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ENGINEERING EXCELLENCE
Younan Properties brings a fresh approach to the office
real estate investment market.
Brian A. Lee
Sometimes it takes an industry outsider to see the whole picture.
While many real estate regulars struggle to see the forest because
of the trees, an innovative mind has arrived to show that there
is a better way to do things.
Employing a unique, if not revolutionary, approach to office
development and management, Zaya Younan and his company, Younan
Properties Inc. (YPI), concentrate on transforming under-performing
high-rise buildings into highly efficient properties and top-notch
investments. Brandishing novel methods and forward thinking,
YPI boldly ventures into lagging markets at which other office
developers thumb their noses.
And the results of YPI’s dynamic approach to office development
and operation? The company has delivered unprecedented returns
on office property investments after just months of ownership.
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| In just 2 years, Younan Properties Inc. has built
a reputation for renovating and repositioning office properties. In
fall 2003, the company purchased the 210,000-square-foot Class A Hitachi
Plaza, located in Brisbane, California, for $23 million and then —
5 days later — sold the building to an institutional investor
for an undisclosed amount. |
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YPI systematically monitors office markets across the country,
comparing market fundamentals with market performance to sniff
out investment opportunities. The company tracks such measures
as unemployment, consumer spending, business migration, employment
growth, population growth and demographic changes in assessing
office investment potential.
Younan cut his teeth in the advanced world of manufacturing
and computer technology. There, the stringent standards of performance,
the perpetual search for greater efficiencies and the commitment
to detail instilled within him a belief that one should never
stop thinking of ways to reach higher. The day Younan decided
to bring this engineering focus to commercial real estate was
the day the industry changed forever.
“I come from an industry that is very efficient in the
world of high technology,” says Younan, chairman and CEO
of YPI, based in Woodland Hills, California. “You can
see the efficiency in everything we do. If you look at the progress
the high-tech industry has made during the last 10 years, it
just boggles your mind — what kind of car you drove versus
what kind of car you drive now, what kind of cell phone you
had and what kind of cell phone you have now, what kind of computer
you had, what kind of wireless capabilities you had. There’s
been so much improvement in our lives in the last 10 years,
yet you take that and go back to commercial real estate as a
whole and say, ‘What improvement, what significant changes
have happened here in the past 10 years?’ You will find
the difference is minimal compared to what happened in other
areas.”
If asking the right questions is really the secret to success,
then it’s little wonder that Younan and his 2-year-old
company have already accomplished a great deal in real estate
investment. Why can’t the commercial real estate industry
be as committed to efficiency as those high-tech fields? Why
do two almost identical office buildings have a 27 percent difference
in occupancy and a 30 percent disparity in income generation?
“Now why is that? How could that be?” says Younan.
“[The buildings are in] the same market, same location,
just with a different owner. The answer to [eliminating that
discrepancy] can be found in the manufacturing and high-tech
industry, which has been developing standards of excellence
during the last 20 years. It could be continuous improvement,
it could be simultaneous engineering, it could be a host of
the things that the industry developed. You follow these procedures,
you follow these standards and automatically at the end your
product would be perfect.”
Younan has made it his goal to bring these high standards to
the commercial real estate industry and, specifically, to his
office investment focus. In the near future, industry experts
could very well be referencing YPI benchmarks for office building
operation instead of the traditional BOMA (Building Owners and
Managers Association) standards in place today.
“How do you determine building by building, case by case,
location by location, class of building by class of building
— and it could be office building, shopping center, hotel,
anything — that the standards that you’re running
your business by are the standards that get you to the efficiency,
utilization and productivity that is world-class?” says
Younan. “We are developing those standards and procedures.
We determine them not from the macro but from micro.”
No detail is too small at YPI. Whether it’s shutting down
an unneeded bank of elevators in a half-full apartment building,
concocting a stopgap to close off the HVAC duct to unoccupied
office floors or writing the date of installation on a light
bulb to measure its lifespan, Younan’s company is committed
to efficiency and cost savings.
“We understand the building from an engineering standpoint,
then we design the parameters for it that dictate how the building
should operate regardless of any outside standards that we don’t
know apply or do not apply,” says Younan. “Once
we develop those standards, we will drive them within every
building we operate.”
Younan is not all words, of course. He puts his money where
his mouth is. For example, YPI purchased the 62,000-square-foot
Warnerview office building in Woodland Hills in October 2003,
having been a tenant at the property before the sale. The old
property management firm at Warnerview had been dealing with
a water leak that was deteriorating the parking structure below
the building. To stop the recurrent leaking, the company repeatedly
uprooted the entire landscaping system on the upper level to
reseal the surface below. It took Younan and his colleagues
to figure out why the sealant was being compromised each time.
“We noticed that every time a major truck went by, the
building would shake a little bit because of the wind,”
says Younan. “Buildings are supposed to move a little
bit. If it doesn’t move, it would be rigid and break.
I was sitting here one day — it was the second day that
we had been a tenant in the building — and I said that’s
the reason they’re constantly having a leak. Every time
they reseal it, the next time a big UPS truck comes here, it
drives past, shakes the entire building, the entire seal structure
breaks, new cracks appear, then water gets in there again and
seeps into the parking structure.” Younan’s solution
as owner of the building was to remove all of the landscaping
and replace it with stone and artificial plants.
“We’re trying to use conventional wisdom, a tremendous
amount of statistics and innovation not only in the way we solve
the problems that approach us on a daily basis as a property
owner but in the way we operate the building,” says Younan.
“We are a strong believer that even if something is not
broken, we can always do it better, cheaper and more efficiently.”
©2004 France Publications, Inc. Duplication
or reproduction of this article not permitted without authorization
from France Publications, Inc. For information on reprints of
this article contact Barbara
Sherer at (630) 554-6054.
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