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New UW Real Estate Curriculum!

REC_MSRE_2015

Study real estate in a hot market city, known to be a learning laboratory for innovation and sustainability.  The UW Graduate School has approved a new work compatible curriculum for the Master of Science in Real Estate program:

  • Streamlined – 5 quarters full time/9 quarters part time
  • Teaching schedule – 2 afternoons a week plus some evenings
  • Three focus area options
    • Real Estate Development
    • Real Estate Finance & Investment
    • Corporate Real Estate

Applications for 2015 are being excepted now.  Scholarship assistance in available – apply by May 1st!  Program details and admission information is available at https://re.be.uw.edu/academics/

The History of Institutional RE Investment: A Conversation with Blake Eagle

The History of Institutional Real Estate Investment:  A 40-Year Perspective
Tuesday, January 20th
6-7 pm
Gould Hall, room 100
kindly rsvp:  bestm2@uw.edu
Eagle_Blake_web

This presentation is a real opportunity to hear an industry pioneer’s perspectives on the institutional real estate asset class.  Through Blake Eagle’s vision and involvement over the years in a multitude of roles, he has helped shape the institutional real estate investment management industry.  To have the opportunity to hear firsthand about these events from the perspective of an industry legend should not be missed.  Blake will cover the significant events impacting the institutional real estate asset class from the 1970s to early 2000s.

Mr. Eagle has been in the institutional real estate investment industry for over forty years. From 1971-1993, he was head of real estate consulting, Frank Russell Company, a global pension fund asset strategy consultant and investment advisor. During this period, Russell clients invested in excess of $18.0 billion in commercial real estate equities. Prior to joining Frank Russell Company, Mr. Eagle was a real estate developer.

From 1994 -2001, Mr. Eagle was the Thomas G. Eastman Chairman, Center for Real Estate, Massachusetts Institute of Technology Center. The Center offers a Masters of Science in Real Estate Development degree and engages in a wide range of real estate research projects and educational programs.

From 2002 thru 2007, Mr. Eagle was CEO, National Council of Real Estate Fiduciaries (NCREIF), a real estate industry association that produces and publishes the NCREIF Property Index (NPI), the standard measure of institutional investor owned US commercial real estate investment performance. Mr. Eagle played the key leadership role in both the founding of NCREIF (1982) and in the development of the NPI.

Mr. Eagle currently serves, or has served, on the Boards of Directors of three real estate investment advisors, three publicly listed real estate investment companies, one real estate securities mutual fund and four private real estate investment funds. Mr. Eagle has served on the Advisory Boards of the Wharton Real Estate Center, University of Pennsylvania, Federal National Mortgage Association (Fannie Mae) and currently sits on the Real Estate Advisory Committee of the NY Teachers Retirement System (NYSTRS). Mr. Eagle has provided expert testimony to The Presidents Commission on Housing, the Department of Labor and the US Senate Banking Committee on US pension fund real estate investment practices.

Mr. Eagle has been honored with Lifetime Achievement awards from NCREIF, The Wharton Real Estate Center and The Homer Hoyt Advanced Studies Institute. In 1993, Mr. Eagle received the Dr. James Graaskamp Award from the Pension Real Estate Association in recognition of his contributions to the body of knowledge in the field of institutional investment in real estate.

 

 

 

Hello from the High Line!

In October several 2nd year Runstad MSRE students headed up to NYC for the Annual ULI Fall Meeting. We might have lost a little of our dignity while celebrating into the late evening, but I’m happy to report that everyone is headed home!

This morning I had the opportunity to walk the world famous High Line. This above ground pedestrian path was originally intended for trains to carry goods to and from Manhattan’s industrial district. Due to shifts in transportation technology (18-wheelers) the trains were shut down in the 1980’s. Fortunately individuals in the neighborhood realized the potential the beautiful iron structure possessed, and worked to form the Friends of the High Line. Working with the City, Friends of the High Line selected James Corner (yes the same James Corner who’s working to redesign the Seattle Waterfront) to help redesign the unused tracks. The final portion of the track open just a few weeks ago, September 21, 2014. This definitely deserves a visit on your next trip to New York!

This amazing path now runs north from Gansevoort Street to the Hudson Rail Yards being redeveloped by the Related Companies in partnership with the City of New York. The picture below was taken from the High Line and shows the progress currently taking place at the Hudson Rail Yards. In the left of the photo you can see the Javits Center, home of this year’s ULI conference.

Patrick Kassin, Second Year MSRE Candidate

 

NAIOP recap!

Today’s guest blog comes to us from NAIOP Washington, who sent us this thoughtful summary of the PLACE CAPITAL screening at the NAIOP breakfast meeting on January 15.  Thank you, Ed Scherer!

Summary of NAIOP Breakfast
January 15, 2014
Place Capital:  A Live Documentary Film About Cities
By Ed Scherer, Avidex Industries, LLC

fellowsNAIOP

Happy New Year!  The group that attended the NAIOP Breakfast were treated to a very unique program on January 15, 2014.  The film centered in on four cities that are redefining our traditional views of the Urban environment.

Glenn Amster introduced the program.  Glenn was President of the Chapter in 2013 and we give hearty thanks to him for his service.  Our new President, A-P Hurd introduced the presenters who shared their film created under the sponsorship of the UW Runstad Center Affiliate Fellows.  The presenters were:

·         Lisa Picard – EVP of Skanska Commercial Development USA
·         Gabriel Grant –  VP – HAL Real Estate Investments
·         Ken Yocom – Assistant Professor at UW
·         Kelly Hogg – Associate Project Manager at CBRE
·         Alvaro Jimenez – Financial Analyst – Security Properties
·         Eric Becker – Filmmaker

The genesis of the film project came from the simple question – “What makes good places”?  The film team concentrated on four cities:

·         Detroit
·         Berlin
·         Krakow, Poland
·         Fukushima, Japan

The issues in Detroit are well known – a manufacturing base that has dispersed to other locations leaving the building infrastructure of Detroit abandoned.  The film described the seeds of rebirth that is a testament to the human spirit.  Shared values, living and working contribute to the overall value increasing the capital of place.  Innovation (how to re-use old tires) and urban farming were pointed out as examples of how Detroit will come back.  There is a long way to go but the film captured the dedication of the people committed to bringing Detroit back to an exciting and vibrant place.  The deterioration was gradual, so will be the rebirth.  The theme from Detroit?  “Diversity = Resilience”

Berlin is one of the most interesting cities in the world.  In the last 70 years it has gone through wartime destruction, division with the Wall and three bankruptcies.  Through it all, Berlin has continued to lead and innovate.  Aspects that were highlighted in the film were that artists and creative thinkers are leading the recovery of Berlin.  The answer from Berlin about what makes good places is that open spaces foster community which fosters open communication.  The rise of Co-working, urban gardening and shared housing were pointed out as drivers for Berlin.  Ideas are the new currency and the reliance on Digital communication has brought about the need for more human interaction.  That human interaction is asserted to bring about the growth of place value.  The Berlin theme – “Spaces of possibility, spaces to pause and share ideas”.

As Fukushima struggles to overcome the three headed monster of earthquake, tsunami, and nuclear contamination, this community illustrates another theme of the film – “Community grows organically from the bottom up, not from the top down”.

Krakow, Poland boasts one of the oldest City Squares in the world, almost 800 years old.  Marketplaces were shown as an essential bridge to community marrying food and people.

The next generations of City dwellers will have tremendous impact on place capital.  It will be an exciting evolution and as NAIOP and community members, we have the opportunity to influence how our places retain and grow value.  The film presentation caused a number of NAIOP participants to look at things from a different viewpoint and we thank the presenters for their unique insights.

Scenes from a CoreNet luncheon

Great crowd, great speaker, great students, and a stunning view to boot – here are a few scenes from Tuesday’s CoreNet luncheon, on the 76th floor of Columbia Tower.  Thanks to all who turned up to hear Steve‘s keynote!

steve      Seattle view

a view to the north of downtown and the waterfront
a view to the north of downtown and the waterfront
Seattle winter sky
Seattle winter sky
a view of Mt. Rainier across the cloudy sky from the Columbia Tower Club
Mt. Rainier across the cloudy sky from the Columbia Tower Club
MSRE students Ben Lukes, Ryan Miller, Louisa Galassini, Andrew Hunt and Stephanie Anderson (L to R) with Scott Carter (center), president of CoreNet Washington State chapter
MSRE students Ben Lukes, Ryan Miller, Louisa Galassini, Andrew Hunt and Stephanie Anderson (L to R) with Scott Carter (center), president of CoreNet Global’s Washington State chapter
Thinking about an advanced degree in real estate?  Think Runstad.
Thinking about an advanced degree in real estate? Think Runstad.
 photo credits: Melissa Best

Bending the Cost Curve on Affordable Rental Development

At the recent 2013 ULI Fall Meeting in Chicago, second-year Runstad MSRE student Craig Ratchford attended a panel session to learn more about research and discussions surrounding the issues of affordable housing development.   He writes in with his impressions of that session, and thoughts about how his MSRE experience has helped him take part in the vital conversation about this real-world dilemma. 

• • •

“There is nothing more complicated than affordable housing development in the entire real estate universe.” – Bending the Cost Curve on Affordable Rental Development panel, ULI Fall Meeting, Chicago, 2013

Before entering the MSRE program, I worked for an applied research and consulting organization focused on measuring the impacts of affordable housing policy and community and economic development in urban areas throughout the country. But while learning to understand the impacts is valuable and important, it was frustrating for my inner pragmatist to understand the difficulty in providing quality affordable housing where it was needed most, but remain so far away from influencing its actual development. I entered the MSRE program at the Runstad Center (and the Evans School of Public Affairs) to learn how real estate, finance, and land use economics intersect with public policy to meet this challenge, and, hopefully, pursue a career confronting this ubiquitous problem.

Many smart people at the ULI conference in Chicago were also confronting this problem. The panel session, Bending the Cost Curve on Affordable Rental Development, showcased a joint research effort and roundtable discussions convened by ULI’s Terwilliger Center for Housing and Enterprise Community Partners. Over the past year, they engaged over 100 affordable housing leaders in weak and strong markets across the country, to identify the most important cost drivers in affordable housing development, and develop strategies to “bend” the cost curve towards more efficient and lower cost affordable housing delivery.

Affordable housing delivery is shaped by a number of procedures, regulations, and policies instituted at all levels of the system – each with its own set of costs. But while there is a rich set of literature on specific regulatory barriers to affordability in general, little research has been done to examine how these issues interact with the financing and costs of affordable housing development. Their research intends to fill this gap.

During the session, the group focused on the following cost drivers:

  • Project scale: small projects, less intensive projects have high fixed costs
  • Project design and construction: higher upfront costs for design and materials are often justified, since the ownership period is typically longer, and limited funding available for future replacement compared to privately financed development requires smart material decisions to reduce future capital investments
  • Financing and underwriting: decreased capital market funding competition (compared to market-rate projects) gives investors greater power to dictate terms; deals must be structured around non-financial terms and goals of multiple funders
  • Capital availability: developers must often begin to scope a deal prior to assembling financing; capital is scarce for smaller or innovative projects; many investors deal in exclusively market-rate or affordable projects;
  • Deal structures: “cost-plus” basis and percentage fees are common, reducing incentives to lower costs; tax credit allocations made years prior hedge risks of cost inflation, and fail to incentive use of anything less than full amount (because the savings reduce the developer fee); strict, increasing reserve requirements, due to higher risks; longer timelines and additional land holding and soft costs, due to project complexity and multiple standards
  • Program and investor requirements: timing and fund distribution are often incongruous with projects needs, directly causing additional constructions costs, higher compensation for the uncertainty of extended land contracts, a reduced pool of potential developers; the challenges of tax exempt private activity bonds
  • Other costs drivers, include incentives to meet social policy goals, poorly designed cost controls (ironically), and costs imposed by local regulations like parking minimums

The differing levels of complexity result in major discrepancies in affordable project costs nationally –examples included lows in the $100’s, up to $500,000 per door in San Francisco.

The session focused mainly on exhaustively identifying the problems. The next research phase intends to produce specific, actionable recommendations for lowering costs in the face of these barriers, with a report expected in the winter of 2014.

The session was interactive. The panel surveyed the audience, to identify their concerns and try to field questions. The back-and-forth between the panel and the audience revealed a very important lesson I hadn’t expected: nobody knows the right answers yet. We’re all exploring. I expected to walk in and learn about bold new plans and strategies professionals used to finance and build affordable housing that were previously off my radar. But it became clear – through this session and in other ULI panels – that there are not simple answers simply waiting to be learned and deployed. Despite years of experience, everyone continues to confront the same challenges and perpetually invent and deploy new strategies. It really is up to us to invent, test, and discover the next generation of affordable housing solutions.

And furthermore, while the panel compiled and succinctly defined the issues and ideas, and certainly helped sort out my thinking, it was no longer new knowledge after a year in the program. Many of the problems had been explored in coursework and resources of the MSRE program – my program experience had taught me the right questions to ask (and often with more nuance than many were addressed during the panel). The professionals in the room, with years more experience, were grappling with the same questions I was. To know that I was on my way to understanding the implications of real-world dilemmas really validated the work my classmates and I had been doing in MSRE.

Mark your calendars for 2013 IREM Forecast Breakfast

Runstad Center director Dr. Stephen O’Connor will moderate an all-star panel at the 2013 IREM Forecast breakfast on December 6 at the Bellevue Westin.  The panel includes Dr. Svenja Gudell, (Zillow), Joe McWilliams (Port of Seattle), Dave MaGee (Cushman & Wakefield) and Matt Rosauer (Pine Street Group).  The breakfast will also feature a keynote by Dr. Stan Humphries, chief economist at Zillow.

More information and a registration form may be found here: IREM Brochure_ForReference.

IREM

More from ULI’s 2013 Fall Meeting… and Chicago’s Secret Spaces

MSRE ’14 student Louisa Galassini sends in these beautiful photos from another tour she took at last week’s ULI conference.  Organized by the Chicago Architecture Foundation, this tour took her behind the scenes of several of the city’s best spaces.

First stop, the architecture office of Goettsch Partners at the top floor of the Railway Exchange building:

Goettsch

Views out of the iconic porthole windows of the Railway Exchange Building

Railway ExchangeRailway Exchange 2

The University Club’s historic Cathedral Hall

Cathedral Hall

A walk through Millennium Park, a 400 million dollar project completed in 2004

millennium

Frank Gehry’s Pritzker Pavilion in Millennium Park

Pritzker

Backstage at Frank Gehry’s Pritzker Pavilion

backstage

The 41st floor of the Kemper Building – the first 360 viewing deck in the city of Chicago, open for the third time in 40 years

kemper

kemper2kemper3

 

 

Washington home sales surged, affordability declined in third quarter

Washington state’s housing market continued to strengthen in the July-September quarter, registering the fifth quarterly consecutive improvement in home sales activity, according to Glenn Crellin, director of the Washington Center for Real Estate Research here at the Runstad Center.   Similarly, median home prices throughout the state advanced, while the affordability of homes dropped measurably.

The Q3 snapshot is now available: Snapshot _WSHM Q3 2013

UW Today also has full coverage of the story.  We expect to have the full report available to subscribers in a few weeks.  Interested in subscribing?  Please contact wcrer@uw.edu.