A look ahead to RECon 2011
As thousands of retailers and shopping center owners and managers prepare to descend on Las Vegas for the International Council of Shopping Centers’ 2011 RECon conference May 22-25, we thought it appropriate to talk with a retail real estate expert about not only the state of the industry, but also what to expect from this year’s show.
Senior editor Katherine Field talked with Mitchel S. Friedman, senior VP of New York City-based RCS Real Estate Advisors, to gain his insights about the show and the industry as a whole.
With RECon rapidly approaching, what do you expect to see in terms of highlights, climate and retailer sentiment at the convention?
Overall, I think we’re going to see a positive, optimistic climate this year; one we haven’t seen in awhile. Retailers are focusing more on growth and expansion rather than survival, and are closely weighing all of their options. So, I think one of the biggest highlights coming out of the show this year will be a higher level of activity and actual deal making.
Comparing this year’s show to what we experienced last year, which was at best cautious optimism, what do you think will be different, if anything?
I think the biggest difference will be that people are more optimistic without the caution. There are certainly a number of things going on in the world that people are keeping their eye on, but nothing that is raising caution like we’ve seen in the past. For the most part, I think people are more comfortable with where we are and what it means going forward, so they now feel a little better about taking the necessary steps to ensure their success for the future.
What will be your focus at the convention?
Our focus is really in two areas: The first being to serve our vast existing client base by helping them manage their current real estate and their growth plans; and the other is meeting with retailers to identify new clients and prospects. We have had great success serving as the outsourced real estate department to many companies and would like to be helping more retailers manage their real estate portfolios and position themselves for growth and prosperity.
What do you anticipate will be key RECon takeaways, especially as retailers return home to face the back half of 2011?
In the second half of 2011, I think most retailers will be concentrating on implementing opportunities uncovered at RECon. Most probably already have determined what they think they need, but I think they’ll come out of RECon knowing what they need to do and will then do it. The biggest takeaway will be related to aggressive growth in 2012. Retailers will leave the show with a clear picture of the optimism that exists, and will start to formulate their best expansion strategies for next year.
Where will RCS’ priorities lie for the last half of the year?
We will continue to focus on providing outsourced real estate services to our existing clients, and identifying and pursuing other retailers who would benefit from those services. We will also spend a significant amount of time servicing companies who are experiencing near-term difficulties by helping them restructure their real estate portfolios.
Long-time Washington insider named RILA’s top lobbyist
ARLINGTON, Va. — The Retail Industry Leaders Association announced that Bill Hughes has joined the association as SVP government relations. Hughes, a 27-year veteran of Capitol Hill, will serve as RILA’s top federal lobbyist.
Prior to joining RILA, Hughes served as Chief of Staff to Senator Kay Bailey Hutchison (R-TX). In that capacity he served as the Senator’s top advisor on all strategic and legislative matters. Before serving as Sen. Hutchison’s Chief of staff, Hughes served as a senior manager government relations for General Electric. Prior to that, Hughes was the Republican staff director for Senate Commerce, Science and Transportation Committee from 2008 to 2009, and staff director for the Republican Policy Committee from 2007 to 2008.
From 1999 to 2006 Hughes worked for House Speaker Dennis Hastert (R-IL), serving as policy director beginning in 2001. In that capacity, Hughes was the primary liaison for the Speaker to House and Senate Leadership and the Administration on policy issues.
Earlier in his career, Hughes worked for the Senate Budget Committee, the Senate Commerce, Science and Transportation Committee, and the House Committee Transportation and Infrastructure.
“The retail industry faces many public policy challenges and opportunities that it relies on RILA to address,” said RILA president Sandy Kennedy. “As one of Capitol Hill’s most respected operatives, Bill’s unparalleled experience will further strengthen RILA’s highly effective lobbying team.”
Saving on energy costs and sustainability
By Lynn Burkhart Jr., [email protected]
Saving money is vital, under current economic conditions. Although economic recovery signs are becoming more frequent, it is doubtful it will ever alleviate the need for running a tight ship.
Monthly electrical expenditures are significant, and with multiple locations, even small decreases can add up quickly. HVAC and lighting are two areas accounting for up to 85% of monthly energy costs.
Are you “Out of the Loop”?
While HVAC systems can be complicated, it is up to the owner to see that he is getting the best maintenance program for his operations. Our surveys indicate many firms let HVAC contracts go to the lowest bidder, without realizing that the latest maintenance technology to lower monthly heating and cooling expenses is not covered in the contract.
Bidding specifications on HVAC maintenance contracts should be adjusted to get a bottom line advantage on not only the contract fee, but also on energy reduction and improved equipment sustainability.
There are several actions that can be taken to determine first hand if the HVAC maintenance program in place is having a positive impact on the bottom line. One of the single biggest actions that can be done is simply to look. As the HVAC system uses 40% or more of a buildings electrical usage, it is well worth taking the time to take a look. Without looking, you are in fact out of the loop.
HVAC Systems: Where to Look and Handle
It is important to look inside the HVAC air handler. It may be large, or may be a smaller unit often found on rooftops of stand-alone buildings. If you are unable to get to these units, ask the maintenance staff to take a few digital pictures of the inside. You want to look at the cleaning and heating coils.
Cooling and heating coils are much less efficient when their surfaces are covered by dirt, biological films and other contaminants. The coil surfaces are where cooling and heating comes out of the unit that changes the temperature in the building air. Dirt and contaminants on the surface of a coil have an insulating affect, like a towel wrapped around an ice pack. The towel insulates the ice pack so less cooling occurs when the ice pack is placed on your skin. In effect, a similar thing happens when cooling and heating coils are wrapped in dirt and other contaminants. They just cannot heat the building air as well as they would if they were clean.
ASHRAE (American Society of Heating Refrigeration and Air Conditioning Engineers) performed an engineering study in 2006 proving dirty coils increased energy costs by 10% or more.1 This study was done on air handlers that were cleaned one year before, so the problem is compounded when traditional coil cleaning is not done annually. Unfortunately, this is often the case as the cost of coil cleaning itself eats into the bottom line.
However, new technology is available that keeps coils clean for longer periods without maintenance attention and capital cost expenditure. There are now coatings specifically engineered for HVAC coils that can provide a shield from greases encountered in fast food restaurants, bakery dusts, dirt, biological film, mineral scale and other contamination that can accumulate. The coil coatings prevent the accumulation and effectively reduce the insulating impact of the deposits as well as the number of cleanings needed. This also reduces the cost of maintenance manpower. (For more details, see our white paper on “Energy Management Thru Clean Coils.”)
Air Handler Sustainability
The replacement of air handlers is expensive. It is not uncommon for the replacement of one air handler to cost $75,000 or more. After 15 years, many units show signs of internal corrosion of the metal – one of the leading reasons air handlers need to be replaced. In large buildings, all the air handlers were installed at the same time. If one is in need of replacement, there is a good chance that many others will queue behind it for replacement as well.
Until a few years ago, when this happened the owner was looking at a good sized financial hit, sometimes running close to a million dollars or more depending upon the number of replacement units. In the majority of cases, the replacements were not budgeted, putting a further dent on cash flow.
However, new technology now used in commercial buildings, nuclear plants, industrial facilities, and hospitals, allows for easy refurbishment of corroded air handlers. This alleviates necessity of HVAC removal, downtime, and replacement. For use on roof top units as well as larger sized equipment, monetary savings with this permanent fix is significant, as much as 20 to 1 over the cost of replacement. For more details, see our white paper on “Sustainability of HVAC Air Handlers.”
Other HVAC Expense Areas and Potential Savings
In an effort to cut costs, replacing air filters is often cut back. While it might seem like an easy way to control expenses, it is usually not. Filters are there to trap dirt, and prevent it from alighting on vital coils that transfer heat or cooling energy. When not changed, air cannot pass thru the filters easily, and the HVAC fan can use more energy, often eliminating savings one thought he would have.
Cold or hot air leaking from air handler doors is another energy waster. You can easily tell if this is occurring just be passing your hand around the units outside access doors. If you feel air leaks, the remedy is simple. Just have the seals replaced.
An HVAC owner “in the loop” will see that improved equipment sustainability and energy reduction result in not just cost savings, but also provide benefits in improved air quality and better utilization of manpower as well.
1. ASHRAE JOURNAL NOV 2006
Lynn Burkhart Jr. is president and founder of Controlled Release Technologies (cleanac.com), which manufactures HVAC maintenance products area to enhance sustainability and energy efficiency. Lynn may be reached at [email protected].