BOMA Conference in Boston - Day Three Recap

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How to Make Empowered Decisions and Stay Inspired
 
“Nothing changes until you decide it will.”

That was the key message from the sold-out Women in Commercial Real Estate Program and Breakfast, an always-popular annual event at the BOMA International Conference & Expo. The breakfast, a great opportunity for women in commercial real estate to grow their careers with actionable tips, featured coach Tami Jaffe, who highlighted how intentional decision-making can be helpful in navigating professional challenges like burnout and boundary-setting.

“We hear a lot about burnout these days and being stuck,” Jaffe said. “But that doesn’t happen overnight. Burnout is actually a lot of small decisions that have led to that point of stress—a lot of decisions you’ve made along the way where you’ve not set a boundary or said ‘yes’ when you probably should have said ‘no’ because you have no more room on your plate. You need to say no sometimes.”

Other times, you may make bad decisions because you didn’t have all the answers or didn’t know what your other choices were. Making better decisions starts with gaining clarity, and clarity starts with understanding the decision you’re about to make.

“What questions do you need answered? Who can help you with those questions?” Jaffe asked the audience. “When we start getting questions answered and start getting clarity, that allows us to move forward because then, we can step out with a little bit of confidence and courage.”

Clarity helps grow your confidence, courage and consistency, which are all key to moving ahead, Jaffe explained:

• Confidence is a complete faith and belief that you can do something. “That comes from getting clarity, because if you don’t have clarity, you’re like, ‘I don’t even know how to start, where to go or who to ask.’ How can you be confident in something you’re not clear on?” Jaffe asked.
• Courage is taking steps forward. It builds on itself; by taking a first step, you gain the courage to take additional steps. “Even moving in the wrong direction, you’re still better off than staying where you are, because you can see much quicker what the next step needs to be and change that path,” Jaffe said. “As you start taking those steps, the momentum starts to build. You can’t get momentum when you’re in the same place.”

• Consistency means doing more of what’s working and not doing what’s not working. “Be consistent about doing the things that will get you the results you want,” Jaffe told the audience. “When we’re consistent and we build that momentum, we get better results.”

Encircling all of these concepts is commitment, a state of dedication. Jaffe asked the attendees to commit to what their future looks like, be it a decision they’ve been putting off or going after a new job. “What is a decision you feel you need to make right now?” Jaffe asked. “You’re in control of your life. No one else can tell you what you need to decide. You get to set that boundary and make it happen… Commit to your brighter future.”
 

How to Start Sustainability Initiatives in Tenant-Controlled Spaces
The market is shifting when it comes to sustainability—and even net-leased, tenant-controlled environments can benefit from more intentionally addressing environmental, social and governance (ESG) initiatives, according to the speakers at a Friday morning panel moderated by Brenna Walraven, BOMA Fellow, president and CEO of Corporate Sustainability Strategies (and a member of the BUILDINGS advisory board).

Tenant-controlled spaces can be challenging places to implement ESG initiatives because the tenants manage their own utilities. However, data-sharing agreements can make it easier for building owners and managers to spot opportunities for strategic upgrades and replacements. The panel shared actionable tips for improving sustainable performance in tenant-controlled properties, including:

• Benchmark. “It’s one thing to compare yourself to the most forward-thinking office or healthcare REIT, but they have different challenges,” explained Megan Basore, vice president of corporate responsibility for Duke Realty. Compare your portfolio to its peers in the same sector for a clearer picture.
• Communicate progress. Publicly share your goals online and on social media. Talk about your sustainability objectives and accomplishments consistently.
• Establish a system to assist with priorities and progress. “What are your processes in place [already] and what are you already doing well?” Basore asked. Publicize the metrics you’re using to measure success, even if you’re not getting a perfect score yet.
• Add ESG to the data-sharing requirements in your lease. “You can get [tenants] involved in getting that information available to share, and that way, it opens the conversation,” said Christy Walters, senior property manager for Duke Realty.
• Make sure ESG data collection can be folded into existing processes. Are your property managers already doing inspections? They can gather data related to sustainability metrics while they’re already inspecting their properties. You should also include your property managers in setting up the sustainability data collection process as much as possible. “The more your property managers understand what value they’re getting from this data, the more invested they’re going to be in talking to tenants about it,” Walters said. “If you collect data and never tell them why, they’re not going to see the value in it.”
• Throughout the process, don’t expect 100% compliance. “I don’t think anybody should assume that tomorrow you’re going to sign up all 50 of your tenants for this process,” Walters said. “Some are not going to care until they’re made to care by changes in government regulations. I don’t recommend anybody spend a lot of time and effort pushing tenants that are not interested. Start with the ones who are interested.”
  

 
Conference Attendees Tour Boston Seaport’s Best Buildings
Boston’s burgeoning Seaport District has seen massive development in the last five years—with much more on the way—that includes residential and Class A office space with top-tier amenities, unbeatable harbor views and public green space. On what was a picturesque Friday morning, more than 50 conference attendees received a walking tour of some of the best buildings in the area.

What the Future Holds for Commercial Real Estate After COVID-19’s Impact
 The Friday afternoon education session “The Future of Work: Navigating the Lasting Effects of the Pandemic on the U.S. Office Market” examined some major questions that commercial real estate professionals undoubtedly have on their minds as the pandemic lingers: How has remote work affected the U.S. office market? When can we expect to see vacancies plateau and decline? What do leases look like now? How and when will things improve?

Session leader Ariel Bentata, founding and managing partner of investments for Accesso Partners, explored these questions and organized his presentation into three sections: trends seen before the pandemic, the impact of COVID-19 and what the future holds.

Before the pandemic: To start, Bentata explained that many of the trends we’re seeing right now were already in the works pre-pandemic, including the rise of remote work, the shift from central business districts (CBD) to the suburbs and office densification.

“Before the pandemic, and even now, there were many downtown areas being completely redeveloped,” he said. “You’ve seen a lot of office buildings turning into residential. You’re seeing a lot of multifamily buildings in downtown areas being revamped. But [research] shows you that, over the last several years, more people have been moving to suburban buildings than people have been moving to CBD buildings.”

Companies have also increased the density of their office spaces over the past 20 years, moving more employees into smaller spaces.

Impact of COVID-19: Bentata cited a study done by Cushman & Wakefield that showed office vacancies rose by 3.1% over the past 18 months (compared to about 2% during the financial crisis more than a decade ago)—but an uptick in occupancy occurred in Q1 and Q2 of 2021.

“We think that the worst is over,” he said. “We’re going to start to see some positive numbers. We have a portfolio of about 50 million square feet, and we’re starting to see a lot more leasing activity, a lot of tours and proposals.” However, shared Bentata, “People are taking longer to evaluate the proposals. They’re taking longer to make decisions.”

As a result of the pandemic, Bentata said numbers for subleases are up everywhere, as well as for concession packages. But the latter has stabilized and even fallen slightly over the past quarter. Average lease terms fell initially but have risen over the past quarter. He added that overall transaction volume rose by 28.7% in Q2 of 2021 from the lowest points of the pandemic.

What the future holds: Regarding working from home, Bentata cited a Gensler U.S. Workplace Survey from this summer that found that 44% of people do not want to work from home after the pandemic subsides. Only 12% said they’d like to work from home full-time (five days a week). The survey also found that the younger generations are more likely to want to think and brainstorm at an office than older generations.

“Working from home does not provide the same level of interaction” that younger professionals need, Bentata said. “You don’t have the same camaraderie. You don’t meet a lot of people. You don’t get a lot of mentorship. Younger people need the office more.”

Bentata predicts a trend of moving generally from urban offices to suburban offices over the next several years, caused partly by companies creating satellite offices in the hub-and-spoke model to give employees shorter commutes and more convenient locations. He also expects that markets with lower costs of living that offer better lifestyle dynamics will benefit from the newfound health concerns in gateway/commuter cities, as well as the perceived long-term ability to work remotely.

And although some employees now favor greater flexibility in the ability to work from home, providing the option of going to an office will remain imperative for attracting and retaining strong talent, as well as establishing and showcasing company culture.

There’s definitely room for numbers to improve, but the office isn’t going anywhere.
 

The Growing Cybersecurity Threat to Building Tech
IT systems are increasingly blending with operational technologies, from smart elevators to fire suppression systems, HVAC and lighting. This opens up buildings to cyberrisks at a level never seen before, explained Lucian Niemeyer, CEO of nonprofit organization Building Cyber Security, at a Friday afternoon educational session.

Niemeyer, who served as assistant secretary of Defense for Energy, Installations and Environment in the U.S. Department of Defense from 2017 to 2021, explained to the audience that getting rid of the gaps that once existed between operational technology and IT “can actually hurt people or cause property damage,” he said. “That’s what we’re trying to get in front of with raising awareness of the threat. It does exist in every building.”

Building Cyber Security is developing an easier-to-understand standard that any building owner or operator can use to vet vendors, shore up the cyber infrastructure of their own buildings and more. The framework will require ongoing certification to make sure that certified personnel are up to date on the latest threats and cyberattack methods. And the benefits of taking steps to protect your building could be many.

“Right now, with a home or car insurance policy, you’re starting to see incentives. If you install a physical protection system or alarm system for your home, you get a discount on your home insurance. If you put a chip in your car and you’re a good driver, you get a discount on your car insurance. We want to do the same thing for cybersecurity,” Niemeyer said. “If a building owner or manager makes the investments to maintain good cyber hygiene, they should get a discount not only on their cyber insurance, but also on their property and casualty insurance.”

That’s a big deal when you consider that companies could spend up to $10.5 trillion a year fighting cybercrime by 2025, according to Cybersecurity Ventures. These costs include damage and destruction of data, stolen money and lost productivity—as well as the harm to the targeted company’s reputation. The cost of cyberthreats is multiplying and could even include lawsuits against your company by tenants or other stakeholders who blame you for not protecting your data and infrastructure well enough.

“We’re going to see more [lawsuits] as shareholders, portfolio investors and private investors look at asset value and what has been affected as the result of a cyberattack,” Niemeyer said. “You’re going to see more emphasis put on fiduciary responsibilities to enhance cybersecurity. You’re also going to see insurance companies asking building owners, ‘What are your cyber protection plans?’ A lot of real estate owners and operators can’t even tell you that today—they turn it over to a third-party vendor who they’ve hired to do monitoring or IT, and the answers coming back are pretty much, ‘We don’t really have anything in place.’ That’s not good for a CSO, for a CIO or for anybody.”