Center for Real Estate
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 teaching and research 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 (MSRED) and a research agenda of issues relating to the planning, development and management of real estate, including its financial performance.
Twenty-eight members of the Class of 2001, the seventeenth class of MSRED graduates, received their SM degrees in real estate development in September 2001. Three members of the class had completed their requirements and received their degrees earlier, in either February or June of 2001, and two others will receive degrees upon completion of their academic requirements. The 32 members of the incoming Class of 2003, which includes five joint degree candidates, were selected in April from an applicant pool that was both strong and the largest in several years. The new class of eight women and 24 men includes seven international students. Two incoming students already hold advanced degrees in architectural studies and city planning.
The center is fully supporting one ongoing PhD candidate jointly in the Departments of Economics and Urban Studies and Planning.
The 28 members of the MSRED Class of 2002 had several new course options in 2001–2002. The subject 15.941 Managing in the Real Estate Industry was dropped as a core course. Instead, students could satisfy the management requirement through offerings in the Department of Civil and Environmental Engineering and the Sloan School of Management. A new real estate-focused management seminar 11.945/15.922 Beyond the Number: Managing Successful Deals was offered by Gloria Schuck, lecturer in the Department of Urban Studies and Planning. The subjects 11.431J Real Estate Finance and Investment, and 11.432.J Real Estate Capital Markets were not offered in 2001–2002 while Associate Professor Timothy J. Riddiough, in the Department of Urban Studies and Planning, was on sabbatical. They will be offered again in 2002–2003. Instead, MSRED students took both 15.401 Finance Theory I, and 15.402 Finance Theory II, as well as a new two-term seminar, 11.921/11.922 Real Estate Finance, designed to complement the finance theory courses.
Associate Professor Riddiough accepted a position at the University of Wisconsin. A faculty search during spring term led to the hiring of David Geltner, recently a professor of real estate at the University of Cincinnati. He earned his PhD at MIT in 1989. He is expected to teach the courses previously taught by Riddiough.
Center faculty are engaged in a number of research projects. Professor of Economics William C. Wheaton has been researching the causes and consequences of the spatial dispersion of jobs in cities throughout the world. His model explaining the process through which wages for identical workers vary by where they work is described in a working paper. Professor Wheaton is also working on several papers studying the influence of metropolitan government structure on the performance of real estate markets. In a joint paper with Professor Bengte Evenson (Indiana), he argues that metropolitan areas with numerous small jurisdictions have a greater incentive to set aside land from development, which drives up the long-term price of housing. Henry Pollakowski, visiting scholar in the Department of Urban Studies and Planning, is continuing work on a model projecting state sales tax losses due to Internet retail sales. He has begun a follow-up to his study of the effects of rent decontrol in Cambridge and Brookline.
The center hosted visiting scholar Joo Hyun Cho, a real estate capital markets specialist, for this year and continued to host housing economist and editor of the Journal of Housing Economics Henry Pollakowski for a sixth year.
The seventeenth summer of professional development courses brought 453 attendees to campus in June and July of 2001, a substantial increase from the previous summer's attendance. Attendees enrolled in eight courses, including two new courses, "Innovations in Real Estate Finance," taught by Associate Professor Riddiough and "Benchmarking: Real Estate Investment Management and Performance Measurement," taught by Professor David Geltner of the University of Cincinnati, both of which were very well received. A second section of the ever-popular "Fundamentals of Real Estate Finance" ran in late July and garnered a good enrollment simply by overflow from the first section and word of mouth. Professional development courses for the summer of 2002 include two new courses. Associate Professor Riddiough will teach a two-day course in "Commercial Real Estate Debt," and Sandra Lambert, lecturer in the Department of Urban Studies and Planning will present "Negotiation in the New Real Estate Context."
Income from membership declined as the center closed the year with 58 supporting members (including five international members). This represents a net loss of ten members from the previous year. Membership fees and benefits were restructured to provide an additional level of individual membership at a lower cost. It is expected that many MSRED alumni will find it more possible to join as individuals at that level. 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 sixth year, Robert Danziger, retired chairman of member firm Northland Investment, organized and led the well-received Real Deals speaker series.
The center hosted a lively meeting in November for corporate supporters, current students, faculty, and, for the first time, members of the public. The topic of the symposium was trends affecting the commercial brokerage sector of the industry, which has undergone rapid consolidation and globalization in the last five years. The dinner speaker was Andrew Farkas, chairman and CEO of the rapidly expanding Insignia Financial Group and a somewhat controversial figure in the industry. The following morning, the heads of leading brokerages, sitting as a panel moderated by University of Pennsylvania faculty member Terrence LaPier, wrestled with a series of topics including motivating and compensating employees, pricing services, the decline of entrepreneurship, and the recession and the future.
In May, the center's spring symposium, Smart Growth: What's Behind the Rhetoric?, attracted a larger group of attendees than usual. Parris Glendening, the governor of Maryland, a former university professor and long-time advocate of growth management, led off the meeting by explaining how his state has implemented incentives aimed at targeting growth to established areas and preventing sprawl. The program the following morning included many well-known advocates and critics of growth management, including Stuart Meck, principal investigator of the American Planning Association's Growing Smart project and Minnesota state senator Myron Orfield, an expert on the demographics and politics of the suburbs. Audience members took part vigorously in the discussion session following the presentations.
John T. Riordan, former president of the International Council of Shopping Centers, and well known in the real estate industry, officially assumed the chairmanship of the center in July 2001. The director, Professor William C. Wheaton, and Associate Director Marion Cunningham continued in their posts this year.
The refurbishing of the center's quarters continued with a face-lift of the student lounge and adjoining conference room. New carpet, paint and furniture created a warmer and fresher environment for students and visitors. The project was initiated by a gift from the Class of 2000 and benefited by continuing design leadership by members of that class. The center's web site is also in the midst of a redesign. The finished site should be ready by the middle of July 2002. The web remains the primary source of inquiries by the public about the MSRED program, professional development courses, and working papers.
More information about the Center for Real Estate can be found on the web at http://web.mit.edu/cre/.