Weak Economy Heightens Liability Risks A slow economy doesn’t just lower property returns; it also increases the potential risk of liability claims against property owners, says Lee Whitman, CPM, general manager at MC Realty Group in Kansas City, Mo. One factor behind the heightened risk: own- ers who inadvertently cre- ate an unsafe environment at a property by postpon- ing needed repairs. The reluctance to repair is more common among less experienced investors who don’t understand the risk, says Whitman. Managers need to be proactive and work with owners either to make repairs or at least to identify potential hazards through signage and other warnings. “At least identifying situations helps show that ownership is not negligent, a frequent basis for liability claims,” explains Whitman. A weak economy also increases the number of injury and workers’ compensation claims filed against a property and its management company, says Whitman. “More and more people are threaten- ing lawsuits as a way to get money,” he says. Other legal issues that caused major concerns for prop- erty managers, according to the 2011 Institute of Real Estate Management Legal Scan, include debt collection suits, which increased 14 percent since the 2009 survey, and fair housing cases, which grew by 25 percent for racial discrimination and 60 percent for discrimination against the disabled in tha
wo-year period. What can commercial real estate managers do to lessen the likelihood of liti- gation? “Walk the property regularly—both outside and in the tenant spaces— and look for potential risks,” says Whitman. That way, you can correct small problems before they escalate.
Are Millennials Homebodies?
A quick scan of the apart-
ment amenities preferred
by Millennial—or Gen-
eration Y—renters reveals
some pronounced nesting
tendencies. A series of sur-
veys on renter preferences
conducted by J Turner
Research found that the
top three apartment ame-
nities for renters age 35
and under were an in-unit
washer/dryer, a gym, and
additional storage in the
unit. The most important
design attributes were
(in descending order) a
large kitchen, upgraded
appliances, and additional
storage. That’s in contrast
to Gen Xers, who ranked
kitchen size as only third in
their design preferences,
says Joseph Batdorf,
president of the firm.
Millennials, like all renter
groups except Silent Gen-
eration retirees, ranked
proximity to work as the
most important criteria.
Next came access to
restaurants and nightlife,
followed by access to
parks and green space
for every group except
baby boomers. That group
ranked proximity to family
and friends higher.
One surprise was the
importance of Craigslist
to Millennial renters, says
Batdorf. “It didn’t show up
at all for the other groups,”
says Batdorf. Also note-
worthy: Renters who used
Craigslist paid a higher
rent than those who found
apartments on other sites.
mix in which each tenant shines and complements
the others, she says, “you create an environment that
generates more sales and tra;c than each tenant
alone. Ultimately, higher sales will generate higher
Tenants, too, recognize the value of being in the
right place with the right company. “Many tenants—
even smaller ones—are willing to wait and even pay
more for the right location,” says John Orr, ;;;;,
vice president of the retail group at Colliers Interna-
tional in Charleston, S.C.
What makes a delectable retail mix? The short
answer: food. In a smaller, unanchored center, for
example, “you only need one of the very popular,
2,500-square-foot restaurant concepts to anchor the
property and create the increased tra;c other ten-
ants want,” says David Andrews, ;;;;, a partner in
the Richmond, Va., o;ce of The Shopping Center
Group. Top restaurant performers today are fast
casual spots such as Pei Wei, Chipotle, and Panera
Bread, which have posted a higher increase in sales
than full-service casual dining chains over the last
year, says Birdie.
What else keeps those customers coming back?
The promise of beauty. Health and beauty retail-
ers are one of the fastest-growing retail categories
today, says Taylor. Tenants like day spas and massage
studios keep shoppers around for hours, especially
those with more disposable income, Birdie adds.
A variation on the health theme is fitness centers.
From Gold’s Gym to smaller cross-training centers
and yoga studios that can fit into 2,500-square-foot
inline spaces between the anchors at a community-
oriented strip mall, fitness is a sure-fire draw, partic-
ularly for the under- 35 demographic, says Andrews.
“Other retailers used to dislike fitness because it
took up so much parking, but now the same retailers
realize those concepts keep shoppers coming back
to the center,” he says.
Specialization within a strip mall is also “a very
savvy way to merchandise a center and make it a des-
tination,” notes Taylor. She recalls a top-performing
center that had ballet, karate, crafts, a toy store,
and day care. Ethnically oriented specialty centers,
which o;er groceries, home decor, food, and even
clothing for one large immigrant group, can turn
an otherwise ordinary center into a local or even re-
gional destination, says Grossman.
In lower-income areas, a center with a discount or
dollar store and a small grocery may become a des-
tination for consumers who don’t have easy access
to mainstream retailers for geographic or economic
reasons, says Taylor.
Managers and leasing agents do need to exercise
caution not to let the combination of retail and
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