MIT Reports to the President 1999–2000
The Center for Real Estate (MIT/CRE) was founded in 1984. The mission of the center is to improve the quality of the built environment through education and research and by facilitating communication among members of the real estate industry worldwide. To this end, it carries out research and teaching programs in the field of real estate development, investment, and management. It also provides a forum for the exchange of information and the discussion of issues by real estate professionals from around the world. The center’s principal activities include an 11-month professional degree program leading to a Master of Science in Real Estate Development and a research agenda of issues relating to the planning, development and management of real estate, including its financial performance.
Thirty members of the Class of 1999, the fifteenth class of MSRED graduates received their SM degrees in Real Estate Development in October, 1999. Three more students completed their requirements and received their degrees in either February or June of 2000 and a fourth student is expected to complete his thesis and graduate in September with the Class of 2000. The 35 members of the incoming Class of 2001, which includes four joint degree candidates, were selected in March from an applicant pool which was strong though somewhat smaller than last year's. The new class of four women and 31 men includes 11 international students. Ten incoming students already hold advanced degrees in business, architecture, civil engineering, planning or construction management.
The center is fully supporting one ongoing Ph.D. candidate jointly in the Departments of Economics and Urban Studies and Planning.
There were no major changes to core courses this year, though course content continues to evolve as the real estate industry changes, particularly in the area of finance and real estate capital markets. A program requirement for MSRED candidates, finance theory, previously taught in a single term, is now taught as a two-term course beginning with Course 15.401, Finance Theory I.
Center faculty are engaged in a number of research projects. Professor of Economics William C. Wheaton is analyzing the relationship between regional wages and urban agglomeration. Timothy J. Riddiough, newly tenured Associate Professor in the Department of Urban Studies and Planning, is doing a study for HUD on how informational advantage by Fannie Mae and Freddie Mac affect the cost and availability of mortgage finance for consumers. He is also studying the demand for commercial real estate, focusing on the determinants of asset prices, particularly the feedback between supply and demand, as well as non-standard risk effects. Henry Pollakowski, visiting scholar in the Department of Urban Studies and Planning, is concluding a study of the Bermuda housing market for the Bermuda Housing Corporation. He is also engaged in building a simulation model, jointly with the Center for Urban Land Economics Research at the University of Wisconsin, which projects state sales tax losses stemming from internet retail growth. This research is supported by the International Council of Shopping Centers.
Professor Riddiough published some of his recent work on the commercial mortgage-backed securities market as a working paper entitled "Forces Changing Real Estate for at Least a Little While: Market Structure and Growth Prospects of the Conduit-CMBS Market." That study analyzes the structure and economics of the conduit-CMBS market and assesses its potential for short and long-term growth.
For a fourth year, the center hosted visiting scholar, Henry Pollakowski, housing economist and editor of the Journal of Housing Economics.
The fifteenth summer of professional development courses brought 452 attendees to campus in June and July of 1999, a 16% percent decrease from the previous summer's record high attendance. Attendees enrolled in nine courses, including one new course, an "Introduction to Portfolio and Asset Management," which was very well received. Enrollment in the center’s 2000 Summer Institute courses was running well below 1999 figures at the end of June. There were two new courses in 2000: one on green development taught by William Browning ’91, an MSRED alumnus, and one on structuring complex transactions taught by Columbia Professor Lynne Sagalyn, who formerly taught at MIT.
Income from membership remained steady as the center closed the year with 91 supporting members (including seven international members). This represents a net gain of 12 over the previous year, however many of the new members were designated as a result of their contributions to the Alumni Fund. The center added seven new members in the regular way and lost the same number in 1999—2000. In addition to annual fees, many members supported the center in non-financial ways by providing case study sites, lecturing in class, and supporting student thesis work. For a fourth year, Robert Danziger, retired Chairman of member firm Northland Investment, organized and led the well-received Real Deals speaker series.
The 15th anniversary of the center’s founding was marked by a September symposium, "Real Estate in a Global Economy," which was attended by more than 300 alumni, members, and friends. It featured economist and Visiting Professor Roger Brinner, and Epoch Foundation Professor of Management, Donald Lessard speaking on hot economies and hot money. They were complemented by a number of distinguished speakers from the center's member firms in the real estate industry, including James Didion, Chairman of CB Richard Ellis; Bernard Winograd, CEO of Prudential Real Estate Investors; and Richard Clarke, CEO of Lend Lease Development, US. The symposium was followed by a dinner for members at which the center recognized two alumni. David Marvin ’94 received the Spaulding Award for his pioneering hotel project in downtown Atlanta, and Erin O'Boyle ’85 was commended for her effective leadership of the Alumni Fund Drive.
The center also hosted a lively and well-attended members meeting in May for corporate supporters, current students, and faculty. The topic of the meeting was the impact of e-business on the real estate services industry. The dinner speaker, William Mitchell, Dean of the School of Architecture and Planning, set the scene with his presentation "Urban Patterns and Cyberspace." The following morning a group of e-business entrepreneurs presented their business plans while a panel of academics, including Professor William C. Wheaton and Visiting Associate Professor James Short, and industry representatives commented on the presentations.
In connection with the 15th anniversary, alumni of the MSRED program raised a total of $668,756 with their participation reaching 66%. Another $70,000 was pledged to be paid over the next two years. The funds were used to establish the "MIT/CRE Alumni Fund for Excellence in Education" which will be used for scholarships, special projects, and funding for Ph.D. students and visiting faculty.
To celebrate their efforts, the alumni held a "Gala Event" in October which was attended by several hundred alumni and spouses along with faculty and staff. Chancellor Lawrence S. Bacow, the center's first Director of Education and a long-time teacher, mentor and friend to alumni was recognized for his many contributions to the center.
Chairman Blake Eagle, Director, Professor William Wheaton and Associate Director, Marion Cunningham continued in their posts this year. Blake Eagle will be leaving in December after seven years at MIT. A search for his successor is under way and an announcement is expected in the fall.
The renovation of the Blakeley Lecture Hall was substantially complete by the time classes started in the fall; however, the new computer projection system was not fully operational until the start of spring term. The work was paid for from the center’s accumulated operating surplus and from the Alumni Fund for Excellence in Education.
Information about center programs is published on the web at http://web.mit.edu/cre/www/. This is also the primary source of inquiries by the public about the MSRED program, professional development courses, and working papers. Additions to the site this year include an expanded alumni page listing the Alumni Association of the Center for Real Estate (AACRE) directors and events, and an online update form for alumni addresses and news.
William C. Wheaton
MIT Reports to the President 1999–2000