From Rags to Riches: Developers Bringing New Life to Old Buildings

By | July 30, 2015

Everyone loves a story with a happy ending—adversity met with opportunity – bringing the two forces together to create something worth celebrating.

You don’t need to look much further than your cable listing guide to witness the growing popularity of transforming old buildings into something new. Popular shows such as HGTV’s Fixer Upper, Rehab Addict and A&E’s Flipping Vegas show viewers the possibilities of turning run-down homes into breathtaking living spaces.

This soaring trend is not isolated to the rehabilitation of family homes, as many developers are now turning their attention toward reviving beauty in urban settings by restoring historical buildings to their former glory, often fueled by historic tax credits offered up by state and federal entities.

A recent example can be found in Detroit, where a group of real estate and restaurant investors, including Michigan-based Schostak Bros. & Co., have announced plans for the redevelopment of the 6.2-acre Brewster Wheeler site at 2900 St. Antoine Street. This $50 million project includes turning the historic basketball court floor into a mixed-use development with a restaurant and meeting space, 100 to 150 residential units, and green space.

Brewster Wheeler site in Detroit, pre-renovation

Brewster Wheeler site in Detroit, pre-renovation. Photo courtesy: Google Street View

Brewster Wheeler site in Detroit-proposed redesign.  Photo by Union Joints LLC

Brewster Wheeler site in Detroit-proposed redesign. Photo by Union Joints LLC

Also in Detroit, the Pepper Shoe Building, located at 1413 Woodward Ave. was recently acquired by Schostak Bros. & Co. The developer plans to convert the 117-year-old building into 42 loft-style apartments with 5,000 square feet of first-floor retail space. The redevelopment project is expected to cost $8.5 million.

  Pepper Shoe Building Photo courtesy: Google Street View


Pepper Shoe Building
Photo courtesy: Google Street View

In a recent article from Crain’s Detroit Business, Jeff Schostak, vice president and director of corporate real estate services for Schostak Bros., said the building’s 60,000-square-foot walls will be removed to combine it with the existing Lofts of Merchants Row, which is immediately to the north at 1425 Woodward (and also owned by Schostak Bros.).

Meanwhile, in Akron, Ohio, the former Goodyear Tire & Rubber Co. campus on the East end of town is undergoing a transformation into a “live, work, play” environment, courtesy of Industrial Realty Group, the California-based company that purchased the Goodyear campus.

The six-story building, which once housed the city’s most recognizable business, is now home to the East End Residence Loft Apartments, state-of-the-art office space, and a new Hilton Garden Inn Hotel. The development will also feature restaurants, retail, and theatre.

IRG was able to leverage federal tax credits to partially fund the project, and will therefore feature affordable apartment units. Redevelopment plans also include restoring and preserving much of the building’s original woodwork, adding to its historic appeal.

According to an article published by the Akron Beacon Journal, a recent event, including a visit by Akron’s own LeBron James, has inspired the developers to re-envision its plan for the restored gymnasium inside of Goodyear Hall.

Plans for the 20,000-square-foot gym and adjacent 1,500-seat Goodyear facility now include concerts and a recreational area where schools and sports leagues can play. The idea was born after the gym was used to host 1,500 people for a meeting of the Greater Akron Chamber, featuring James as a special guest.

Akron's former Goodyear HQ - Photo courtesy: Google Streetview

Akron’s former Goodyear HQ – Photo courtesy: Google Streetview

The Federal Historic Preservation Tax Incentives program encourages private sector investment in the rehabilitation and re-use of historic buildings. According to the National Park Service, the tax credit program is one of the nation’s most successful and cost-effective community revitalization programs, having leveraged more than $69 billion in private investment, while preserving nearly 40,000 historic properties since 1976.

Investors can apply for either a 20 percent income tax credit (if the property is deemed by to be a ‘certified historic structure’ by the Secretary of the Interior) or a 10 percent income tax credit if the building is non-historic.

 



Prevention is the Best Medicine

By | July 28, 2015

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We’ve all heard the old lines:

“Prevention is the best medicine” or “An ounce of prevention is worth a pound of cure.”

Any property manager would likely agree that when it comes to managing a portfolio, prevention IS often the best medicine. A property management organization’s assets, such as boilers, chillers, and HVACs are crucial to their buildings’ productivity and unexpected equipment repairs and downtime can be detrimental to a business’ ability to profitably run a property.

Utilizing property management software tools that can assist in the planned maintenance and scheduled care of these assets can significantly increase an organization’s ability to keep their assets in optimal working condition. By doing so, a property management company can reduce emergency repairs and decrease the capital spent on premature equipment replacement.

MRI Software’s Workspeed Preventative Maintenance Module allows for property management organizations to be proactive when approaching preventive maintenance. This increased focus allows for lowered labor requirements, increased equipment longevity, and reduced energy costs. In addition, staff productivity can be greatly enhanced with automated scheduling and easy access to building asset information, including BOMA standards.

Companies that follow a proper preventive schedule can save $0.33 per square foot each year on maintenance costs – which amounts to as much as $200,000 in savings per year for an average building.

 

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The Empowerment of Choice

By | July 27, 2015

The following article appeared in the July/August 2015 issue of Multihousing Pro Magazine

From ice cream to software, humans want choice.

When you have the flexibility to choose, you typically will. Choice invokes freedom, individuality, and a personal expression of will. Mostly it allows us to follow our own personal tastes and meet our own specific needs.

Just ask Baskin Robbins, home of the 31 flavors. The company has created more than 1,000 flavors of ice cream, and they still continue to innovate and provide more choice to their patrons. Why? Because it keeps ice cream lovers coming back for more. And it satisfies the desire to improve and out-do the last flavor.

Choice, and the ability to combine multiple flavors has not been a common strategy when it comes to enterprise software.

Traditionally, IT departments want to limit complexity by focusing on fewer technology providers. The result is a vanilla solution. One flavor does not fit all.

Such internal strategy is rooted in the belief that application integration is difficult and costly because eacIcECREAMBLOG.h integration needs to be custom built and software providers don’t work well together. Conventional wisdom would have you believe that getting everything from one place has to be better and easier than involving multiple software providers.

At my company, however, we believe clients want, need, and deserve choice and flexibility. The real challenge in providing such options is that it is seen as a threat to the very strategy that has gotten other large property management software providers to the place of comfort in which they find themselves today. Having invested in many products to create these solution stacks, most providers see openness and choice as potential erosion to their business.

Such trepidation often rises from a focus on what is good for the software provider, and not so much what the apartment owners and operators need or want.

Lack of competition creates a vacuum of complacency. Providers are not driven to innovate or think out of the box, but merely stretch the one great flavor they have. The problem is, it’s still vanilla.

The inherent risk is that if you make it easy to choose with a spectrum of alternatives, then your one great flavor, vanilla, may not be selected. Why sell more flavors if just vanilla is good enough?

Because vanilla is, well, vanilla. And because the business of multifamily is far more flavorful and complex. My team accepts and embraces this risk. In fact, we believe that owners and operators should have the ability to choose the best solutions for their apartment business, instead of adapting their business to the solution they are buying. In fact, with greater and greater complexities facing owners today such as regulatory requirements, one set solution is downright risky.

We believe it’s critical to have the flexibility and nimbleness to wrap around an owner’s objectives with a strong set of solutions. We encourage owners to pick and choose according to their needs and objectives. At the same time, we offer a very robust partner network in the property management software space so as to provide unparalleled flexibility in the solutions we implement—conforming to, and supporting, existing business processes.

One such effort is MRI’s Partner Connect program which provides easy access to technology experts who focus on an owner’s individual business. They work tirelessly to refine their unique products and become the innovation leaders in their respective fields. Our strategy is simple: we don’t want to be a jack of all trades. We prefer to focus on providing the best property management software possible while providing the flexibility and choice to work with other product providers—creating a solution tailored to our client’s individual requirements. We provide access to a bevy of flavors that allow apartment owners to make smart choices.

By creating a collaborative and robust partner network, and by providing pre-built integrations to these partners, we have addressed the two issues that typically work against providing choice. We want you to pick the flavors that you want, not the ones we think you should have. Like the best ice cream cone, the best portfolio of applications is the one you picked, not the one that someone else thought you would like.



Eliminating Excel Spreadsheets will Help Solve your Data Evaporation Problem

By | July 23, 2015

Data evaporation in the commercial real estate industry is often related to the industries heavy reliance on spreadsheets for sharing data. Typically, real estate organization use hundreds, if not thousands of spread sheets, which create process bottle necks, and lack the structure and detail to enforce data integrity and ushutterstock_108870227-resized-600niformity.

Each time data is transferred from one stage in the real estate data chain to the next, data quality and detail is lost i.e. it evaporates. For example: The majority of property managers receive an annual or quarterly snapshot of the latest rent roll and general ledger information, which is not only out-of-date almost immediately, but also lacks much of the detail available in the source system.

When property managers pass on their budgets to the asset managers, further time and details are lost, and the cycle continues until the information finally makes its way to fund, portfolio and risk management who at this point severely lack the transparency, visibility, accuracy, and supporting detail needed to mitigate risk, make decisions, and define strategies.

The problem is exacerbated when organizations share information with outside parties.

At each point of the data exchange we see manual re-keying of information, or at best a drastically reduced sub-set of information electronically transferred, with either scenario resulting in a significant reduction in the level of detail available to the next party in the chain.

Using a financial modelling solution specifically designed for real estate investors significantly reduces the dependency on spreadsheets and eliminates data evaporation.

It offers a more secure, user friendly and robust solution for capturing, analyzing, and preserving real estate information. It also empowers the real estate professional by streamlining the collection and aggregation of information from internal and external parties for the purposes of budgeting, portfolio management and analytics.

A single point of entry for all real estate data is precisely what real estate investors and owners have been looking for. This is key to transforming a company and driving its competitive edge.



Cutting down on paper = Cutting down on operating expenses

By | July 21, 2015

To increase profit, most companies research and reevaluate their ability to reduce operating expenses.

Many companies, although using modern technology in many aspects of their business, still manage work orders and preventative maintenance schedules through a pen and paper approach. The cost of materials (writing instruments, stationery) as well as their disposal, continue to mount throughout the year.

Workspeed, as a building property operations software, has the ability to reduce operating expenses in multiple ways. This web based program reduces, and potentially eliminates, the need for pen and paper documentation. The entire work order and preventative maintenance systems are internet based, while keeping permanent records of all workflow items for reporting and reference. By removing the need to constantly stock material goods, clients have reported reductions in operating expenses of up to $300 per property.resizedBLOGtpsreports

The ability to configure Workspeed to deliver service requests ‘on-the-fly’ to the necessary technician, or property management user, reduces operating expenses by increasing technician efficiency. This is accomplished by reducing, or removing, the need to dispatch and update work orders over the phone, and utilizing the Workspeed system instead.

By tracking every step of the process in Workspeed, both tenants and property managers are provided updates as work orders are created and completed. Over time, the hours saved through an automated process can greatly impact the cost of operating expenses, and in turn provide a boost to profits.



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