that you could hear everything that your tenants were thinking – that you knew everything that they wanted. If so, you’d be in the best position to renew your leases and fill your space at the highest possible rate and under the most advantageous terms. Without actually knowing what your tenants want you might assume that they demand the best per square foot rate they can muster or the shortest term, and you’d be right about both. But then that’s too obvious ? like knowing that women like shoes. Everyone wants to pay less and knowing that won’t separate you from the crowd and empower you to secure an extension.

Knowing the seemingly unknowable does not require some special power. Instead, it requires that your organization establish a constant and positive communications stream between it and its tenants. Make it your business to open lines of communication ? take down any barriers and construct an easy means for your tenants to communicate with your organization at any time of the day.

My suggestion is to immediately install a web-based operations management system that provides meaningful amenities to your tenants while creating an easy and effective, traceable and reconcilable means for them to communicate with you.

You might discover a few important and unexpected facts that are unique to this economic downturn.

For example, the lowest price per square foot is no longer sufficient alone to secure your tenants. Tenants are willing to spend the money to gain operating efficiencies because those efficiencies translate to dollars on their bottom line.

You might be surprised to learn that tenants generally do not like talking to the property managers or engineers about their needs. They’d rather communicate electronically. Contrary to the assumption that real estate management is a strictly people business, in truth, tenants just want what they need on time and at a fair price without the unnecessary distraction. A great property manager is like a great waiter – getting tenants what they need when they need it without extended interaction.

You might also learn that flexibility is paramount in a changing economy – that flex space and flexible lease terms are key to operating in unpredictable economic times. Flexibility respecting demising walls, cubicles and employee density are all hot topics. In an economy driven by increasing home office usage and greater office “virtuality” don’t forget that you need to make it more attractive to come into the office than to work at home. Create collective work areas that are attractive to the eye and to the body. Hear your tenants.

How do we know what tenants want? We know it because we’ve made it our business to create an easy and effective means for owners and managers to listen more carefully to what is going on in tenant spaces.

The food of survival for the commercial real estate industry in a starving economy is strong return on investment on your staffing decisions, your purchasing decisions and your resource investments.

Return on investment can be measured in the near term and over a longer period of time – which is an important distinction when making decisions that drive ROI. The key to maximizing return on investment is to apply three simple principles of value realization:

1. Understand the sources of return on investment by investigating and monitoring all facets of your building operations
2. Actively measure return on investment by applying a thorough understanding of the cost-to-return ratio
3. Respect the life cycle of return on investment by having the courage to see it through

In an economic famine, when accounts receivable are slowing and revenues shrinking, employing these principles will be critical to organizational success, and perhaps, survival

Understanding Your ROI

Understanding return on investment requires that an organization actively investigate its business operations by applying tools that enable personnel to see the business more clearly. Without visibility, decision-making is always blind and that blindness can be dangerous. Dissect your business by segregating your building operations into key performance units ? people, resources, activities, and obligations ? then watch those individual business units carefully.

Measuring Your ROI

Measuring return on investment requires that an organization apply those same visibility tools.  In business, visibility comes from efficient data gathering, effective communications and usable reporting. Take those same key business units and set a cost and revenue baseline for each. Build your management tools around those units so that the business can monitor and measure them accurately and often.

Life Cycle of Your ROI

Respecting the life cycle of return on investment is perhaps the most important principal of operations and the hardest to employ. Like fruit, return must ripen before it can be harvested.  Embed your data gathering and communications tools into each unit then actively and regularly compare their performance. Doing so will allow you to see your return ripen over time and help you to know which units are performing well and which units are draining resources.

When times are tough, a manager’s first reaction is to make the decision to cut. Generally, managers do so indiscriminately and without gathering all of the facts – this because they believe that time is of the essence and that unpleasant tasks are best administered quickly. Uninformed decision-making usually results in cutting one or more resources that generate the highest return.  So take a deep breath and make sure that you gather all of the facts before taking action. Apply the good carpenter’s maxim “measure twice, cut once” to all of your management decisions. Be courageous enough to let the fruits of your labor ripen and your business will survive, even thrive.

For a more detailed White Paper on extending and improving your ROI please visit the Research Library.

In last Thursday’s blog, we gave you a test: Go to Google and see how your building’s brand stacks up. We also gave you an example of the messages delivered by the world’s top traffic driver, the web. The results weren’t so good for the building, despite it being a well known class A office tower. Today, we are focusing on how a building and all of its players, can recapture their collective voice using proven, easy to implement strategies to build a brand and get great results.

First things first; whose responsibility is it to get people into your building? Is it the broker’s responsibility to attract new tenants? The property management team’s responsibility to retain tenants? The parking management company’s responsibility to rent spaces? Your vendor tenants responsibility to market their own product or service? What about the owner? What role do they all play?

Today, in most buildings, each party has their own niche that they are responsible for. This “every man for himself” approach worked well when space was in high demand and traffic in your building was at record levels.  Now the current climate has left record vacancies in just about every type of space.  There are fewer consumers purchasing products from your vendor tenants and lower demand for building services (ie. Parking). This significant drop in traffic has had a dramatic, negative impact on every player’s bottom line.  When every player in a building works collectively to recapture the building’s voice, then every player wins.

The Building that Markets Together, Stays Together

Each player in your building has the same problem – getting people in your building. So why not leverage all of the different activities that each of your players engage in, and input that into the overall brand?  The easiest way to do this is to create an online presence for your building; brand it as you would any product, and promote your building’s players and the products and services they provide. Here are five easy strategies that can help you achieve this:

Strategy #1: Market Your Building’s Vendor Tenants

If your building has an entire complex of restaurants, coffee shops, and merchants or just a single cafeteria, you can use your building’s presence as a way to drive business; thus bringing more people into your building as well as making your tenants happy with ‘building only’ deals. Offering space on your building’s website for something like dollar coffee every third Wednesday of the month, is a great way to drive traffic and improve tenant relations.

Strategy #2: Drive People into Your Parking Garage

A couple years back I was looking to rent a parking space in my building, a Class A office tower in downtown Seattle. The parking garage in my building was convenient, spacious, and easily accessible. The problem?  It was impossible to find rate and rental info – so I rented a space next door where the building had a website that answered all of my questions and gave me contact info. As a big parking garage in a major downtown center, you can only imagine the amount of money gained by the building with an online presence as opposed to the one without.

Strategy #3: Unite Brokers, Managers, and Owners

These players are all selling the same thing, the building! So why not bring the efforts of these players together?  Prospects and current tenants make the decision to lease based on how well your building suits their needs. A building that offers amenities like an on-site gym, provides meeting space, boasts green technologies, and is convenient to public transit can have a significant advantage over buildings that don’t offer these conveniences. The problem is that many buildings keep all of the great things a state secret.

Brokers, managers, and owners all have a vested interest in keeping their building occupied – creating an online presence is the single best way to keep prospects and current building tenants aware of everything that you do. You can even extend this effort by providing a tenant landing page and integrate a communications program into your public facing website. This will help create brand consistency and make your building a market differentiator.

Strategy #4: Always Brand

Recapturing your voice is all about promoting your brand – a brand is simply the recognizable experience your clients have every time they engage with you. Consistency and quality are essential to the successful branding of your building and can drive people to your building thus improving your bottom line. As we saw in our previous blog, if your brand is tarnished by online ‘gossip’ and that the only information available about your building, your brand is going to suffer because the experience is negative (even if it is beyond your control).

Establishing an online presence is essential to building a brand and communicating your message. Prospects Google your building, they find your website, and they look no further because they found their answer. As a bonus, you might also find good public relations opportunities if you sponsor events, such as blood drives or other community activities.

Strategy #5: Always be Accessible

Is your building accessible? Can I easily find the hours of business operation? What about how late the sandwich shop is open in case I need to order lunch for a meeting? Where is the handicap entrance for my co-worker who is recovering from a water-skiing mishap? How can vendor’s gain access to the loading dock and who do they need to contact with certificate of insurance information? How about directions? Or what if I am going to an event downtown and want to use your garage but don’t want to get locked in after hours?

These are just some of the common questions and concerns people have – and if they can’t easily find an answer they will take their business elsewhere. Always being accessible is a multi-level communications strategy that starts with an online presence, passed to the public (and tenants), who then find useful and helpful information about your building.