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2017 NAIOP Real Estate Challenge

MSRE 2017 Candidate Sean Durkin shares his thoughts on the NAIOP Real Estate Challenge. This unique competition is the framework for the Real Estate Development Studio, a course requirement for the development option in the MSRE curriculum.

The likely winning team debates potential layouts for the Translink site in Coquitlam, BC Disclosure: This picture is of the authors team

This year’s NAIOP Real Estate Challenge takes University of Washington Runstad Center development-focused students to Coquitlam, British Columbia to compete against the Portland State University and University of British Columbia real estate development students.

The subject site, surrounded by heavy and light rail as well as a 20-terminal bus roundabout, is currently operated as a park & ride. It is owned by the Canadian government’s transit arm, TransLink, and is ripe for a re-imagination, the focus of the competition. The challenge includes aspects of public and private collaboration, new development analysis and underwriting, phasing, costs of construction, market analysis and forecasting, and financial feasibility analyses. Thanks to The Runstad Center, second year students have been well-educated in these aspects and will bring a diversity of ideas and work experience for a responsible, transit oriented, development. With foreign tax laws and market cycles, Greater Vancouver offers students an unfamiliar market to enthusiastically tackle.

Under the direction of Runstad professors Al Levine and Pike Oliver, students are responsible to gather and verify market data and site information in order to deliver an economically viable development project that will beautify the transit station and rider’s experiences, continue to offer park and ride potential, benefit the community, and attract a for-profit developer.

With UW being four-time victors of this 14-year development competition, competition is high amongst the class with three internal teams independently developing a plan of action. Students will vote on the most viable work and unite late in the quarter to all work on finalizing the design and deal structure that serves TransLink, an outside developer and the community best.

Are you on the Washington Chapter NAIOP email list? Look for the blast email from Seattle’s NAIOP chapter to register for the Seattle March breakfast event where teams from each school will present their proposals and a winner will be announced.

The buzz is out about the upcoming minor in real estate

Jill Wood, Co-President of Windermere Real Estate and Runstad Center Advisory Board member, was recently quoted in a story about the new real estate minor. Read the full article here Two undergraduate courses will launch spring quarter: RE 400 Real Estate Accounting and RE 360 Intro to Real Estate Market Analysis. Please contact msre@uw.edu for more information about registering.

New Undergraduate Initiative in Real Estate

Thanks to a generous endowment from the Jacobi Family and Windermere Real Estate the University of Washington is launching a series of undergraduate classes in real estate. The Director of the Runstad Center for Real Estate Studies, Professor Simon Stevenson, who also holds the John and Rosalind Jacobi Family Chair, described the initiative as an important part of the long-term development of the Real Estate program at UW.

“The development of an undergraduate minor is exciting in many respects. It will complement the well established MSRE program and will also open up real estate and the associated career possibilities to UW’s undergraduate student body. The first class started this quarter and from a standing start it already has over twenty students enrolled. The Intro to Real Estate class will be followed by a Market Analysis course in the Spring Quarter. As more courses are rolled out over the next two years this will develop into a fully-fledged minor in real estate. Everyone in the University of Washington’s College of Built Environments would like to extend our thanks and appreciation to Windermere Real Estate and the Jacobi family for their support and help in developing this exciting initiative”.

2017 CoreNet Recipients

On Tuesday, CoreNet recognized the 2016-17 scholarship recipients at their January luncheon. Congratulations Eric Jacobs, Lori Shannon, Adam Boyd, Matthew Ricci and Tak Stewart.
We are so grateful to the CoreNet Seattle Chapter for their continued support of our students.

corenet-luncheon-scholarship-awardees-2017 — Eric Jacobs, CoreNet University Relations liason Scott Carter, Lori Shannon, Adam Boyd, Matthew Ricci

Runstad Center Mentors

Runstad Center mentor Joe Polito recently took his mentees on a project tour of Tilt49. Tilt49 is a mixed-use residential and office property, under construction in the Denny Triangle. The project includes 11 floors of office with 31,000 SF floor plates, a 7,000 SF deck on level 9 and a lobby featuring food retail and other “pop-up” retail spaces. Kristen Jensen from Touchstone, Kyle Paulsen and Ian Knowles from Mortenson Construction lead the tour. Our mentors are an invaluable resource for our students, providing career path advice and hands on exposure to real world projects. Click here for the bios of all the 2016-17 Runstad Center mentors.

group-photo — Kristen Jensen of Touchstone, MSRE Candidate Taryn Rehn, MSRE Candidate McKenzie Darr, Ian Knowles from Mortenson Construction, MSRE Candidate Fred Levine, MSRE Candidate Luqi Chen, Runstad Mentor Joe Polito from Touchstone, and Kyle Paulsen from Mortenson Construction

The ULI Fall Meeting, a great networking experience

MSRE Candidate Eric Jacobs recently attended the ULI Fall Meeting and shares his thoughts/fears on networking, a necessary skill in the world of real estate...

“Networking” has always been a bit of a scary word to me. It conjures up images of awkward conversations, exchanging business cards with strangers and trying to “sell” oneself. Those aren’t situations where I tend to be comfortable. The ULI Fall Meeting promised to be chock full of those sort of interactions so I had a certain amount of trepidation going into the week.

Thankfully, with the help of the MSRE staff and my friends and classmates, I never felt the need to put myself into awkward situations. Instead, I was able to “customize” my networking experience into situations where I felt comfortable and confident in my ability to put the best (and most genuine) version of myself forward.

Starting the week off with a tour worked well as it allowed us to meet people in a relaxed setting, whether watching longhorn steer being herded down a Ft. Worth city street or sampling a variety of Texas whisky at a cool outdoor bar. I made friends in a relaxed setting with natural conversations about who we are, what we did, where we were from and our differences and similarities. As other people from the group were doing the same we were constantly being introduced to new and interesting people.

As the week went on, different events were set up during the day where we met local real estate leaders and essentially got to grill them for helpful information. We could ask as many questions (or as few) as we felt comfortable. It was another great way to get to know contacts who could be a big help now, or down the road.

Finally, our last night in Dallas we headed out to a northwest networking event. Our little crew of Washingtonians piled into a random limo, jumped onstage and sung with a local bar band for a song or two and generally engaged in the sort of good-natured shenanigans that create lifetime bonds.

When I got home I thought about the great time I had before realizing, much to my chagrin, I had been networking the whole time. Oh well. Thank you so much to the staff and sponsors that made this trip possible for all of us!

The M-Line Trolley

While at the Fall 2016 Urban Land Institute Meeting in Dallas, I encountered an unexpected and delightful transit mode. The nostalgic M-Line trolley links the downtown Dallas Arts District with the trendy shops, galleries and bistros of Uptown, including West Village, where you can transfer to or from the more modern Dallas Area Rapid Transit rail service at the Cityplace/Uptown Station. An additional connection to DART Rail is available with the completion of an M-Line extension along Olive Street through Klyde Warren Park to near St. Paul Station. It reminded me of the waterfront streetcar that vanished from Seattle’s waterfront a decade ago.

Pike Oliver
Runstad Center Faculty

Investing and creating communities to love

Pike Oliver continues his impressions from this year’s ULI Fall Meeting with a summary of Sarah Filley’s session.

One of the more interesting presenters at the Urban Land Institute 2016 Fall Meeting in Dallas was from Oakland, California. Sarah Filley cofounded Popuphood, which she said, “invests in entrepreneurs with hearts of gold to create communities we love.”
Ms. Filley explained “Cities like Oakland are the most vulnerable to recession, where it hurts the most and lasts the longest,” she said. In 2011 Oakland’s downtown had 35 percent retail vacancy. But there was an active monthly arts festival drawing 25,000 people on a single day. The idea of Popuphood was to connect artists with vacant retail space.

Filley’s initiative aggregated very small businesses and concentrated them on a single block, using redevelopment funds to provide them with six months of free rent. The approach of curating local independent retail tenants to catalyze local economic development began to transform the downtown, block by block.Popuphood continues to offer three-month to five-year leases to micro entrepreneurs, helping activate and reposition downtown properties. As a result, the value of properties housing these small retailers and pop-ups has doubled over the last five years. “These buildings have gone from vacant to vibrant,” Filley said. Popuphood has proved that micro entrepreneurs can have major economic impacts.

To watch a video of Sarah’s presentation click here

Sell or hold?

Faculty member Pike Oliver joins the students this week in sharing his experiences at the 2016 ULI Fall Meeting…

Several Runstad students attending the 2016 Urban Land Institute Fall Meeting in Dallas, saw John McNellis, a principal with McNellis Partners, a northern California–based developer, share his perspective on one of the most difficult real estate decisions—sell or hold, as captured in his excellent how-to-do-it book, Making It in Real Estate (Washington, DC: Urban Land Institute, 2015). A video of that presentation is available at https://www.youtube.com/watch?v=z2PnevX5QG0

McNellis tells you how to get started as an entrepreneurial real estate developer, sharing practical tips and advice from his wealth of experience over 35 years in real estate development. He entertains with witty anecdotes, and wisdom on how to take advantage of opportunities and avoid pitfalls. Offering humorous insights, the book covers the ins and outs of how to get financing, working with architects, brokers, and other professionals, how to make a good deal, and win approval for a project.

For those looking to get into the real estate business, McNellis advised trying to take a 20-year approach to your career. “Do you want to work for the biggest company that’s constantly in the headlines, or do you want to focus on building economic independence? Are you doing the night classes and other hard work to get to where you want to be?”

Timing the market has never been part of his strategy. “We view ourselves like farmers; we plant, sow, and harvest each year,” said McNellis. McNellis outlined why he has always taken a “value add” approach, “buying junk and selling antiques,” rather than a merchant builder’s approach of selling fast at lower margins. But he also admitted, “We’ve lost money every which way you can.”

Dallas’s affordable and mixed-income housing plan

MSRE Candidate 2017 Alastair Townsend discusses what he took away from a session on Dallas’s affordable housing issues at the 2016 Urban Land Institute Fall Meeting…

Among major cities, Dallas’ poverty rate is the third worst in the nation.^[1] 38 percent of children in Dallas live in poverty, the highest rate among the 10 largest US cities.^[2] Judging by what was discussed at this ULI panel discussion, Dallas seems to have failed to address the issue of housing affordability in this era of growing poverty and acute income inequality. Dallas’s Affordable and Mixed-Income Housing Plan, it turns out, is a recently-mandated effort triggered by the city’s contravention of federal fair housing policies. The panelists were a group of people at the center of making this change.

Dallas’ Office of Economic Development Director Karl Zavitkovsky openly admitted that Dallas was late to implement policies to address the quality and availability of affordable housing for low-income families. It seems that the city is only now enacting policies that are tried and tested in other cities.

The city has used TIF (tax-increment financing) to fund redevelopment, although Zavitkovsky said their use is limited in terms of housing. The city does not account for affordable housing units created within the TIF districts.^[3] The city has also enacted voluntary inclusionary zoning. However, developers typically opt for making payments, rather than incorporate affordable units in their developments. Turning these funds into affordable housing units appears to have been a struggle for the city. Zavitkovsky also mentioned the use of home-improvement rebates of $5,000.

While the downtown and north of the city has boomed, the south, where most low-income and minority neighborhoods are focused, has been neglected. The city’s own housing policy was proven to perpetuate racial segregation between northern and southern Dallas. After it blocked a mixed-income development in a predominantly white downtown census tract, the developer appealed directly to U.S. Department of Housing and Urban Development (HUD), alleging discrimination. HUD investigated and judged that city officials had indeed unfairly denied federal housing funds in order to make the project unfeasible and maintain the racially segregated status quo. In a letter, HUD stated,

“There is overwhelming evidence reflecting a need for affordable housing for the low-income strata (at or below 50% AMI) in the City of Dallas. As discussed, there is an overrepresentation of minorities and persons with disabilities at this income level. Furthermore, the Central Business District and Downtown Connection TIF District [the site of the project] are overrepresented by white, non-disabled residents. Lastly, the average rents in the Central Business District and Downtown Connection TIF District are not affordable for persons at the 30% or 50% income strata. In addition, the evidence indicates that there was a need for affordable housing to be available in Dallas in an equitable manner and that there was in particular a need for affordable housing in the downtown area for which TIF and Section 108 financing should be resources.”^[4]

Facing fines in the tens of millions, Dallas was forced to settle the dispute by promising to lead development of a regional 10-year housing plan and to overhaul its housing department. Dallas has turned to the ULI’s Advisory Services Panel (headed by Tony M. Salazar who was also one of the panelists) for help. The council’s recommendations included creating a Chief Executive Officer of Housing and Community Investment; creating a housing trust fund with defined revenue sources; expanding incentive and inclusionary programs; leveraging existing city assets, mostly land; and better managing the housing voucher program to ensure the vouchers get used and don’t just expire. The ULI panel also highlighted Dallas’ opaque and inconsistent entitlement approval process, because it misses opportunities to trade upzoning for affordable housing.

With the benefit of greater background knowledge in hindsight, this ULI panel discussion was probably an attempt to assist their client and the conference’s host city to air their dirty laundry and move beyond the recent housing discrimination controversy. After admitting it needs help, Dallas’ admission of culpability is the next step to reforming their housing policy. The City of Dallas seems to have taken this necessary step on their road to recovery with the help of the ULI as both its publicity platform and sponsor.

^[1] James, L. (2014, August 15). COUNCIL BRIEFING. Briefing presented at Mayor’s Task Force on Poverty before City Council, Dallas. Retrieved October 29, 2016, from https://dallascityhall.com/government/Council Meeting Documents/2014/Poverty_Task_Force_082014.pdf

^[2] Hallman, T. (2016). Dallas has the highest child poverty rate among big cities, and city hall isn’t sure how to change it | Dallas City Hall | Dallas News. Retrieved October 29, 2016, from http://www.dallasnews.com/news/dallas-city-hall/2016/09/07/dallas-highest-child-poverty-rate-among-big-cities-city-hall-sure-change

^[3]Dallas’ TIF Affordable Housing. (n.d.). Retrieved October 29, 2016, from http://buildlouderdallas.org/wp-content/uploads/2012/09/February-2014-Dallas-TIF-Affordable-Housing.pdf

^[4] Sweeny, G. L. (n.d.). LETTER OF FINDINGS OF NON-COMPLIANCE 1600 Pacific LP v. City of Dallas [Letter written November 22, 2013 to The City of Dallas]. Retrieved October 29, 2016, from http://nlihc.org/sites/default/files/HUD_Dallas_Fair_Housing_11-22-13.pdf