Additional designation for buildings could help your customers claim a competitive advantage

James A. Peck, chairman and chief elected officer, Building Owners and Managers Association (BOMA) International

As published in Scotsman Guide's Commercial Edition, November 2009.

Building-owners and managers want to distinguish their properties in the marketplace to better attract tenants and funding in today's market. This desire is only increasing as the credit crisis pummels the commercial real estate economy.

To best help their clients, commercial mortgage brokers must use every tool in their arsenal to secure deals in this market. Part of the problem today, however, may be that some brokers are relying too heavily on strategies that worked well during the boom days but that have fallen flat during the recession.

An industry-designation program launched this past May -- Building Owners and Managers Association (BOMA) International's 360 Performance Program -- may help some owners and managers demonstrate their buildings' competitive advantage. For mortgage brokers, the program also may be useful in finding funding for clients who are seeking exceptionally managed and operated buildings that don't necessarily come at a premium.

Rather than focus only on certain operational areas, such as energy-efficiency or sustainability, BOMA 360 evaluates all major areas of building operations and management. The program is designed to recognize buildings' achievements. It also provides a tool that can be used to market properties that meet and exceed best practices and that operate to the highest standards of excellence, helping attract and retain tenants.

In addition, these standards create incentives for property-buyers who are looking for assets that could attract lenders that are prioritizing the best-run buildings for funding approval.

Criteria

Essentially, the BOMA 360 designation is a stamp of approval that a building is top performer and that it is tested across comprehensive evaluation criteria. For a building to receive this designation, it must meet industry best practices in six areas:

1. Building operations and management
2. Life safety, security and risk management
3. Training and education
4. Energy
5. Environment and sustainability
6. Tenant relations and community involvement

Energy use is a key part of the criteria, and buildings must be benchmarked through the U.S. Environmental Agency's ENERGY STAR Portfolio Manager to meet BOMA designation requirements.

Although being green is a core component of the BOMA 360 program -- as evidenced by the energy and environment-and-sustainability categories -- for a building to earn designation, its security systems and procedures, tenant programs, preventive maintenance, community outreach and energy-benchmarking history also must be exemplary.

Benefits

The BOMA 360 program helps building-owners claim a competitive edge.

For instance, many tenants may feel more comfortable leasing space in buildings that meet the criteria to obtain this designation. And lenders will feel more comfortable funding buildings that are more likely to remain occupied.

We couldn't be further from the buy-and-flip strategies that pervaded the commercial real estate market just a few years ago. If anything good has come out of the market downturn, it's that we value our assets more today than at any time in recent memory.

A building's value is no longer measured by its appreciation in two years time; rather, it's measured on how well it's managed today and whether it stands above the competition.

James A. Peck is chairman and chief elected officer of Building Owners and Managers Association (BOMA) International. He also is senior director of asset services at CB Richard Ellis in Albuquerque, N.M. Reach him at jim.peck@cbre.com.