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WCRE APPOINTED EXCLUSIVE LEASING AGENT FOR COLWICK BUSINESS CENTER

LEASING AGENT FOR COLWICK BUSINESS CENTERWolf Commercial Real Estate (WCRE) is pleased to announce that it has been appointed exclusive leasing agent by Golden Gate Management for its recently acquired Cherry Hill office portfolio located at Colwick Business Center, 53-55-57 Haddonfield Road in Cherry Hill, New Jersey. Colwick Business Center consists of three office buildings comprising of approximately 173,000 square feet.

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Among many desirable attributes, Colwick Business Center features highly efficient suite layouts, private 24/7 access to each tenant suite, and ample parking. Available suites range in size from 2,500 to 29,475 square feet.

Current anchor tenants of this premier office complex include Virtua Health, Rutgers University and the State of New Jersey.  The new owner, Golden Gate Management, is committed the southern NJ marketplace with recent acquisitions of flex and office parks and their ability to enhance value with the lease-up of the available space in these buildings.  

“We are excited to be working with WCRE’s leasing team of John Mozzillo, and Bethany Brown, and I am confident they will be very successful in marketing this premier business center,”
– Fishel Schlesinger Principal, Golden Gate Management

All of the available buildings in Colwick Business Center are single story office properties with private entrances, offering all useable space with no loss factor. The efficient layouts not only provide cost savings but also help to ease the logistical and safety concerns Covid-19 has posed for tenants in multi-story properties that require elevators and common areas.

Colwick Business Center is located just west of the Cherry Hill Mall on a stretch of Haddonfield Road that has recently undergone a massive redevelopment renaissance. The area features affluent residential communities, retail centers, hotels, and other amenities attractive to office tenants. Additionally, The Garden State Towne Center, home to Wegman’s, Best Buy, Home Depot, Dick’s Sporting Goods and other high-end retailers, is conveniently located a short distance away on Haddonfield Road.

Colwick Business Center

 

A marketing brochure and tenant information package is available upon request and also in at this link

 

About Golden Gate Management

Golden Gate Management has led the development and repositioning of more than 1,500,000 million square feet of best-in-class commercial and residential properties. The company is highly experienced in managing all aspects of the development process, from site selection and
entitlements, through coordination of tenant move-in.

Golden Gate’s 10-year history as a preeminent management company is unmatched. Reflecting the company’s core competencies and start-to-finish execution capability, Golden Gate has served as a single-source solution for small and large tenants with its full breadth of its in-house capabilities of construction services thus building relationships with their tenants, Leveraging the strength of its experienced team, Golden Gate has emerged as a first-class project management firm.

 

About WCRE

WCRE is a full-service commercial real estate brokerage and advisory firm specializing in office, retail, medical, industrial and investment properties in Southern New Jersey and the Philadelphia region. We provide a complete range of real estate services to commercial property owners, companies, banks, commercial loan servicers, and investors seeking the highest quality of service, proven expertise, and a total commitment to client-focused relationships. Through our intensive focus on our clients’ business goals, our commitment to the community, and our highly personal approach to client service, WCRE is creating a new culture and a higher standard. We go well beyond helping with property transactions and serve as a strategic partner invested in your long term growth and success.

Learn more about WCRE online at www.wolfcre.com, on Twitter & Instagram @WCRE1, and on Facebook at Wolf Commercial Real Estate, LLC. Visit our blog pages at www.southjerseyofficespace.comwww.southjerseyindustrialspace.comwww.southjerseymedicalspace.comwww.southjerseyretailspace.comwww.phillyofficespace.comwww.phillyindustrialspace.comwww.phillymedicalspace.com and www.phillyretailspace.com.

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Change to the Bankruptcy Code Protects Landlords

Change to the Bankruptcy Code Protects LandlordsLet’s look at how a temporary change to the bankruptcy code protects landlords. The Consolidated Appropriations Act of 2021 (CAA), signed into law on December 27, 2020 provides money for governmental departments, coronavirus stimulus to individuals and businesses, but also made a temporary change to the bankruptcy code. Some of those amendments directly affect the rights of landlords of commercial properties.

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Since the pandemic started, landlords have been working with their commercial tenants by reaching deferral and waiver arrangements for payment of rent in arrears. Landlords are concerned that if their tenants filed a bankruptcy petition, payments made outside the ordinary course of the lease could be recovered by the bankruptcy estate, if the trustee brought a lawsuit to recovery of those payments under Section 547 of the Bankruptcy Code. Sections 547 and 550 provide for the avoidance and recovery of payments made on or within 90 days before the debtor filed for bankruptcy or one year if such transfer was to an insider, known as the preference period.

Under the CAA landlords have temporary protection from preference and claw back litigation. The safe harbor is geared toward encouraging landlords to work with their struggling commercial tenants, reaching agreements on the payment of rent without the fear of having to turn over those payment to a bankruptcy estate. To qualify, the payment arrangement should have been entered into on or after March 13, 2020, and the payment arrangement should not include, fees, penalties, or interest in an amount greater than what the tenant would have if paid on time and in full.

Landlords should also be prepared that if a tenant does file for bankruptcy, Section 365(d)(4) allows additional time for debtors to assume, assign, or reject nonresidential real property leases. Under the CAA, a Chapter 11 debtor has an initial 210 days to make a determination, and a 90-day extension provision with landlord written consent. However, debtors will still be required perform all of their obligations under the lease in a timely manner, unless the court directs otherwise.

Since these amendments will sunset on December 27, 2022 unless extended, it is important to understand the developments in case law and provisions of the change to the bankruptcy code. Our professionals can assist you in navigating the new rules and how they can impact your rent collection actions.

This e-alert is provided by Hyland Levin Shapiro LLP as a general summary of the topics discussed; it does not replace the need to consult with a legal professional and is not intended to be a substitute for competent professional advice, including any advice regarding the effect of the Consolidated Appropriations Act of 2021 on your particular business. If you have any questions about the provisions summarized above, please contact Angela L. Mastrangelo, Esquire at mastrangelo@hylandlevin.com or 856.355.2989.

The contents of this article are for informational purposes only and none of these materials is offered, nor should be construed, as legal advice or a legal opinion based on any specific facts or circumstances.

Angela L. Mastrangelo, Esquire

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Why Reviews Matter in Business

Reviews Matter to ConsumersLet’s examine why reviews matter to consumers. The wide-spread and long-lasting effects of COVID-19 remain to be seen, but one thing we can all agree on is that both retail and consumer behaviors have been forever changed. Prior to COVID, consumers were gradually shifting to a more digital landscape, mostly driven by convenience. This past year, business and consumers were forced to drastically alter their behaviors and operate almost completely online overnight. While hopefully, some normalcy will return, studies are finding that customers prefer the digital transformation and many conveniences that it provides.

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What does this mean for businesses? Being online is no longer a luxury or an afterthought, it is a necessity for survival. Even further than that, a company’s online reputation and reviews has now become their biggest marketing and piece of influence.

Consumer’s are spending more time than ever looking at business listings, in fact 31% of consumers say they are more likely to check a Google listing before visiting than they were pre-pandemic. They are also referencing online reviews, not only to research the service or product, “they are confirming the safety of businesses by checking reviews” (https://lnkd.in/dKZ3Ky3).

As a small business, retailer, start-up company or commercial real estate firm, your online reputation can be your biggest advantage or your greatest liability. According to Aversa PR, “No matter your resources and budget, this Reputation Management should be a key principle in operating any business” in 2021.
(https://www.inquirer.com/business/covid-online-sales-small-business-fraud-reputation-risk-20201117.html).

Why Do Reviews Matter?

Choosing a new business or product is a risky decision and while making it, customers are looking to trust factors that show that this business is the best choice. Online reviews serve as Social Validation that a business is trustworthy. Consumers turn to online reviews as a judgement of approval from their peers to guide their purchasing choices.

In fact, 92% of B2B buyers said they purchased from a company after reading positive online reviews, while 72% said they ended their conversations or prospecting with a company due to negative reviews. The customer base has changed, over half of customers today grew up with the internet, cell phones, social media. They have been taught to consult the internet, and believe the internet, for every decision. Many businesses grow from word of mouth or direct referrals, online reviews are now the reference of choice from consumers.

A study from BrightLocal showed that 87% of customers (91% of 18-34yr olds) trust online reviews as much as a personal recommendation and that 93% of people Google first, then decide to engage based off their discovery. When it comes to your online reputation, it is simply too important to not have a proactive strategy or plan in place. Simply asking for reviews isn’t enough anymore. From responding to customers, analyzing review trends, managing the platforms and listings, it is easy to understand why companies quickly become overwhelmed.

With a firm strategy and execution plan, companies are able focus on growing their business offline with the piece of mind that their reputation is being protected and built positively online. Many commercial real estate brokerage firms employ these business and marketing strategies. Whether you choose to manage the process inhouse or use a full-service reputation management agency, to succeed in 2021, your online reviews can no longer be an afterthought.

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Sale and Leaseback of Commercial Real Estate

Sale and Leaseback of Commercial Real EstateLet’s explore the sale and leaseback of commercial real estate. With COVID-19 affecting so many businesses many may be looking at their real estate holdings to see if they should entertain a sale-leaseback transaction with a nonprofit real estate foundation for a particular property to free-up cash tied up in their real estate. For mission critical buildings that are being leased from non-profit or for-profit landlords, they may consider negotiating with the property’s owner for a sale-leaseback with a nonprofit real estate foundation, attempting to reduce rent expense. A nonprofit real estate foundation is a third-party nonprofit entity that sources low-cost capital to acquire or develop properties used by hospitals in furtherance of their charitable mission. The sale-leaseback option for so monetizing these non-core assets will work as well with traditional sources like insurance companies, REITs and other institutional investors.

Confer with the professionals at WCRE or ask us for a seasoned real estate or tax attorney but here’s one technique Abo has seen work well with business clients. Although real estate is generally thought of as an illiquid asset, some liquidity can be achieved by taking out a loan backed by the property. Alternatively, a sale and leaseback may be used effectively if a company’s balance sheet is burdened with excessive debt or just having difficulty in obtaining new capital. Typically, the transaction involves the company owned property being sold to a third party and then leased back to the company under a long-term lease.

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Sale and leaseback transactions may be on the rise but clients need to be aware that the IRS often focuses on transactions between closely-held corporations and their controlling shareholder to make sure that these transactions benefit the company as well as the shareholder. In one common type of sale and leaseback transaction, the company sells the land with a building on it to the shareholder and, in turn, the shareholder leases it back to the company. Some of the financial and tax benefits we’ve seen have included:

The rental deductions the company could take might be significantly larger than the former depreciation deductions if the property had been in service for many years.

After the sale and the leaseback transaction, the shareholder’s basis in the property will be its fair market value which is usually greater than the price paid for the property by the corporation. Thus, the shareholder’s depreciation deduction would be much greater than what was previously available to the corporation (also still need to consider the tax consequences of the sale to the corporation).

The sale and leaseback may enable the shareholder to generate passive rental income that could be offset
against passive losses of the shareholder.

The IRS would obviously be concerned that these transactions have economic substance and that they are
based on reasonable market conditions, and not just designed to generate larger tax deductions. Thus, for
a sale to be valid, the controlling shareholder should have taken an equity interest in the property and also
assumed the risk of loss. For the leaseback to be valid, four tests come to mind that really should be met:

1. The useful life of the property should exceed the term of the lease.

2. Repurchase of the property by the corporation at the end of the lease term should be at fair market value and not at a discount.

3. If the leaseback allows for renewal, the rate should be at a fair rental value (speak to WCRE, not necessarily the accountant).

4. The shareholder should have a reasonable expectation that he or she will generate a profit from the sale and leaseback transaction based on the value of the property when it is eventually sold and the rental obtained during the lease term.

I suspect one of the biggest risks for the seller-lessee is the loss of a valuable asset that could have substantially appreciated over its useful life. Also, the rental market could drop, leaving the seller locked into a rental rate in excess of fair value. On the other side of the table, the seller could move or default, leaving the buyer with unattractive real estate in a soft market.

Even if there are no other problems, the benefits of the deal could be substantially reduced if the IRS deems that it is merely a “financial lease.” In that case, the IRS will treat the seller-lessee as the true owner of the real estate, with all the appropriate tax assessed, and the buyer-lessor will be treated as a lender-mortgagee.

Since sale and leaseback transactions can be quite complicated and also have to pass IRS muster, as I stated earlier, whether you are a buyer, seller or investor, you are well advised to consult with WCRE and seasoned real estate/tax counsel about your financial and tax consequences and the manner of structuring and implementing them to withstand possible IRS challenge.

FOR MORE INFORMATION:
Martin H. Abo, CPA/ABV/CVA/CFF is a principle of Abo and Company, LLC and its affiliate, Abo Cipolla Financial Forensics, LLC, Certified Public Accountants – Litigation and Forensic Accountants. With offices in Mount Laurel, NJ and Morrisville, PA, tips like the above can also be accessed by going to the firm’s website at www.aboandcompany.com.

 

Martin H. Abo, CPA/ABV/CVA/CFF
307 Fellowship Road, Suite 202
Mt. Laurel, NJ 08054
(856) 222-4723
marty@aboandcompany.com
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Winter Weather Liabilities

Winter Weather LiabilitiesLet’s explore some winter weather liabilities. The winter months bring more than just cold weather and shorter days; they bring the possibility for winter weather and storms that may result in a snow and ice-covered landscape. While it may be a winter wonderland for some, as a property manager, snow and ice buildup means a hazard with the potential for costly liability.

If you deal with either commercial or residential property, you are responsible for the side effects of winter. In legal terms, snow and ice are the same as any other hazard presented on a property, and just like any other hazard, property managers can be held liable if they cause injury. To avoid litigation resulting from winter injuries, it is important that you are vigilant in your snow and ice removal efforts.

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RECOGNIZING AND PREVENTING HAZARDS

Winter brings a variety of hazards that you need to prepare for; slips and falls are by far the most common injury associated with winter weather conditions. Diligent snow and ice removal can go far in keeping walkways and parking lots safe. Remove snow quickly after snowfalls, and salt regularly to keep ice from building up.

Not all winter hazards are under foot, however, icicles, along with other accumulations of frozen or heavy snow above walkways and building entrances, can cause serious injury if they fall on those below. Remove icicles and other buildup as soon as possible. If it still appears to present a hazard, consider rerouting foot traffic around the area.

Performing preventative maintenance in the summer and fall can also keep you prepared for winter storms. Make sure eaves are properly installed, and check that downspouts are aimed away from walkways. If eaves leak or downspouts direct water onto walkways, snow that melts in the heat of the day has the potential to freeze and create a hazard with cooler nighttime temperatures.

TRANSFERRING RESPONSIBILITIES TO TENANTS

For smaller residential rentals, such as single family homes or duplexes, the responsibility for snow and ice removal is commonly accepted by the tenant. To make sure responsibility is clearly established in this situation, the lease should include a provision citing the tenants as responsible for any snow and ice removal. This section of the lease should also establish how long after a snowfall the tenant has to clear public areas such as sidewalks, as most municipalities have laws requiring prompt snow removal. It is important to be as specific as possible to avoid any unnecessary liability or disputes after heavy storms.

CONTRACTING SNOW REMOVAL

Based on the size and number of properties you manage and the average snowfall in your area, you may be inclined to contract out snow removal to an independent company. While this can save you the time and costs associated with managing snow removal yourself, it is important that you choose wisely to avoid complicating matters.

First, make sure the contractor has sufficient resources to meet your demands. It is important that they can be onsite quickly after, or even during, a snowfall to make sure walkways and parking areas are cleared. It is also important that they have the equipment and manpower to finish the task quickly to reduce any disruption to tenants’ lives or businesses.

Second, make sure the company you hire carries the proper insurance, covering both its operations and its employees. The last thing you want is to end up being liable for a worker’s injury when liability for injury is the very thing you were trying to avoid. Also, much like the lease agreement with a residential tenant, it is important to specify the conditions and time constraints for removal in writing. When contracting any type of service, it is essential to have a written contract that will guarantee you receive the services you pay for.

It should be noted that hiring a removal service does not absolve you of liability. If the company you hire provides poor service, or simple does not show up at all, you are still the party responsible for any injury resulting from a winter hazard. Make sure to pick a reputable company that you can trust to do a good job, and always have a plan of action for removal if they are unable to complete the work as quickly or effectively as you require.

For additional questions on your risks and exposures, or on appropriate coverages to protect you from liability or costly disputes, contact Hardenbergh Insurance Group today.

For more information, contact:

winter-weather-liabilitiesBrian Blaston
Commercial Lines – Manager
Hardenbergh Insurance Group
phone: 856.489.9100 x 139
fax: 856.673.5955
www.hig.net

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Who Owns the Fixtures at Lease Expiration

Who Owns the Fixtures at Lease ExpirationLet’s examine who owns the fixtures at lease expiration. In order to facilitate a smooth transition between commercial tenants, it is important for landlords to understand their rights regarding items attached to their property. Generally, a lease will govern these rights. However, if the lease is silent on the issue, articles annexed to the property deemed “fixtures” must stay with the property, while articles deemed “trade fixtures” may be removed by a vacating tenant.

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In New Jersey, a fixture is an object that “become[s] so related to particular real estate that an interest… arises under real estate law.” N.J.S.A. 12A:2A-309(1)(a). In contrast, an article may be considered to be a trade fixture if: (1) the article is annexed to the property for the purpose of aiding in the conduct of a trade or business exercised on the premises; and (2) the article is capable of removal from the premises without material injury thereto. Handler v. Horns, 2 N.J. 18, 24-25 (1949). As such, an important distinction between fixtures and trade fixtures is whether removal of the item will cause material injury to the premises. See e.g.
GMC v. City of Linden, 150 N.J. 522, 534 (1997). In applying this test, courts infer that if removal of an article would cause material injury to the premises, the parties must have intended for the article to remain beyond the lease term. Id.

A typical conflict involving this nuanced distinction may involve a vacating tenant removing an item from the leased premises under the assumption that it was (1) attached to the premises for the purpose of conducting a trade or business; and (2) capable of removal without material injury to the premises. A landlord may dispute one or more of these assumptions, arguing that the article was not used in the conduct of business (that it was in fact attached to improve the structure) or is not capable of removal without material injury to the premises.Over the years, vacating tenants have attempted to remove countless items from leased premises, including air conditioning systems, irrigation systems, bolted down light fixtures and even circuit breaker panels, by arguing these items were trade fixtures. See e.g. In re Jackson Tanker Corp., 69 B.R. 850 (Bankr. S.D.N.Y. 1987).

However, it isn’t difficult to imagine a hypothetical where the traditional landlord and tenant arguments are reversed – that is, where the tenant argues that the article must remain with the property and the landlord argues that the tenant is responsible for its removal. This unusual fact pattern may especially arise where the tenant’s business is specialized in nature, and where equipment is not easily removed from the premises.

For example, Landlord rents out space to Tenant, who plans on operating a restaurant. The lease does not specifically address what does and does not constitute a trade fixture. Tenant plans on installing a walk-in freezer and other specialized, complex systems. After several years of operating, Tenant declines to renew the
lease, closes, and vacates the premises. Tenant removes the furniture, appliances not fixed to the premises and other items it deems to be trade fixtures and leaves the walk-in freezer infrastructure. Tenant refuses to remove the walk-in freezer, arguing its removal will cause substantial damage to the premises. Unable to re-let the premises to a restaurant tenant, Landlord is left with a walk-in freezer occupying a substantial portion of the premises. It is important that during the lease negotiation, landlords think carefully about the business their prospective tenant is in, the kinds of equipment the tenant will install and what will happen to that equipment upon termination of the lease. This same thought process applies when landlords receive requests for alterations. In the above hypothetical, Landlord could have avoided being left with a walk-in freezer and a less than desirable space if it addressed the issue during negotiation of the lease. A discussion with prospective tenants concerning the specific kinds equipment the tenant will install is always a good idea, followed by specifications and drawings for approval. Landlords are wise to reduce these conversations to writing, and specifically address each party’s expectations regarding the disposition of specific equipment when the lease inevitably comes to an end. As always, an ounce of prevention is worth a pound of cure.

The contents of this article are for informational purposes only and none of these materials is offered, nor should be construed, as legal advice or a legal opinion based on any specific facts or circumstances.

William F. Hanna, Esquire
Hyland Levin Shapiro LLP
hanna@hylandlevin.com
Hyland Levin Shapiro LLP
6000 Sagemore Drive, Suite 6301
Marlton, NJ 08053-3900
(p) 856.355.2900

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Preparing Commercial HVAC Systems for Winter

Preparing Commercial HVAC Systems for Winter

With the fall season in full swing, it’s time to start preparing commercial HVAC systems for winter. If your HVAC system isn’t ready for the frigid winter season, you’ll be left out in the cold. Take action now to make sure that doesn’t happen!

Hutchinson, a leading energy services and mechanical services contractor serving the region’s commercial customers, offers tips to help add life to your systems, enhance comfort and improve your bottom line.

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1. Take Advantage of Energy Efficiency Programs. Upgrade to energy efficiency with Direct Install from New Jersey’s Clean Energy Program and up to 70% of the cost will be covered for energy upgrades, including lighting and HVAC equipment. Instead of pumping money into your outdated, inefficient units, why not upgrade to a new, state of the-art energy efficient system?

2. Use Energy Star Portfolio Manager to see how your building rates with other similar buildings. If you rate low, there are many things you can do to improve the operation of your building.

3. Check HVAC settings to get maximum efficiency. By setting your thermostat at 68°during the day and at 60° at night, you can save approximately 3% on heating costs for every degree under 70.

4. Install a programmable thermostat. Forget to adjust the temperature before you left the office? No worries. With a web and cloud based control system during and after office hours, you’ll keep settings maintained. Now, that’s peace of mind!

5. Establish a preventive maintenance program. When your HVAC system runs smoothly, so can your business. Prevent equipment problems before they start!

• Change or clean all air filters, preferably every month.
• Repair leaks in piping, air duct s, coils, fittings and at the unit(s).
• Replace defective equipment insulation, ducting and piping.
• Install/upgrade HVAC controls to include new energy management systems technologies.

6. Clean Heating Ducts Heating ducts periodically to allow efficient heating and provide fresh, clean air. Also check to make sure the ducts are properly insulated.

Contact Hutchinson at 888-777-4501 or dicoordinator@hutchbiz.com for help preparing commercial HVAC systems for winter

About Hutchinson
Hutchinson is a leading energy/mechanical services contractor performing heating, cooling, plumbing, and energy services throughout the greater New Jersey, Southeastern Pennsylvania, and Northern Delaware Region. Visit www.hutchbiz.com for more information.

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How to Prepare Your Parking Lot for Winter

How to Prepare Your Parking Lot for Winter

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Did you prepare your parking lot for winter? Most property owners neglect this because many property managers and commercial property owners are unaware of how the winter weather, salt and plowing can cause damage to their parking lot. Winter weather can wreak havoc on a commercial parking lot, specifically in our region. The harsh freeze-thaw cycles cause asphalt to expand and contract, allowing water to seep into the foundation. This creates permanent damage, in the form of cracks and potholes.

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Ways Prepare Your Parking Lot for Winter

Crack Sealing: As a preventative measure, consider filling cracks in the parking lot before they turn into potholes. Longitudinal cracks between ¼” and 1” can be cleaned and filled with hot rubberized material that will expand and contract as the temperature shifts. The crack sealing material creates a bond with the surface of the asphalt pavement, preventing water from penetrating the asphalt.

Asphalt Repairs: Potholes can be repaired with hot mix asphalt in the fall months. Damaged asphalt is saw cut and removed, then the area is cleaned and prepared for the installation of new asphalt. When hot asphalt is unavailable, EZ Street high performance cold asphalt is a great alternative. This material works in cold temperatures, and can even be applied in water. Neglecting potholes, especially in the colder months, can be very dangerous. As the asphalt continues to break apart and the holes become larger and larger, this creates a safety hazard for both pedestrians and vehicles.

Inlet Repairs: When water seeps into your inlets, the inside structure deteriorates. Salt and ice melt used in the winter months also washes into the storm drains, which further erodes the walls. To avoid a potential sinkhole, make sure your catch basins are structurally sound, the interior walls are parged, and the surrounding asphalt is intact.

For more information on ways to prepare your parking lot for winter, contact:

 

david sulkin

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Cost Segregation Can Increase Cash Flow for Commercial Properties

Cost Segregation Can Increase Cash Flow for Commercial Properties

Let’s look at how cost segregation can increase cash flow for commercial properties. Have you recently built, purchased, expanded or renovated a commercial property? If so, there may be significant untapped tax savings in the property or facilities. A cost segregation study can unlock those savings through greater tax deductions, accelerated depreciation and increased cash flow. Here’s how it works: Portions of a new or existing building are reclassified as “personal property” or “land improvement.” This cost classification can be depreciated over a shorter five, seven or 15 year period as opposed to the standard 39-year depreciable life of a commercial building.

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What if you built, renovated, expanded or purchased a building in prior years? Cost segregation is still an option. The IRS allows taxpayers to change prior accounting methods to take advantage of these previously understated depreciation deductions. This can be done without amending tax returns and can generate a relatively large tax deduction in the year of change.

TAX REFORM MAKES COST SEGREGATION MORE VALUABLE THAN EVER

The tax benefits of cost segregation are even greater thanks to tax reform’s enhancement of bonus depreciation.
In general, bonus depreciation is applicable to depreciable business assets with a recovery period of 20 years
or less. Tax reform doubled bonus depreciation from 50 to 100 percent for qualifying property with acquisition
and in-service dates between September 27, 2017 and December 31, 2022. This means that 100 percent of
qualifying costs would be fully depreciated and recognized in year one and only the remaining building cost
would depreciate going forward over 39 years. After 2022, the bonus rate decreases by 20 percent annually,
so the time to act is now.

REAL RESULTS FOR REAL PROPERTIES

RKL performs over 80 studies every year for companies in a variety of industries, including rental real estate, office buildings, hotels/motels, golf courses, auto dealerships, manufacturing facilities, warehouses and more.

Here are two recent examples to demonstrate cost segregation can increase cash flow.

• Construction of a new hotel facility in 2018: Of the total project cost of $13.5 million, RKL identified $5 million as personal property and land improvements. This cost segregation combined with enhanced 100 percent bonus depreciation a present value of the tax savings of $958,000 (using a 37 percent federal tax rate and six percent discount rate), with projected additional depreciation deductions of $4 million for a tax savings of $1.5 million.

• Turn-key construction of a new medical office in 2017: Of the total project cost of $2.4 million, RKL identified $1 million as personal property and land improvements. This cost segregation combined with enhanced 50 percent bonus depreciation produced a present tax savings of $200,400 (using a 42.67 blended tax rate and six percent discount rate), with projected additional depreciation deductions of $695,000 over the next seven years. This will produce tax savings of $296,500 over that seven-year period with $233,200 in the first year alone.

• 2018 look-back study for a previously purchased office/distribution warehouse facility: RKL identified $326,200 of the original $1.375 million building cost as personal property and land improvements. This resulted in a one-time additional depreciation deduction in the current year’s tax return of $170,700. To obtain an analysis of potential cost segregation tax savings, contact RKL today.

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Why Smart Buildings Matter to Commercial Real Estate Owners

smart buildings energy consumptionLet’s look at why smart buildings matter to commercial real estate owners. Energy cost savings are top of mind for every commercial building owner, operator, and facility manager, but it’s time to be proactive. On average, a U.S. office building spends nearly 29% of its operating expenses on utilities, and much of this expenditure goes toward HVAC operation.

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Researchers at Massachusetts Institute of Technology (MIT) estimate commercial buildings account for 20% of all the energy used in the U.S. and conclude that as much as 30% of that energy is wasted. Wasted energy will only increase over time without intervention. Imagine a solution that prevents waste and saves 15-30% on energy expenses? That’s possible to achieve with smart buildings.

Smart buildings are any facility that have complete automated controls and systems in place that are integrated together to form an intelligent data collection application, usually via a building automation system (BAS).
BAS offers reduced operation and energy consumption, improved building efficiency, preventative maintenance, comfort for workers and building occupants, and better use of resources.

At Pennoni, we offer our Utilities Watch (UW) solution, a combination of best-in-class energy analytics/fault detection software and engineering expertise that optimizes buildings, reduces costs, and minimizes environmental impact.

Through UW, our software continually analyzes data from diverse systems: BAS, energy, water, and other resource metering systems to identify opportunities for cost reduction. The fault detection and diagnostics application within the software drills down into patterns to identify issues, deviations, and opportunities for operational improvements and cost reduction.

Utilities Watch Key Benefits

Reduce costs

  • Optimize buildings and reduce energy consumption
  • Increase control and visibility of energy budget
  • Decrease maintenance and capital costs through proactive and predictive maintenance
  • Increase lifespan and reliability of HVAC systems

Validation and M&V

  • Performance goals
  • ECM’s, LEED

Commissioning

  • MBCx – automated ongoing commissioning

Risk Management

  • Disaster recovery (information supports better identification of issues)

Improve sustainability strategies, goals, and metrics

  • Full integration to EnergyStar Portfolio Manager
  • Earn additional LEED points for existing buildings

Improve portfolio management

  • Benchmark buildings and compare performance
  • Performance accountability

Deploying smart buildings software is only half of the equation. Our energy analysts and engineers write custom algorithms to automate analyses that traditionally required constant manual effort. From there, our team of engineers interprets the data to make it meaningful and actionable with custom dashboards and notifications that ensure the facility manager has full visibility and can readily prioritize activities, ensuring much greater efficiency.

For more on smart buildings and Utilities Watch, contact Tony Lepre at (609) 214-5520 or TLepre@Pennoni.com.

tony lepre

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Architectural Design Considerations for a Post Pandemic World

Architectural Design Considerations for a Post Pandemic WorldLet’s look at architectural design considerations for a post pandemic world. Are you tired of hearing about the “New Normal”? Do you yearn for the “Old Normal”, or fear that life as we knew it has changed forever? These are legitimate thoughts as we navigate through and beyond this pandemic. The good news is that we are natural survivors, with a long history of staring-down adversity and rising above with resolve, courage, and grace. Even in such extraordinary times, we overcome fear, fight through pain and loss, heal ourselves and our world, and eventually move forward as well or better than when the crisis first began.

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Another common saying at times like these is “this too shall pass”. We at Jarmel Kizel Architects and Engineers, Inc. agree, however, it is incumbent upon all of us to first deal with the situation in a safe and vigilant manner, and to do what we can to prevent this from happening again. The reality is, we live in a world of expanding population growth, urban swell, suburban sprawl and frequent international travel, all factors that facilitate the spread of a deadly virus such as COVID-19. Like many of our colleagues throughout the architecture, engineering and planning community, the team at Jarmel Kizel Architects and Engineers, Inc. has been considering strategies that protect our health while helping restore and preserve as many characteristics of the “Old Normal” as
possible. The firm recently conducted a round table video call to discuss how we as design professionals can address the behavioral, physical and technological changes needed to keep our society safe, prevent further spread, and help expedite return to “normalcy”. The topics discussed in this paper are the results of our collective thoughts on this matter, and would be delighted to expand upon them in greater and more technical detail based upon our client’s needs.

Jarmel Kizel Architects and Engineers is active in several industry sectors, but the three most prominent are residential, office/commercial interiors, and education/childcare; all indisputably linked to lifestyles of our fellow Americans. We’re engaged daily in designing buildings and spaces where people live, work, shop, and educate their children. In the context of these specific sectors, this article will explore the behavioral or “humanistic” side of how to better plan for and help prevent similar challenges in the future, and explore the physical and technical considerations that could be implemented to fight and defeat this crisis.

Workplace Design Considerations for a Post Pandemic World

Workplace Design Considerations for a Post Pandemic World

Whether you work in an urban high-rise, suburban office suite, or in a retail location, changes will be obvious as soon as we all return. Office tower workers and visitors will endure delays at security/reception checkpoints and can expect lengthy lines waiting for an elevator. All who work in offices will be required to follow safety guidelines such as social distancing, wearing protective face masks, and submitting to health screening upon entering. Employers will be forced to weigh productivity and efficiency factors against employee safety and wellness.

Many companies have already considered (or are implementing already) the following policies and procedures:

• Adding hand wash and disinfecting stations
• Modifying office, conference room, and workstation configurations to assure adequate distance between staff members
• Placing shields and barriers between workstations
• Limiting use of office pantries and kitchens
• Implementing staggered shifts, 4-day work weeks, and permitting/encouraging work-from-home Encouraging remote videoconferencing in lieu of face-to-face meetings
• Limiting business travel to the best extent possible
• Temperature check / overall health assessment screening at entry

These, and many other operational and “behavioral” safeguards have been discussed via news outlets and various blogs and webinars, and are mostly common-sense. Additionally, workers can be safe-guarded by implementation of technology, much of which is already available:

• Hands-free operational entry doors
• Facial recognition technology
• Clear graphic signage for directions, wayfinding, room capacity, etc.
• Occupancy sensors in office and common spaces
• Voice-activated elevator call commands
• Hands free toilet/urinal flush and touchless lavatory faucet control
• Introducing more outdoor air intake for ventilation systems
• Ultraviolet / germicidal lighting for cleaning and disinfecting of surfaces
• Ultraviolet / germicidal devices in HVAC systems and distribution ductwork
• Use of antiviral surfaces and coatings

Overall design standards for offices can and should be altered to create a higher “area-per-workstation” ratio, and work-benching, hoteling, and shared computer spaces should be greatly reduced or eliminated. Office environments in firms such as ours, where collaboration and cooperation among various disciplines is imperative, must utilize more and more the technology that already exists to share information, share documents, share screens, etc.

Residential Design Considerations for a Post Pandemic World

Residential Design Considerations for a Post Pandemic WorldJarmel Kizel has designed countless multi-family residential projects over its history. We recognize that many reading this paper are more accustomed to single-family home living but certain considerations run consistent regardless of lifestyle. Also, many reading this have some involvement in multi-family residential through business (developers, investors, designers, leasing agents, property managers, etc.). Multi-family residential buildings, whether they be owner-occupied or rental property, share certain inherent concerns with office
buildings, especially high-rise, and the same behavioral, operational physical, and technical precautions should be followed.

Some additional residential design considerations considerations are as follows:

• Building maintenance and cleaning must be ramped-up to provide even more protection against viruses.
• Common areas, lobbies, corridors, shared entertainments spaces and others must be utilized with the same social-distancing standards
as utilized in an office environment.
• Amenity areas (fitness rooms, lounges, business centers, community rooms, swimming pools, shared social/entertainment areas, etc.) must be designed or re-designed to foster social distancing, which may include layouts of more building area
• Information Technology must be upgraded to support more and better connectivity for the influx of those working from home
• Design trends must be studied, evaluated, and implemented for any new residential development. Trends may include increased unit size and physical accommodation of work-at-home areas and/or full home offices
• Package/mail delivery and pick-up must be designed with adequate space for the onslaught of on-line shopping deliveries, and to ensure that multiple residents can safely retrieve packages. (Note: This is not a “new trend”, but likely one that will expand due to COVID-19, but not necessarily change back once the pandemic is behind us)
High-rise and “urban” multi-family residential buildings will likely require more expensive systems and costly retrofit for the same reasons as high-rise office buildings. Primary reasons for this include limited points of entry, security/concierge check-in, and need to utilize elevators within social-distancing guidelines.

Educational Building Design Considerations for a Post Pandemic World

Educational Building Design Considerations for a Post Pandemic WorldJarmel Kizel Architects and Engineers is very active in the design of educational facilities, and has designed hundreds of child daycare centers across the country, for many of the known national brands. Although COVID-19 has proven to be less interested in youngsters than their parents and grandparents, protecting these precious boys and girls is an obvious necessity. This industry sector is different than others mentioned because operations are linked not only to building codes, but also to licensing requirements on a state-level. Even as restrictions
have been lifted to a large extent, it is unknown how many students and staff will be permitted in the building at any given time.

Operational and behavioral considerations are fairly obvious, including distancing of the youngsters from each other, vigilantly cleaning and disinfecting surfaces, and “eye-balling” boys and girls for potential symptoms. Some less obvious operational safeguards include the manner by which parents/guardians are permitted to enter buildings for pick-up and drop-off.

Many of the physical and technical considerations are similar to the aforementioned building uses, with a few industry-specific design considerations:

• Designing centers with more bathrooms to allow for less sharing of common facilities
• Addition of spaces dedicated for sanitizing teaching materials and toys
• Use of sterilization machines, where toys, books, pillows, blankets, etc. can be placed and sterilized overnight and when school is not in session
• Automation via voice activation and occupancy sensors, similar to those proposed for offices.
• Use of Ultra-violet and germicidal lighting, as proposed for office spaces.

Behavioral and technological recommendations for Child Daycare and Early Child Development should be consistent in “K-12” grade level school buildings as well.

CONCLUSION

Americans are outgoing and socially engaging by nature, and our culture has been deeply impacted by the voracity and spread of the COVID-19 virus. Many of us know someone who has suffered from it, or has even died, but we must focus our attention now on protection, prevention, and adaptation to the “post-COVID” way of life. If we continue to adhere to prescribed guidelines and common-sense, and the architectural and engineering  community leads the way with innovative approaches to design, the virus AND its aftermath can soon be in our rearview mirrors, and the “New Normal” could become substantially similar to the “Old Normal”. We at Jarmel Kizel wish you and yours the best of health during this crisis, and always.

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Reopening a Business After the Coronavirus Shutdown

Reopening a Business After the Coronavirus ShutdownLet’s look at what liabilities to consider when reopening a business after the coronavirus shutdown. As the coronavirus (COVID-19) pandemic continues to have an unprecedented effect on daily life, many business owners are looking forward to the future and a return to normalcy. However, even when stay-at-home orders are lifted and nonessential businesses are allowed to resume operations, there’s a lot for organizations to consider before reopening a business after the coronavirus shutdown. What’s more, many of these considerations are workplace-specific and could be more involved depending on the industry you operate in.

To protect their customers and employees alike, it’s important for organizations to do their due diligence before opening their business back up to the public following the COVID-19 pandemic.

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WHEN TO START reopening a business after the coronavirus shutdown

While many essential businesses (e.g., hospitals, pharmacies, grocery stores and gas stations) have remained open during the COVID-19 pandemic, other operations deemed nonessential have shut down temporarily or changed the nature of their operations. Not only has this led to significant business disruptions, but, for many, it has critically impacted their bottom line.

However, we may be nearing a time when stay-at-home regulations are scaled back and all businesses are allowed to resume as normal. The question then is: How will business owners know it is acceptable to reopen?

Best Practices When Reopening a Business After the Coronavirus Shutdown

• Review guidance from state and local governments —The COVID-19 pandemic impacts states and regions in different ways. Just because a business is allowed to reopen in one region of the country doesn’t automatically mean your operations will be allowed to resume as well. As such, it’s critical to understand and review all relevant state and local orders to determine if and when your business is allowed to reopen.

• Understand the risks —If and when the government allows all businesses to reopen, that doesn’t necessarily mean COVID-19 is no longer a threat to your operations. What’s more, some businesses may have greater COVID-19 exposures than others, underscoring the importance of performing a thorough risk assessment before reopening. Prior to conducting a risk assessment, it’s important to review guidance from the Occupational Safety and Health Administration (OSHA), state and local agencies, industry associations as well as your local health department. More information on conducting a risk assessment can be found below.

Again, before reopening, it’s critical to seek the expertise of legal, insurance and other professionals.

CONDUCTING A RISK ASSESSMENT

Even after the government allows reopening a business after the coronavirus shutdown, firms still need to determine if it makes sense to resume operations. Safely restarting your business won’t be as simple as unlocking the front door.

Before reopening a business after the coronavirus shutdown. one should perform a risk assessment to determine what steps must be taken. While the complexity of risk assessments will differ from business to business, they typically involve the following steps:

• Identifying the hazards—When it comes to COVID-19, businesses need to think critically about their exposures, particularly if an infected person entered their facilities. When identifying hazards, it’s a good idea to perform a walkthrough of the premises and consider high-risk areas (e.g., breakrooms and other areas where people may congregate). It’s also important to consider what tasks employees are performing and whether or not they are especially exposed to COVID-19 risks when performing their duties.

• Deciding who may be harmed and how—Once you’ve identified hazards to your business, you need to determine what populations of your workforce are exposed to COVID-19 risks. When performing this evaluation, you will need to make note of high-risk individuals (e.g., staff members who meet with customers or individuals with preexisting medical conditions).

• Assessing risks—Once you have identified the risks facing your business, you must analyze them to determine their potential consequences. For each risk facing your business, you’ll want to determine:

• How likely is this particular risk to occur?
• What are the ramifications should this risk occur?

When analyzing your risks, consider potential financial losses, compliance requirements, employee safety, business disruptions, reputational harm and other consequences.

• Controlling risks—With a sense of what the threats to your business are, you can then consider ways to address them. There are a variety of methods businesses can use to manage their risks, including:

• Risk avoidance—Risk avoidance is when a business eliminates certain hazards, activities and exposures from their operations altogether.

• Risk control—Risk control involves preventive action.
• Risk transfer—Risk transfer is when a business transfers their exposures to a third party.

For COVID-19, control measures could include cleaning protocols, work from home orders and mandated personal protective equipment (PPE) usage. Additional workplace considerations can be found below.

• Monitoring the results—Risk management is an evolving, continuous process. Once you’ve implemented a risk management solution, you’ll want to monitor its effectiveness and reassess.

Remember, COVID-19 risks facing your business can change over time.

MAINTAINING WORKPLACE SAFETY USING OSHA AND CDC GUIDANCE

Once you conduct a risk assessment, you will need to act to control COVID-19 risks. Again, risks and the corrective steps that organizations take to address those risks will vary by business and industry. Thankfully, there are a number of OSHA and Center for Disease Control and Prevention (CDC) workplace controls to consider if your risk assessment determines that COVID-19 poses a threat to your employees or customers. For instance, you should:

• Implement administrative controls—Typically, administrative controls are changes in work policies or procedures that reduce or minimize an individual’s exposure to a hazard. An example of an administrative control for COVID-19 is establishing alternating days or extra shifts that reduce the total number of employees in a facility at a given time.

• Utilize Personal Protective Equipment (PPE)— PPE is equipment worn by individuals to reduce exposure to a hazard, in this case, CVOID-19. Businesses should focus on training workers on and proper PPE best practices. Employees should understand how to properly put on, take off and care for PPE. Training material should be easy to understand and must be available in the appropriate language and literacy level for all workers.

• Consider engineering controls—Engineering controls protect workers by removing hazardous conditions or by placing a barrier between the worker and the hazard. For COVID-19, engineering controls can include:

• Installing high-efficiency air filters
• Increasing ventilation rates in the work environment
• Installing physical barriers, such as clear plastic sneeze guards

• Be adaptable — You should be prepared to change your business practices if needed to maintain critical operations. This could involve identifying alternative suppliers, prioritizing existing customers or suspending portions of your operations.

• Create a dialogue with vendors and partners — Talk with business partners about your response plans. Share best practices with other businesses in your communities, and especially those in your supply chain.

• Encourage social distancing — Social distancing is the practice of deliberately increasing the physical space between people to avoid spreading illness. In terms of COVID-19, social distancing best practices for businesses can include:

• Avoiding gatherings of 10 or more people
• Instructing workers to maintain at least 6 feet of distance from other people
• Hosting meetings virtually when possible
• Limiting the number of people on the jobs site to essential personnel only
• Encouraging or requiring staff to work from home when possible
• Discouraging people from shaking hands

• Manage the different risk levels of their employees — It’s important to be aware that some employees may be at higher risk for serious illness, such as older adults and those with chronic medical conditions. Consider minimizing face-to-face contact between these employees or assign work tasks that allow them to maintain a distance of 6 feet from other workers, customers and visitors.

• Separate sick employees — Employees who appear to have symptoms (i.e., fever, cough or shortness of breath) upon arrival at work or who become sick during the day should immediately be separated from other employees, customers and visitors, and sent home. If an employee is confirmed to have COVID-19, employers should inform fellow employees of their possible exposure to COVID-19. The employer should instruct fellow employees about how to proceed based on the CDC Public Health Recommendations for Community-Related Exposure.

• Support respiratory etiquette and hand hygiene — Businesses should encourage good hygiene to prevent the spread of COVD-19. This can involve:

• Providing tissues and no-touch disposal receptacles
• Providing soap and water in the workplace
• Placing hand sanitizers in multiple locations to encourage hand hygiene

• Perform routine environmental cleaning and disinfection — Businesses should regularly sanitize their facility to prevent the spread of COVID-19. Some best practices include:

• Cleaning and disinfecting all frequently touched surfaces in the workplace, such as workstations, keyboards, telephones, handrails and doorknobs.
• Discouraging workers from using other workers’ phones, desks, offices, or other tools and equipment, when possible. If necessary, clean and disinfect them before and after use.
• Providing disposable wipes so that commonly used surfaces can be wiped down by employees before each use.

CONTINUED SAFETY

While resuming operations following the COVID-19 pandemic may seem like a daunting task, businesses don’t have to go it alone. To help with this process, organizations can seek the help of their insurance professionals to determine what actions they need to take to ensure their business reopens smoothly. To learn more about reopening a business after the coronavirus shutdown, contact Hardenbergh Insurance Group today.

Brian Blaston Hardenbergh

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