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Facility Closures & Downsizings: HUD To Close Several Multifamily Field Offices; Layoff more than 1,000

The U.S. Department of Housing and Urban Development is planning a series of restructurings and changes within its Office of Mul

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The U.S. Department of Housing and Urban Development is planning a series of restructurings and changes within its Office of Multifamily Housing Programs and the Office of Field Policy and Management (FPM). The changes, which include consolidating multifamily hubs nationwide and closing 16 smaller offices, affect approximately 900 of the departments’ 9,000 employees. The entire restructuring process is expected to take approximately two and a half years.

“The current organizational model for HUD is not sustainable from a financial and a service delivery point of view,” said Maurice Jones, HUD’s Deputy Secretary. “We are reviewing every aspect of our operation to determine if we have the right people in the right places and we’re determining where we can be even more efficient, to get the most value out of our limited resources. We’re in a different budget environment and we’re at a point where we must make some extremely tough choices.”

HUD’s Multifamily Office provides mortgage insurance to HUD-approved lenders to facilitate the construction, substantial rehabilitation, purchase and refinancing of multifamily housing projects as well as administering a number of project-based rental assistance programs.

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The office’s restructuring plans include streamlining multifamily’s organization’s headquarters and field operations. The plan is expected to generate up to $40 million to $45 million in annual savings once fully implemented.

A key component of the multifamily plan will be consolidating its field employees from 50 offices around the country into 10 offices that will report to five multifamily hubs that will be in New York, Atlanta, Chicago, Fort Worth and San Francisco, with satellite offices in Boston, Jacksonville, Detroit, Kansas City, and Denver.

“Multifamily is one of HUD’s core programs, and this is its first major restructuring since 1998,” said Marie Head, deputy assistant secretary for Multifamily Housing Programs. “We have to change in order to be nimble and keep pace with the marketplace by leveraging technology, reducing our footprint as appropriate, and enhancing customer service in ways that will help ensure that we perform as a 21st century institution. In today’s budget climate, we must also look for every opportunity to increase our operating efficiency, but we also have to keep in mind the impact of these changes on our employees. We will be doing all we can to move forward on the plan in a way that offers workers as much flexibility as possible.”

HUD’s Office of Field Policy and Management is also trimming costs. It is closing 16 of its 80 field offices this year in a move that is estimated to save the agency between $110 million and $150 million over a 10-year period. The small offices that are closing are located in Camden, NJ; Syracuse, NY; Orlando, FL; Tampa, FL; Springfield, IL; Cincinnati, OH; Flint, MI; Grand Rapids; MI; Shreveport, LA; Dallas, TX; Lubbock, TX; Tucson, AZ; Fresno, CA, Sacramento; CA; San Diego, CA; and Spokane, WA.

“We looked at where our staffs are and where they need to be in order to make certain we can achieve the greatest possible impact on the people and the places we serve, especially given today’s tough fiscal climate” said Pat Hoban-Moore, HUD’s assistant deputy secretary for Field Policy and Management. “We can implement this realignment while still serving communities throughout the nation, effectively and efficiently. In addition, we will be focused on making sure staffs in the affected offices have full information on all of their options.”

By closing offices and restructuring operations, HUD hopes to balance budget reductions and increasing workloads while giving the agency’s staff the tools necessary to provide high quality service from the remaining office locations.

Banks Downsizing While Expanding Payrolls
The new mantra of companies with a large retail presence is, “Invest in technology; divest brick and mortar.” And the same is being said in retail banking circles as it in among the owners of bookstores and electronics stores.

According to FDIC statistics, the number of domestic bank offices has been declining by about 1,000 per year for the last four years from 100,658 at the end of 2008 to 97,909 at the end of last year.

Unlike with personal goods retailers, though, the branch shrinkage occurring at the nation’s banks has not resulted in fewer employees. In fact, in the last two years, the nation’s banks have been adding employees to their payroll. Employment ranks were up about 20,000 in 2011 and up another 1,500 last year.

William Henry Rogers, chairman, CEO and president of SunTrust Banks, explained during a first quarter earnings conference call this past week that the move to trim branches isn’t just about trimming expenses. Rather he said that branches remain meaningful to many of bank customers and SunTrust continues to invest in its physical presence, while at the same time investing more heavily in a “virtual presence.”

In rightsizing its branch network SunTrust is trying to combine both the physical nature of its business as well as the virtual nature.

“We’re putting more emphasis on turning that branch into a sales center,” Rogers said. “I think declaring the death of the branch (is) way early. I think that would be a mistake for anybody to reach the conclusion that tomorrow we will be a digital bank and completely different from what we are today. I just think these are trends that we’re watching and making sure that we’re reacting to appropriately.”

As with most businesses competing in today’s economy, banks are having to spend more dollars on technology than ever before, from delivering banking services to clients, to fraud prevention and much more.

To offset some of this increase expenses, banks are reviewing under-utilized areas where costs can be trimmed. “The fact is, is that more and more of our clients are simply just not coming into the branch anymore, especially the higher-end clients,” said Christopher D. Myers, CEO of Citizens Business Bank.

“You’re not going to pick up the paper and read that we’ve closed 10 offices next month. But at the same time, we are situationally looking at brick and mortar and where we can be more efficient.”

Helping banks identify ways to be more efficient is creating market opportunities for commercial real estate brokerage firms.

“We outsourced management of our facilities to Jones Lang LaSalle,” James C. Smith, chairman and CEO of Webster Bank, told analysts. “By partnering with a recognized leader in the field, we’ll gain new capabilities to identify the best locations and designs for both new and existing banking center and corporate facilities, both of which are a major focus for us, while helping us reduce energy and maintenance costs.”

William C. Losch III, executive vice president and CFO of First Horizon National Corp., said branch infrastructure is certainly one that it continues to look at but also corporate wide.

“We have a particular focus on reducing the footprint if you will a square footage that we use as an organization to be more efficient and move more into owned properties or long-term leased properties from elsewhere,” Losch said. “Our procurement group has done a good job working with our various businesses to renegotiate contracts. When ones come up for renewal taking cost out of the organization there, we’ll continue to see that. What we’re focused on a lot going forward are things that we call horizontal opportunities.”

Tenant Satisfaction, Loyalty Set More New Records in First Quarter 2013
Nearly two out of every three tenants in office buildings currently intend to renew their leases, according to Kingsley Associates’ Q1 2013 Office Industry Trends.

For the four quarters ending on March 31, 2013, 64.2% of tenants indicated that they “probably would” or “definitely would” renew, the strongest loyalty measure recorded since before the financial crisis of 2008.

Tenant satisfaction also continued its unprecedented rise, with 87.9% of tenants indicating “good” or “excellent” satisfaction overall.

The increases in both satisfaction and loyalty continue to be broad-based: overall satisfaction is higher than it was a year ago in each of the 10 major U.S. markets tracked by Kingsley Associates, while renewal intent is higher in 9, with tenants in Washington, DC reporting a negligible decrease of 0.1 percentage points from Q1 2012.

“It’s a great time to be a tenant,” said Phil Mobley, vice president of Kingsley Associates. “With slow employment growth, vacancy has remained stubborn, which means excellent service and good deals on quality space as landlords strive to retain customers.”

The good news for building owners, Mobley added, is that they have built a solid base of goodwill with tenants.

“When the market does tighten, owners will reap the benefits of the loyalty they are creating with unprecedented service levels,” he said.

And, as there have been for several months, there are indications that the necessary conditions for rental growth may be materializing. More than 15% (15.3) of tenants anticipate needing more space within a year, while nearly 40% (39.6) look to be adding headcount-an increase of 2.5 percentage points from just a year ago.

According to tenants, employment growth figures to be especially strong in Atlanta, Boston, Chicago, Denver and San Francisco.

Facility Closures & Downsizings
Biota Pharmaceuticals Inc. adopted a revised corporate strategy following the recent completion of management’s strategic and operational review of the organization and its various development programs. The implementation of this strategy will shift the company’s primary focus from early-stage research to clinical-stage development programs that it could independently advance into late-stage development. Immediate actions will include a reduction in the company’s workforce to be implemented immediately, reducing the number of its employees and contractors by 30% over the next several quarters. The reduction will be concentrated on research and development functions dedicated to drug discovery, but other areas of the organization, including general and administrative positions, will be affected. The company has closed its Rockville, MD, facility and expects to complete the relocation of its U.S. corporate headquarters to Atlanta next month.

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Federal HighwayBoca RatonFLClosureUnknownImmediately.Carl's Patio301 Camino Gardens Blvd.Boca RatonFLClosureUnknownImmediately.Carl's Patio5480 W. Hillsboro Blvd.Cocunut CreelFLClosureUnknownImmediately.Carl's Patio14380 S. Tamiami TrailFort MeyersFLClosureUnknownImmediately.Carl's Patio10045 S. Dixie HighwayMiamiFLClosureUnknownImmediately.Carl's Patio680 Tamiami Trail NorthNaplesFLClosureUnknownImmediately.Carl's Patio7492 Tamiami TrailSarasotaFLClosureUnknownImmediately.Illinois Central School Bus641 N. Ohio St.AuroraILClosure685/30/2013.Bethel New Life4950 W. Thomas St.ChicagoILLayoff144Immediately.Texas de Brazil (North Bridge)51 E. Ohio St.ChicagoILClosure854/30/2013.CIBA Vision333 E. Howard Ave.Des PlainesILClosure2626/30/2013.Illinois Central School Bus654 Kennedy DriveMetropolisILClosure505/29/2013.Shell Vacations40 Skokie Blvd., Suite 350NorthbrookILLayoff675/31/2013.Kmart840 Plainfield RoadWillowbrookILClosure764/30/2013.Century Aluminum1627 State Route 3543HawesvilleKYClosure7508/20/2013.BMW of North America3819 Prologis ParkwayEastonPALayoff956/28/2013.Johnstown Specialty Casting545 Central Ave.JohnstownPAClosure605/31/2013.Vincentian Regency9399 Babcock Blvd.McCandless TownshipPAClosure1003/21/2013.School Specialty1156 Four Start DriveMount JoyPAClosure1485/13/2013.GBS Global Customer Service635 Grant St.PittsburghPALayoff773/15/2013.Consumer – Home Solutions1500 Penn Ave.PittsburghPALayoff1083/15/2013.SargentoBellinghamWAClosure34Immediately.BoeingvariousPuget SoundWALayoff9396/7/2013.Oshkosh Defense2307 Oregon St.OshkoshWILayoff7006/14/2013.UTi Integrated Logistics892 Dupont Road, Building 8 & 9WashingtonWVLayoff147Immediately.iPacesetters89 Arnold Ave.WestonWVClosure1835/28/2013
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