MIT Reports to the President 1995-96


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.

In addition to its usual education, research, and membership activities, this year the center published the first issue of its new, newsletter-format Research Report containing abstracts and articles about faculty and student research. The Research Report which is edited by center Director William C. Wheaton, Professor in the Departments of Economics and Urban Studies and Planning, is scheduled to be published twice a year alternately with the center's newsletter, and mailed to alumni, supporting members, and more than 10,000 real estate professionals worldwide.


Twenty-two members of the eleventh class of MIT/CRE graduates received their SM degrees in Real Estate Development in September, 1995. Eight more students received degrees in February or June 1996. The 36 members of the incoming Class of 1997, which includes four joint degree candidates, were selected from a strong applicant pool in March. The new class of four women and 32 men includes eight international students and 11 students who already hold advanced degrees in other disciplines.

The center revised two core courses to reflect changes in the real estate industry. Course 15.941 Managing the Real Estate Company taught by Gloria Schuck, Lecturer in the Department of Urban Studies and Planning, was expanded by the addition of segments on negotiation and team building, taught by Sandra Lambert, who is also a Lecturer in the Department of Urban Studies and Planning. A new course, 4.453, Building Technology in Real Estate Decision Making, taught by Leonard J. Morse-Fortier, Assistant Professor in the Department of Architecture, is the successor to 1.413 Construction Technology and the Building Construction Process. It focuses on evaluating existing structures and building systems rather than new construction.

Lisa Burke, a 1995 graduate of the MSRED program was awarded the Ralph Adams Cram Award by the School of Architecture for her thesis on mixed-use development. The thesis draws on several disciplines to provide new insight into the interactions between financing and design in large urban projects. William D. Browning, MSRED 1990, currently Director of Green Development Services at the Rocky Mountain Institute, was also honored. The center presented him with the Charles H. Spaulding award for outstanding professional achievement.


Sandra Lambert published a substantial report covering phase two of the "CRE 2000" project on the management of corporate real estate. CRE 2000 is sponsored by the Industrial Development Research Council and Foundation. The report's co-authors Jean Poteete and Alison Waltch are graduates of the MSRED program. The research is going forward with phase three studying how corporations and the service providers they engage are managing real estate globally.

Five scholars from the People's Republic of China visited the center in November to participate in a week-long workshop with an MIT research team of graduate students directed by Professor Wheaton. They are carrying out a comparative study of real estate market information systems in Beijing, Shanghai and the United States.

The center hosted a day-long focus group on changing practices and emerging challenges in the property management industry in November. Taking part were 20 senior executives from firms that provide or consume management services in commercial office buildings. A report on the session by Lecturer Lambert and Marc Louargand, specialist in asset management and former Lecturer in the Department of Urban Studies and Planning, is available from the center as a working paper.

The center published six working papers this year in addition to the one mentioned above. Two papers were authored by Assistant Professor Timothy J. Riddiough and concerned risks associated with securitized commercial real estate debt, and a review of the impacts of regulatory taking risk on land development. Professor Wheaton co-authored two studies of the cyclic behavior of real estate markets--the London commercial office market, and the US market for hotel space. He also modeled the effects of population density on land use in congested cities, and discussed the implications of the increasing use of communications technology for the real estate industry.


The center's professional education program included the 1996 Summer Institute of the Pension Real Estate Association (PREA) and the center's own professional development courses. The PREA Institute is a tightly focused professional education program which this year hosted 52 pension fund real estate investors and asset managers. Professors Wheaton and Riddiough were joined by three outside practitioners for a two-and-a-half-day program on real estate cycles.

The eleventh summer of professional development courses brought almost 400 attendees to campus in June and July of 1995, a thirty percent increase over the previous summer. A new advanced finance course on risk management presented by Assistant Professor Riddiough proved very popular, as did the other two finance courses which were filled to capacity. The increased demand for professional education in real estate finance held steady in 1996 as well. By the end of June, July finance courses were almost fully booked, as was a new course in due diligence focusing on building systems.


Income from membership held steady as the center closed the year with 87 supporting members (including 22 offshore members), a net loss of two over the previous year. With leadership from Blake Eagle, Chairman of the center, and Associate Director Patricia Brady, the center added ten new member firms in 1996. In addition to annual fees, many members supported the center in non-financial ways by providing case study sites, lecturing in classes and in the Lunchbox Lecture series and supporting student thesis work.

The center hosted two members' meetings. The November meeting on changing US demographics featured Professor of Management and Economics, Lester C. Thurow discussing potential impacts of the global redistribution of purchasing power. Frank Levy, Professor of Urban Economics in the Department of Urban Studies and Planning, described changes in US income distribution. Other speakers discussed various aspects of the changing population profile and their impacts on real estate. The November meeting introduced a one-day workshop format focusing on entertainment and recreation. Members heard presentations on a variety of types of entertainment and then broke into discussion groups to evaluate potential real estate opportunities. Among the speakers was MSRED alumnus Liam Thornton, '90 Senior Development Manager for Walt Disney Imagineering. Former center Director, Lawrence S. Bacow, Professor of Law and Environmental Policy in the Department of Urban Studies and Planning and Chair of the Faculty, closed the day with a passionate speech to the members on "The Future of the Research University, Why Should We Care?"


The leadership of the center remained consistent throughout the year and is expected to continue through the coming year.

William C. Wheaton

MIT Reports to the President 1995-96