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Between a Lock and a Hard Place

The priorities of property managers changed abruptly after Sept. 11, 2001. The destruction of the World Trade Center towers forced management firms to address security and safety issues with a new sense of urgency. Now, some property managers are putting routine improvements and remodeling on the backburner to devote resources to security and safety upgrades.

Tightening security has been a “huge challenge” for firms that manage office properties, says Anthony J. Trocchia, a vice president for Chicago-based Jones Lang LaSalle. “There was definitely a lot of pressure on property managers to really perform and to shift priorities in order to incorporate new security needs.”

Some of the new post-9/11 priorities include putting more guards on duty at a cost of about $12 to $14 per hour for each guard, and hiring security consultants to perform reviews of procedures, which typically costs about 3 cents to 5 cents per sq. ft., or about $30,000 for a 1 million sq. ft. office tower.

Some buildings have expanded their closed-circuit video security systems and added high-tech lobby turnstiles, measures that can run up a bill of $250,000. Property managers also are asking consultants to draw up color-coded floor plans to ensure their buildings are prepared for possible disaster-recovery efforts.

Overall, Trocchia estimates that Jones Lang LaSalle has increased its security spending by 1% to 5%. Other firms have spent more. Larry Conlon, director of asset services for New York-based Cushman & Wakefield, says he has noticed a rise in building security costs of 15 % to 25%, depending on the class of the building.

Who's paying for the upgrades? A certain allocation for security expenses is included in the base rent of the typical office lease. When conditions change and operating costs run over the amount allocated in the base rent — such as when more security guards are hired — the owner typically has the right to pass those extra charges along to the tenant. However, the owner may decide to swallow those extra costs as a goodwill gesture, property managers say. Capital costs, on the other hand, are usually borne by the owner.

A Different Focus

A survey released by DEGW, an international architecture and consulting firm, and the International Development Research Council, now CoreNet Global, in the first quarter of 2002 indicates that property managers are wise to place an increased emphasis on security measures. The survey, which polled 300 corporate real estate executives, showed that 86% place more importance on emergency planning than they did before 9/11.

Gregg Popkin, executive director of Insignia/ESG Inc.'s property management group in New York, says security has become a top priority for his firm's tenants. “We have, over the past year, had to spend a tremendous amount of resources, time and effort on the concept of security,” says Popkin. “It's really at the forefront of everything that we do these days.”

In the wake of the Sept. 11 attacks, many property managers conducted portfolio-wide reviews concerning their building's security in a whole new way: through the eyes of a terrorist. Working with security consultants and checklists from trade groups, many property management executives found themselves trying to find answers to questions they'd never asked before. How secure are the ventilation ducts and the electrical systems? Is the loading dock monitored? How secure is the parking garage? How many entrances lead to office space?

“Security for commercial office buildings in the past was basically to deter theft, from without and from within, and random acts of violence,” Conlon says. “There's a different focus now.”

Even property managers operating in secondary markets are re-evaluating security procedures. “You're forced to think of how things could happen that you otherwise would never have thought of before, and then go through your building and try to identify potential risks with a completely different mindset,” says Joseph Hegger, senior vice president and director of operations for St. Louis-based Colliers Turley Martin Tucker.

Although tenants are more concerned about security issues in the wake of the Sept. 11 terrorist attacks, a survey in March sponsored by the Urban Land Institute and Building Owners and Managers Association (BOMA) International indicated that, in most cases, drastic improvements to security systems have not been required. “This survey confirmed that building owners and managers by and large had comprehensive emergency preparedness plans in place prior to the events of Sept. 11,” said BOMA President Sherwood Johnston after the report was released.

Still, many respondents — which included 102 property managers and 61 building owners — indicated that they planned to implement additional security measures this year. (see chart on page 36). According to the survey, the most commonly implemented upgrade in the wake of 9/11 involved vendor security, including requiring background checks of vendor employees.

While most property managers say they have changed procedures in all their buildings, the most profound changes have been in Class-A office towers, particularly in major markets. Employees, guards, visitors, messengers and deliverymen all suddenly found themselves struggling to adapt to what Conlon calls a cultural change when their “open” building became “closed” — security-speak for a building with restricted access.

Managers of many Class-A buildings have added more security managers. Some high-profile properties managed by Insignia/ESG, for example, have hired dedicated security directors and “managers of life safety” to tackle security and fire-safety issues, according to Popkin.

Due to the increased emphasis on security, there is more pressure on security subcontractors to hire more skilled workers. “You have to rethink this minimum wage concept and look at what these positions really need to be,” says Rick Randolph, managing director of technical services for Los Angeles-based CB Richard Ellis.

No Turning Back

A recent survey of security practices in 50 Class-A office buildings by Boston-based Colliers International found that most buildings had tighter security than a year ago. The survey reported that of the four markets where the terror threat is considered gravest — New York, Los Angeles, Chicago and Washington, D.C. — Los Angeles buildings have made the greatest strides since Sept. 11.

Part of the reason may be that L.A. property managers had further to go. In particular, managers of low-rise suburban office campuses in L.A. had not focused on conventional security issues as much as managers of the area's high-rise office buildings, says Ross Moore, vice president and director of research for Colliers International.

When it came to new technology, Moore says the biggest change in security since 9/11 in the 50 buildings covered in the survey was the installation of card-reading systems. This technology includes card-activated turnstile systems that vary in sophistication. The most modern turnstile systems allow employees to swipe cards at the turnstile as guards confirm a person's identity by looking at a digital photograph that flashes on a nearby video monitor. Conlon of Cush- man & Wakefield says the cost of such a system in a 1 million sq. ft. Class-A building, along with some enhanced video surveillance, typically runs about $250,000.

Emergency plans

In addition to improving security, planning for fires and other emergencies has become a central preoccupation of property management firms. Executives at several firms say they have improved their crisis-management planning in the past year, both through more extensive planning and by creating ad-hoc committees to plan for emergencies.

In the past, emergency response and recovery was often divided between several people — such as security officers and information technology personnel — and that made it difficult to develop a coordinated response, says Jim Francis, senior vice president at Kroll Inc., a New York-based security consultant. “What we're trying to establish with the folks that we consult with is a command structure where everyone responsible for security has a coordinated plan and a coordinated team, and it is able and ready to respond,” Francis says.

Due to the extreme damage sustained to buildings surrounding the World Trade Center towers, property managers are addressing the possible impact of a disaster at neighboring office buildings.

“Traditionally, when owners of buildings thought of an evacuation plan, their universe was that building,” says Randolph of CB Richard Ellis. “We learned from 9/11 that you had to think out of that box and think of the neighborhood, and start coordinating emergency plans with your neighbors.” Now, for instance, managers are trying to make sure that employees from several buildings do not evacuate to the same parking lot.

Disaster response planner Curtis Massey, CEO of Massey Enterprises Inc. of Virginia Beach, Va., says his firm has been especially busy since last September. The stock in trade of Massey's company is what he calls disaster pre-planning. Among other services, Massey's company prepares building plans designed to be read easily by firefighters.

Preparing these plans for a typical 1 million sq. ft., 50-story tower costs about $35,000 and takes six to eight months to produce. Massey says such pre-planning can save lives. Without such detailed plans, he notes, firefighters can find themselves in the same position as the New York Fire Department on Sept. 11 — making life-and-death decisions with very little information at hand.

A floor plan of the World Trade Center towers was not available that morning, according to Massey. In the aftermath of the attack, the fire department asked Massey to locate plans for the complex's 6-story basement, where rescue workers hoped to find survivors. In a situation where every second counts, it took him six days to find a copy of the plans across the river in Jersey City — and another two and a half days for two of his employees to draw up simplified versions that could be read by firefighters.

Tweaking the Procedures

Some property managers are finding that they need to be flexible and revise procedures that tenants deem unnecessary or intrusive. “People were really ticked off because it was taking a half hour to go down to Starbucks,” says Moore of Colliers International.

Inconvenient procedures such as requiring tenants to meet visitors in the lobby are among the requirements that are being relaxed in some locations, security experts say. “As we've moved away from 9/11, certain owners, certain of our clients, have suggested that we relax some of these conditions, because their tenants are complaining about what their visitors have to go through,” says Conlon of Cushman & Wakefield.

Still, Hegger says that participation in training and fire drills is way up compared with before 9/11. And Vince Hill, corporate director of security at Forest City Enterprises in Cleveland, says office workers are patient with the new emphasis on security because they understand it's for their own good.

Bennett Voyles is a New York-based writer.

Heightened Security

In March, more than 200 BOMA International and Urban Land Institute members — including 102 building managers and 61 building owners — responded to a survey asking them to list what new security measures they have implemented in their buildings since the Sept. 11 terrorist attacks. The most common security improvements involved vendor security, including requiring personnel to sign in at the front desk. The respondents also listed the security measures that were in place prior to 9/11.

Security Measure Before 9/11 Added After 9/11
Lobby Security Controls 74.3% 6.9%
ID Cards for All Tenants 41.1% 6.9%
Perimeter Barriers 14.9% 5.9%
Surveillance Cameras 64.9% 5.4%
Garage Security 42.6% 5.0%
Vendor Security Precautions 52.0% 15.8%
Alarm Monitors 80.2% 5.9%
Employee Background Checks 60.9% 5.9%
Source: BOMA International

Security To-Do List

Respondents to a BOMA International and Urban Land Institute Survey conducted in March listed what additional security measures they planned to add to their buildings this year. Respondents said they planned to:

  1. Install security cameras or upgrade the existing security camera systems.

  2. Update and expand emergency planning and evacuation procedures.

  3. Increase the number of security personnel.

  4. Implement identity card systems for tenants and vendors.

  5. Implement or expand key-card access systems.

  6. Ban exemptions to security requirements.

  7. Eliminate loading-dock parking and after-hours deliveries.

  8. Expand security training for all property employees.

  9. Restrict access to certain building areas.

  10. Implement new security procedures for mail center areas.

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