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Simon Stevenson awarded 2018 Nick Tyrrell Research Prize

Simon Stevenson, the Chair of the Runstad Department of Real Estate and the John and Rosalind Jacobi Family Professor of Real Estate, has been awarded the 2018 Nick Tyrrell Research Prize for innovative applied research in real estate investment. The award is for the paper “Optimal Composition of Hybrid/Blended Real Estate Portfolios”, which was co-authored with former colleagues Frank Ametefe and Steven Devaney of the Henley Business School, University of Reading.

The prize is awarded annually by three of Europe’s leading real estate industry associations; the European Association for Investors in Non-listed Real Estate Vehicles (INREV), the Investment Property Forum (IPF) and the Society of Property Researchers (SPR). The prize is in memory of Nick Tyrrell, the former Head of Research & Strategy and a Managing Director in J.P. Morgan Asset Management’s European Real Estate Division, who passed away in August 2010. His research work was characterized by a combination of academic rigor and practical relevance.

The research considers the optimal mix of liquid, publicly traded assets that may be added to a real estate portfolio to provide enhanced liquidity while at the same time minimizing the impact on portfolio return. The performance and liquidity of real estate funds has become an issue of concern among investors, especially as the ability of investors to exit funds has often been compromised in periods following market shocks. Increasingly, institutional investors, such as UK defined contribution pension funds, are requiring increased liquidity from real estate funds, which they use to gain exposure to real estate as an asset class.

The research indicates that applying formal portfolio optimization techniques leads not only to benefits with respect to liquidity but also to an improvement in the ability of blended real estate products to track the underlying benchmark index. The authors will be presenting their findings at a special industry seminar in London in the spring of 2019, date to be confirmed. A similar event will be held in Seattle. A copy of the Prize-winning paper is available here:

Urban Affairs Association Annual Conference in Toronto

Earlier this month, faculty members Gregg Colburn and Rebecca Walter presented at the Urban Affairs Association Annual Conference in Toronto. Below is an abstract of Gregg’s session on housing subsidies.

Session Title: Housing Subsidies: Housing Choice and Quality

Paper Title: Housing Market Conditions and the Housing Choice Voucher Program

Since the 1970s, housing vouchers have become the primary mode of federal housing support for low-income households in the U.S. The voucher program was designed to provide recipients with the choice and flexibility needed to secure higher quality housing in neighborhoods with lower levels of segregation and poverty. Decades of analysis suggest that the housing outcomes of program beneficiaries have failed to produce the favorable outcomes envisioned by policymakers. To add to our understanding of the outcomes of this important federal program, this paper seeks to underscore the importance of context-dependent policy analysis. In particular, this study analyzes the impact of housing market conditions on the outcomes achieved by voucher recipients. Using neighborhood and housing outcome data from the American Housing Survey, and rental market vacancy data from the U.S. Census, I demonstrate the important role that market conditions play in program outcomes. The results from this study suggest that voucher recipients are successful at improving housing unit quality outcomes regardless of market conditions, but the ability to move to a better neighborhood is a function of market conditions. While voucher holders find improved housing and better neighborhoods in cities with higher vacancy rates, expensive coastal cities with low vacancy rates present a profound challenge for housing authorities and voucher recipients as they seek to administer and use vouchers in tight market conditions.

 

Lead with your heart

Runstad Center faculty member Deborah Scaramastra talks about the importance of using your heart when making job choices, read her Linkedin post.

Silhouette of George Washington statue, University of Washington, Seattle campus on November 20th, 2013. Photo by Katherine B. Turner
Silhouette of George Washington statue, University of Washington, Seattle campus on November 20th, 2013. Photo by Katherine B. Turner

Financial and macro-economic factors in global real estate markets

The last three decades have seen increased integration across global stock markets. New research from the Runstad Center of Real Estate Studies at the University of Washington has examined what factors drive international integration across public real estate markets. The research has implications for fund managers as increased integration can have a negative impact upon the diversification opportunities available across global real estate markets. The findings observe that whilst public real estate markets have become more inter-connected, both the level and increase in integration is less than that observed in stock markets generally.

The research, authored by Simon Stevenson, John and Rosalind Jacobi Family Professor of Real Estate and Director of the Runstad Center, also considers how financial and macro-economic factors impact the extent of co-movement across markets. The results highlight that those countries with heightened financial and trade openness and display monetary independence see increased integration. The stability of respective the foreign exchange rate also has a significant impact.

Financial market factors, both specific to public real estate as well as the broader stock market, are also important. The paper finds that increased integration is observed in countries with larger stock markets, which are themselves more integrated with the global market, whilst the size of the public real estate market also plays an role. Specifically, public real estate markets that constitute a larger proportion of the overall domestic stock market, also tend to display increased integration. Factors such as volatility and trading volume in public real estate stocks are also important elements.

The paper, “Macroeconomic and Financial Determinants of Co-Movement across Global Real Estate Security Markets” is published in the latest issue of the Journal of Real Estate Research, the primary publication of the American Real Estate Society.

Faculty Search

The University of Washington’s Department of Urban Design and Planning and the Runstad Center for Real Estate Studies are seeking applicants for two Assistant Professor positions and one Associate Professor position for the MS in Real Estate.

The appointments will be on a 9-month (100% FTE) basis with salary commensurate with qualifications and experience. Qualified candidates will hold a doctoral degree or foreign equivalent in a related field with expertise in at least one of the following areas; housing, real estate development, real estate finance and investment or corporate real estate and possess a record that demonstrates promise as a researcher and scholar.

Candidates for the Assistant Professor positions should be prepared to teach real estate courses at both the undergraduate and graduate levels. Expertise in affordable housing and housing policy would be viewed favorably for the Associate Professor position. Follow the links below for full descriptions as well as application instructions.

Real Estate Associate Professor

Real Estate Assistant Professor

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

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