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Weekly UpdatesTIME CAN BE A MEASURE OF OUR EXPERIENCES AND OUR PROGRESS--A COMPANION IN OUR PERSONAL AND PROFESSIONAL LIVES THAT REMINDS US NOT OF WHAT WE'VE ACCOMPLISHED, BUT HOW WE HAVE LIVES. From its inception in 1933 through today, the Institute of Real Estate Management (IREM) has served as a source, resource and a welcome guide for real estate management professionals. By providing valuable training and leadership advocacy for the real estate industry and professionals, IREM has shaped, responded to and played an integral role in what is currently a multi-trillion dollar industry employing millions of talented leaders worldwide.
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The real estate industry has now established itself firmly as the foundation of society's heritage and the unfinished business of every country and culture. Real estate continues to be the responsibility of each generation and the cornerstone of every nation's history. Every town and city is defined by the characteristics of its developed and undeveloped real estate; in fact, it has become the fulcrum from which society bands together for common causes, interests and values.
While real estate defines the vitality of each community and the attitudes and experiences of the tenants, residents, guests and customers it serves, it is not the buildings which define the real estate industry--it's the real estate professionals. As most buildings are demolished, redeveloped, readapted and retrofitted to meet the ever-changing needs of society, those who make it happen are a defining reason why real estate and IREM are synonymous with everyone's "live, work, play, stay and shop" environments.
During the past 75 years, we have seen many human and worldwide successes, failures and surprises. Since IREM's founding in 1933, the world's population has increased by nearly 4.8 billion. Today the global commercial real estate industry is valued at around $15 trillion (35 percent of which is in the United States). IREM Members manage more than $1.5 trillion in assets, including 8.4 million residential units and nearly 9.0 billion square feet of commercial space, making IREM a global leaders poised to shape the future direction of the real estate industry. With more thanl8,000 members located in 80 U.S. and eight international chapters, IREM's leadership within the real estate industry is acknowledged, honored and welcomed.
While IREM's future and that of the real estate industry are shaped by the past, how IREM and the industry respond to current and future challenges will define their value and success in the decades ahead. Many global factors are impacting and shaping the future of real estate (i.e., climate change, terrorism and economic advancements, to name a few), but real estate's future ultimately will be defined by the men and women who call real estate their profession. While many factors face the real estate industry, I feel the following four operational factors are likely to have the greatest impact on the real estate professional in the next 25 years.
1 SUSTAINABLE ENVIRONMENTS
U.S. buildings currently account for 39 percent of all energy use (A $222 billion energy bill), and 70 percent of all electricity consumption. An estimated 250 plus billion square feet of buildings in the United States are not energy efficient. As of May 2008, more than 10,000 projects, or 3.5 billion square feet of commercial space, were seeking LEED certification. The green building industry is projected to grow from a $12 billion industry in 2007 to a $47 billion industry by 2015.
Prediction: During the next 25 years, green buildings will not only be the standard, but we can expect to see new uses for buildings, including those for growing farm products, generating their own power, and operating with artificial intelligence; additionally, most buildings will become homogenous and linked with all other buildings surrounding them.
IREM'S Role: The CPM[R] designation and ARM[R] certification will be augmented by a letter and a number following the designation (i.e., the number will signify the level of "green" experience/expertise, and the letter will represent the type of asset one is most capable of managing). IREM's course curriculum will be hard to distinguish from that which is offered by the United States Green Building Council (USGBC), except IREM will be the official designator of "Green Building Managers."
2 TALENT& EDUCATION
There is a growing shortage of talent within the real estate industry. The average age of a property manager is 43.5 years and the average age of an IREM Member is older than 50 years. Meanwhile, the average employee tenure within the real estate industry is 3.5 years and the industry's employee turnover is around 30 percent. During the next two decades, millions of Baby Boomers will begin to retire, and the pool of experienced replacement talent is not deep enough. Over the next 25 years, the real estate industry will be forced to rely more upon technology and smart buildings to satisfy tenant needs.
Prediction: By 2033, buildings will become self-managed assets in which the role of today's property manager will be redefined and retitled as a "Facility Knowledge Director" (FKD), overseeing multiple technologies and Web-based resources, requiring the individual to become more of a CEO than a CPM.
IREM's Role: IREM will establish a direct link with 50 to 75 colleges and universities, 100 newly created real estate trade colleges and 1,000 real estate-focused high schools world-wide to recruit, train and prepare tomorrow's real estate professionals. IREM will offer training in 5, 10 and 15-minute intervals via podcasts or through the individual member's watch or hand-held PDA. Real-time training will be commonplace, and IREM will develop the world's reservoir of "Best In Class" business practices, allowing members access 24/7 from any global location. Today's 8,700 CPMs will grow to nearly 20,000 by 2033.
3 STANDARDIZATION
Within 25 years, the global real estate industry will, with IREM's leadership, establish a consistent set of standards, business practices and laws/regulations regarding the management and leasing of buildings. In 2007, approximately 32,000 properties ($1.5 trillion in value) were sold or purchased. By 2033, the real estate industry will continue to be a local business but will be governed by global capital markets requiring a uniform set of standards and documentation to underwrite and finance. Within the next 25 years, it will not be uncommon to see universally accepted standard leases and operating statements.
Prediction: By 2033, 75 percent of all buildings valued at $50 million or more and 35 percent of all buildings valued at less than $50 million will be operating under a set of global standards. Only three or so global service providers will exist, but they will come together as a consortium with the International Facility Management Association (IFMA), the Building Owners and Managers Association (BOMA), the International Council of Shopping Centers (ICSC), the National Apartments Association (NAA), the National Institute of Standards and Technology (NIST) and others, to shape--with IREM's leadership--global operating standards for buildings.
IREM's Role: Not only will IREM lead this role, but it will become the standards arbitrator. IREM will serve a key role in validating, certifying and maintaining the integrity of standards set.
4 TECHNOLOGY
From photovoltaic (PV) solar energy conversion to biometrics, from computer designed and assembled office buildings to tenant chips that monitor movements and activate services, the real estate industry will look very different in 2033. Building will become connective technological portals with interior walls that sense and respond to health, medical and personal needs. Building Information Modeling--the process of generating and managing building data during its life cycle by using three-dimensional, real-time, dynamic building modeling software--will be common-place. Because property managers will be less concerned with developing the latest policy than learning and applying the latest technology, every major office building will require a technology officer. Robotics will complement the work of site personnel (i.e., security, janitorial and parking).
Prediction: One out of five CPMs will have a degree in information technology, and by 2033 all tenants will utilize their "personalized" chip to work in a timeless workplace environment.
IREM'S Role: IREM will take the lead in licensing software and building technology. The licensing fees from this technology will enable IREM to generate nearly $250 million in fees.
Nearly 70 years ago James C. Downs, Jr., from Chicago, became the first CPM and also was the creator and first editor of the Journal of Property Management. His book, Principles of Real Estate Management, first published in 1947, is now in its 15th edition. While the inspiration of Jim Downs provided the foundation for IREM's beginning, the thousands of current and future CPMs, ARMs and hundreds of AMOs have shaped and continue shaping IREM's exciting future. Much has changed in the past 75 years, but the basic tenets of quality, service, performance excellence and continuous learning have not changed--they have just become stronger. Onward to the next 25 years of great expectations, exciting challenges, incredible surprises and countless rewards.
Christopher Lee is President and CEO of the Los Angeles-based CEL & Associates, Inc. one of the nation's premier real estate consulting firms. Readers are encouraged to visit CEL & Associates, Inc.'s website (www.celassociates.com) or contact Lee directlv by calling 310-571-3113 or via email to cel@celassociates.com. Lee authored the IREM Key Report, From Good to Great to Best in Class, published by IREM earlier this year.
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