Keeping It Flexible
AMB CEO and MIT Alumnus Hamid Moghadam '77 Keeps His Development Options Open
December 5, 2007
Hamid Moghadam's roots at MIT run deep. After he graduated with both SB and SM degrees in Civil Engineering, he went on to study business at Stanford, then co-founded the AMB Property Corporation, a leading global developer and owner of industrial real estate.
Though his work at AMB keeps him as busy as a Chairman of the Board and CEO should be, Hamid keeps his Institute connections very much alive. AMB is an important industry partner with the MIT Center for Real Estate. And Hamid's schedule stays flexible enough to ensure he can regularly present for Professor Gloria Schuck’s "Leadership in Real Estate" class (11.430J/15.941J). This year, via MIT/CRE's Learning from Leaders series, all area graduate students in real estate were able to benefit from Hamid's participation in the class. At an 8:00 a.m. breakfast talk on December 5th, he spoke candidly to Center students about his company's history and strategy.
Hamid cofounded AMB in 1983, and led the company through its initial public offering in 1997 (NYSE: AMB), "my toughest business decision," he admitted in a recent San Francisco Business Times article. Since then the company has become an industry powerhouse, with $13 billion of assets under management, $15.5 billion with committed capital, and a property portfolio of 137 million square feet in 44 markets in 15 countries, with 2800 customers. Most of AMB's facilities are located in port cities, and the company has a strong presence in Asia, Europe, and North America.
AMB's product is industrial – warehouses and distribution centers around the world. But while many companies focus on industrial properties, AMB specializes in a particular kind. "We have a unique strategy," Hamid shared recently in a nareit.com interview. "We focus on high throughput distribution properties, or properties built primarily for speed as opposed to storage. Geographically, we focus on large metropolitan areas and infill sub-markets in these areas. Other REITs own high throughput distribution properties, but none focuses solely on this segment."
Hamid expanded on the thought for MIT/CRE students, explaining that while AMB's products are industrial, the company thinks of them as "logistics facilities." This important distinction suggests a better alignment with – and understanding of – the business needs of the companies using the facilities. AMB customers are trying to manage their supply chain – get things from point A to point B as efficiently as possible. (Hamid noted, as an aside, that the two biggest modes of transportation for logistics are air and sea; but while more goods are moved by sea, the value of the items moved by air is greater.)
AMB places a great deal of importance on flexibility or "optionality" in real estate, and Hamid explained two different ways that his company approaches it. AMB makes spaces as flexible as possible, so that the needs of a variety of tenants can be served – "tenant optionality." But the company also considers "development optionality" – the impact of increased land value on AMB facilities. As the value of locations increases (due to logistics demand, for example), alternative uses with greater value become more viable, and therefore more attractive. AMB then has the option of selling and/or developing.
Hamid closed with two points related to flexibility in development. First, he said that most people prefer any type of use over industrial use, so an alternative development is almost always preferred to the existing one. Additionally, the green development movement is also an "anti sprawl" movement, which encourages more infill development. Because AMB specializes in infill, the company's sites have become more attractive.
Hamid has presented "leader to leader" talks every year for over 15 years in Professor Schuck's leadership classes. She expressed deep appreciation of him, both as a professional and as a human being. "It would be difficult – if not impossible – to find a more respected person in the real estate industry than Hamid," she said."Heis an inspirational role model for our students, and for most people who meet him. The heart of the leadership course is leaders like Hamid who share their time, their passion, their experiences and insights with us."
Recent speakers in MIT/CRE's Learning from Leaders series include Michael Topham, Executive Vice President–Europe/Middle East, Hines; Bryce Blair, Chairman and Chief Executive Officer, AvalonBay Communities; and Stephen Samuels, Principal, Samuels and Associates.
Hamid Moghadam is Chairman of the Board and Chief Executive Officer of AMB Property Corporation, a leading global developer and owner of industrial real estate. He cofounded AMB in 1983 and led the company through its initial public offering in 1997 (NYSE: AMB).
Mr. Moghadam has held a number of strategic roles within the real estate industry. He is the former Chairman of the National Association of Real Estate Investment Trusts (NAREIT) and the Real Estate Investment Trust Political Action Committee (REITPAC). He served as a director of Plum Creek Timber Company (NYSE: PCL) and was a founding member of the Real Estate Roundtable.
Mr. Moghadam is a Trustee of Stanford University, serves as a director of Stanford Management Company, and sits on the Stanford Graduate School of Business Advisory Council and its Campaign Steering Committee. As an active participant in the San Francisco Bay area community, he has served or currently is serving on various philanthropic and community boards including the California Academy of Sciences, Town School for Boys, and as Chairman of Young Presidents Organization's (YPO) Northern California Chapter.
He is a past winner of the Ernst & Young Entrepreneur of the Year, a recipient of the Ellis Island Medal of Honor, and has been named CEO of the Year on six different occasions by three separate industry publications. He also received NAREIT's Industry Leadership Award in 2005.
Mr. Moghadam received SB and SM degrees in engineering from Massachusetts Institute of Technology and an MBA from Stanford Graduate School of Business.