Not everything about real estate development can be contained on a spreadsheet, as students in the Real Estate Investment and Market Analysis course learned this spring.
“Buildings, like any other enterprise, need to make money and they sink or swim on the developer’s mastery of core business disciplines,” says Professor Nancy Wallace, who co-teaches the BILD experiential learning course with Professor Dwight Jaffee. However, Wallace points out, “The ability to think creatively across those disciplines is also a must.”
One team of students applied creativity to a City of Berkeley plan to rejuvenate a Telegraph Ave. site adjacent to People’s Park. Their plan: preserve a historic mural and bring affordable housing and a small grocery store to the neighborhood.
Another team, tapped to address Cal Performances’ desire for a new facility, ran the numbers and found that immediate shorter term options appeared to have greater paybacks. “It’s a very real-world outcome,” says Wallace, “to find that very large scale projects must be developed in stages."
“We then thought we could best help by drawing Cal Performances’ attention to their existing assets,” says Brad Wolfe, MBA 13. Noting the success Berkeley-Haas has had differentiating itself through culture, the team reframed their challenge and made recommendations to help Cal Performances expand revenue by more directly connecting to and leveraging Cal culture.
“Our approach was inspired by the Haas Defining Principle of Question the Status Quo,” says Wolfe. “We believe in the Haas Defining Principles and we also see their power as market differentiators.”
On the other side of the Bay, Cleya Ormiston, MBA 14, was on a team helping the San Francisco Public Utilities Commission determine highest and best use for a site in Millbrae. Ormiston chose Haas specifically for its Real Estate Program and this summer will be working at Met Life in the Real Estate Investment Group.
She says the team spoke with more than 80 people during the project, including Connie Moore, MBA 80, CEO of REIT giant BRE Properties, and Steve O’Connell, MBA 12, development manager with Grosvenor. “People really wanted to help us learn,” observes Ormiston.
That learning was critical because, as Wallace says, “Real estate may be about piles of dirt, but these piles of dirt require an understanding of supply and demand, of the tenant base, of sustainable rents, operating costs, and capital structure, as well as the marketing knowledge to attract the target constituency to a development. It’s a very serious-minded pursuit.”