Day 10 --- 8/12/10

Last day of class. We are set to discuss adaptive reuse, redevelopment, transportation, architecture and facilities management.

One article contends that the surface transportation system for the future must address the economic and demographic changes that have taken place over the past 50 years, and deal effectively with the changes expected for the next 50 years. The article highlights the impact of population growth on transportation systems. According to the article:

- as of June 2005, there were 12 “mega-metropolitan” areas of 5 million in population and above. These include New York, Los Angeles, Chicago, Washington, DC, San Francisco, Philadelphia, Boston, Detroit, Dallas, Miami, Houston, and Atlanta.

- there are also 53 metropolitan areas of one million and above. According to a 2004 study by the University of Pennsylvania School of Design, between 2000 and 2050 more than 70 percent of the nation’s population growth and 80 percent of its economic growth are expected to take place in metropolitan areas.

Such a dramatic growth in population is bound to bring about a heavy reliance in the existing infrastructure and the need for upgrading and expanding the transportation infrastructure.

Another article on redevelopment trends indicates a continuing shift in development toward urban neighborhoods in the United States, despite a slow real estate market.This trend shows that redevelopment continues in many urban neighborhoods. Taking advantage of opportunities to reuse land and to redevelop underused sites is a key smart growth strategy. It helps communities protect natural lands from being developed, strengthens the local economy, and puts new homes, stores, and jobs within easy reach of surrounding neighborhoods.

Some of the other topics discussed include the shift towards rail e.g the San Francisco high speed rail system and the Texas rail initiatives.

There was also a frequent reference to sustainability and its close relation with redevelopment and adaptive reuse. While sustainability is closely tied to adaptive reuse, such redevelopment activities can also be almost entirely devoid of sustainability.

Day 9 --- 8/05/10

Back to the discussions...

The main topics of discussion for the day were trends with respect to residential properties (Singlefamily and multifamily residential), appraisal and valuation, development and construction.

One of the articles I submitted states that U.S. home prices will begin a gradual recovery by next year, according to a survey of 92 economists and other housing analysts. The analysts surveyed by on average expect home prices, as measured by the S&P/Case-Shiller national index, to rise about 12% in the five years ending Dec. 31, 2014. As of Dec. 31, that index was down about 28% from its peak level in mid-2006. The article has also a contrasting point view in that excess inventories, including those from looming down and that much of the excess supply is in remote or economically depressed regions and so isn't relevant to most potential buyers, who will instead bid up prices in more desirable areas.

Another article countered this optimism stating that ominous shadow inventory of distressed properties hanging over the industry will lock home prices into a downward trajectory for the remainder of this year, with property values starting out 2011 even lower than they were in 2009. Market trends charted show that inventory levels are indeed moving higher and the influx of shadow inventory is beginning to show in the market.

Another topic discussed this evening included appraisal and valuation issues. One article argued that the financial regulatory reform bill signed into law recently could result in more accurate home valuations, higher appraisal costs, faster closings, more completed transactions and maybe even higher prices, according to critics of a controversial quasi-governmental regulation that the legislation eliminated.

Day 8 --- 7/29/10

Following on last week's event, we visited the Trinity River Vision Project in Fort Worth. We were given a presentation on the Trinity River Vision as it pertains to Fort Worth. The project involves three aspects: Trinity Uptown, Central City Project and Gateway Park.



Trinity Uptown:

- is predominantly private development following the improvements through the Central city Project.
- covers app 800 acres for approximately 10k homes and 3 mil sq ft of commercial space.
- expected to create app 16k permanent jobs.

Central City Project:

- primarily public improvement projects, environmental cleanup and flood protection.

Gateway Park:
- involves recreation improvements and ecosystem restoration.

Affordable housing is envisioned as public funds are being used,
- an estimated 6% will be affordable housing.

Other points:
- form based codes are used rather than the traditional building codes,
- federal funds are used for the project and, hence, the federal relocation act applies in dealing with relocation.
- The project uses market price as much as possible in dealing with relocating properties and condemnation is only a last resort rarely used.

Day 7 --- 7/22/10

We attended the ULI sponsored event regarding the Trinity River Project in Dallas.

The Trinity River Project:
- includes app 10k acres, 26 miles
- will be the largest park system in the US upon completion.
- attempts to address concerns and stigma...sell the vision.
- the 1908 flood was the point of disconnect with the river.
- attempts to maintain eco-balance

According to the project website, the Dallas Floodway Extension will provide environmental restoration and recreation to the Trinity River Corridor. This project will reduce the flooding risk for about 12,500 structures in downtown Dallas and the densely populated areas along the southern corridor.

Wetlands construction will also improve floodwater conveyance and benefit wildlife. When completed, seven wetland cells will make up the 170-acre Chain of Wetlands extending four miles from Cedar Creek to Loop 12. Various plant species will be introduced to provide habitat for waterfowl, fish and other wildlife.

Some of the projects aspects include:

The I-30 Bridge:

Trinity Trails

Day 6 --- 7/15/10

We started the class with a discussion on the recent financial sector reform regulations. Our discussion centered around the the reform that will mark the end of more than a generation in which the prevailing posture of government toward the financial industry was largely one of hands-off admiration, evidenced by steady deregulation.

We then discussed the increasing pace of price reductions by home sellers. It appears sellers, including banks (OREOs) are being forced to expedite selling by the perceived flat and 'stabilized' nature of prices. In some instances, local governments are putting pressure on banks to maintain or at least prevent properties from dropping to dire states.

I submitted three articles for this week's discussion. The first article was about the relative importance of stocks as the choice investment tools. The article contends that stocks may be the way to go even with a forecast of modest economic growth and a lack of clarity about whether the federal government will create more regulations. According to the article, a lot of businesses are delaying hiring and expansion plans. Many consumers are holding off on making purchases and government stimulus spending is winding down. Last year, it was mostly margin improvement that drove the earnings of American companies. This year, the best companies are starting to show substantial revenue gains, and that is expected to continue through 2010 but slow by mid-2011. As a result, such conditions favor companies with access to capital, low debt, low-cost production, market leadership and experienced, innovative management teams.

The second article I submitted deals with the importance of emerging markets for the global economic growth, particularly since the developed markets are not expected to grow at a rate exceeding 3% in the near future. According to the article, reflecting much higher productivity and population growth, the economies of the developing world are expected to grow by about 6 percent in all three years, while high-income country growth is limited to 2.3 percent in 2010 and 2.4 and 2.7 percent in 2011 and 2012 respectively. Because of these large growth differentials, developing countries will be a major source of global growth. Nearly half of the increase in global demand in each of 2010 through 2012 will come from developing countries.

The third article I submitted was an outlook towards the lending industry trends as of the end of last year. The article contends that 2010-11 will largely show greatly increased regulatory oversight that will restrict lenders; an era of much lower risk-taking by traditional lenders has begun, and risk capital remains difficult to obtain; the creation of higher-risk loans and investments will be taken over to a large extent by hedge funds and private equity; alternative sources will be used to a growing degree by small businesses and consumers unable to get loans elsewhere including peer-to-peer lending, use of “Angel investors,” wealthy individuals who make investments in small firms, are filling the capital needs of small companies and start ups; a lengthy and expensive process of write-downs by lenders will continue into 2010 and 2011, particularly in credit card and commercial real estate loans.

Other articles we discussed include the looming prospect of commercial real estate backed loans as a great deal of these loans will mature starting this year. It is estimated that a total of about $1.4 trillion in commercial real estate loans will mature between 2010 and 2014, about $300 billion of which is expected to mature in 2011. This is expected to aggravate the default rate on these loans, especially since property values have already declines by as much as 40% from their pre-downturn (2007) level.

We also discussed the increasing complexity involved in workouts including the major restructuring areas, impact of workouts, potential tax consequences etc.

Day 5 --- 7/8/10

Today's discussions are related to the hospitality, travel, resort and international property markets.

We started our discussion with a discussion on the general hospitality market trend. We discussed about how the industry reacted to the recession and the impact of the recession on the travel behavior. We specifically discussed on the short term and potential long term behavioral changes on the part of travellers as a result of the economic downturn.

We then discussed one of the articles I submitted on the status of the Chinese real estate sector. The article particularly measures the degree of growth in the Chinese real estate market with reference to the growth in GDP and the impact of the domestic market growth in the overall GDP growth.
The article mentions that the Chinese economy has recovered quickly. It asserts that the early government intervention and lower levels of debt compared to its western counterparts helped it to weather the financial storm better than most. The article also mentions that the current upswing is resulting in unprecedented liquidity easing after the global financial crisis and so there are some recent housing market developments that appear symptomatic of a bubble. The article describes that sales have nearly doubled over the past year, housing credit has increased sharply, and the price of houses in the secondary market has accelerated rapidly. Yet from an affordability standpoint, property prices appear expensive and seem to have factored in a certain amount of future income growth.

The article concludes that there are enormous opportunities for investing in China’s long term growth and resurgence as the emphasis changes from growth speed to growth quality.

...

The second article I submitted was an analysis of a survey done towards the end of last year. The analysis was done based on responses of more than 260 hotel and restaurant executives and focuses on the industry trends for 2010.

The results were summarized in five major topics:

a) most important initiatives

- main focus was expected to be on increasing core revenue and finding new revenue sources. Increasing efficiency and streamlining operations was another important initiative mentioned in the responses, indicating that the industry was on its way to rebounding.

b) recovery vs. recession

- nearly half of the respondents said they were starting to see signs of a turn-around but were proceeding with caution.

c) customer engagement efforts

- most operators were targeting new customer segments beyond their traditional focus followed by adding value to attract new customers.

d) reaction to social trends, and

- nearly half of the survey participants identify social networking as a top company initiative in the year ahead. From Facebook to Twitter, and everything in between, hospitality companies are tapping into social networking at growing rates to build brand loyalty and to keep their fingers on the pulse of consumer discussions. What's more, an arsenal of apps, plug-ins and analytic tools are available that make it even easier for businesses to track and drill-down into user data.

e) IT budgets for 2010.

- Most of the respondents expected some reduction in IT budget as part of the streamlining efforts.

We also discussed other articles submitted. Some of the other topics we covered included:

- a contrasting outlook towards the status of the Chinese economy;

- travl trends,

Day 4 --- 7/1/10

So much for improving on my late arrival...

I joined the class in the middle of a discussion about low income housing needs especially the 'social obligation' aspect of it.

Is low income housing an 'obligation'...if a developer or local government decides to revitalize a specific area for varying reasons like crime reduction, tax base boosting, strategic changes etc, should they also be responsible for relocating the existing constituents? I, for one, am strongly in favor of forcing such decision makers to bear the consequences of their choices... If the local government or the developer chooses to develop an area, then they must be forced to provide an alternative location to the existing dwellers even if the reason for the relocation is a 'social good' like behavior alteration like crime reduction.

Other articles we discussed focused on the topics of industrial markets, tax and government trends.

On industrial markets:

most people agree that the current signal from the sector in particular and the economy in general is mixed. There are signs of recovery from the deep recession although these signs are erratic in many cases and are yet to be proven stable and lasting.

On taxes:

I submitted an article regarding the philosophical base of taxation. The article mainly revolves around the dilemma as to why earned income is taxed at a much higher rate than investment income (like dividends and capital gains) and inheritances (estate tax). While there will always be a segment approach to any government policy including tax policies, that fact that income earned through hard work (like 16 hours a day, two or three jobs, six or even seven days a week) is taxed at a rate higher than investment income seems hard to conceive.

On government trends:

I also submitted an article on the government technology trends. The article is a continuation of our previous discussion on cloud computing and social networking. We discussed about how some municipalities are utilizing social networking like facebook, twitter and YouTube in order to bolster citizen participation in governance.

We also discussed the canadian economy and its focus on banking regulations. We discussed how the relatively stricter banking regulatory framework helped ease the impact of the financial meltdown that 'haunted' the global economy.

Another interesting topic we discussed was a proposed commercial rent tax in San Fransisco.

Day 3 --- 6/25/10

Another interactive class has already started... but I'm improving on my arrival.

Major topics of discussion for the day:

- Retail markets
- Technology
- WWW
- Social networking
- Software trends and issues

We discussed the articles we all contributed for the class. I contributed the first two articles for discussion.

The first article was about Internet marketing trends. I briefly mentioned the reason why I chose the article for discussion. I felt this article was reflective of how important Internet marketing has become in real estate. The article explains how important managing the digital footprint of businesses. Effective Internet marketing requires proper management of the online digital presence.

The ever expanding use of social media and mobile marketing is also another indicator of how internet marketing is evolving. Geomarketing (targeting marketing efforts to local searches) and video blogging (Vlogs) are also shaping the trend of internet marketing.

The second article was about network security issues and trends in network threats. Having seen how important online presence is in the real estate business and taking in to consideration that fact that web based applications are gaining traction in replacing individual computer applications, it is equally important to focus on the emerging network related threats.

New threats are increasingly targeting networks mainly through Non-vulnerability Based Attacks (NBA... silly me...I thought NBA meant nothing without Kobe somehow in the mix...). The article discusses Web Application Firewall (WAF) that compliments the traditional individual computer protection tools to deal with NBA ad other emerging threats.

The other articles dealt with topics including the mall vs lifestyle center issues...

Day 2 --- 6/17/10

Once again the road got the best of me...perhaps it's train time...

I joined the class in the middle of a discussion about building design concepts. Per the whole building design concept, proper design can:
- improve productivity - difference in open vs closed working areas, ease of access to natural light etc...
- improve health;
- promote greater flexibility of use - thus reducing impact of tenant improvement costs upon tenant replacement, and
- save costs.

* Regional malls vs the return of urban spread retail structures, lifestyle centers and community town centers.

Regional malls are increasingly giving way for smaller community town centers, lifestyle centers and small urban retail structures. The current market condition, the growing challenges of finding and/or retaining anchors as well as in-line retailers in regional malls potentially indicates the heydays of the 'big boxes' may be over.

I think regional malls are still major players mainly because youngsters prefer them. The future for such structures may not be as appealing as the past but the current demographic 'fans' trendy nature of consumers

*LEED Certification:
Typical reasons for large businesses green initiatives:
- marketing tool; and
- potential for cost savings.

* Growth in production of green products - like solar panel productions in China.

- The growth, particularly in china, is linked to the growing environmental problems in China such as smog, pollution, contamination and increasing frequency of adverse weather conditions.

* Role of government in guiding the behavioral change required for the success of green initiatives:
- potential impact of mandatory requirements for green initiatives, especially those with lesser cost impact and objectively verifiable benefits e.g low-e glasses:

Day 1 --- 6/10/10

Class started! I arrived a bit late...as usual traffic was brutal.

Major topics discussed include:
- Sustainability (underground warehouse facility - Subtropolis - and LEED platinum Bldg - BOA Tower in NY)
- Adaptive reuse of old structures and unused office space
- Educational trends - the growth and impact of online learning,
- Employment trends - the points of sale to employers... what do employers seek???

We kicked off the class with a video about an underground warehouse facility called Subtropolis. This structure is about 800k s.f of underground warehouse structure converted from an old mining facility. This facility incorporates low lease rates without compromising on low energy costs and constant air and humidity levels.

Some of the benefits of Subtropolis mentioned include:

-Low lease rates — 30-50% less than above ground facilities
-Low utility costs — 50-70% savings in total energy costs
-Constant temperature and humidity levels — protect your products and make your employees more productive
-Maximum flexibility — for expansion and seasonal surges
-On-site services — management, maintenance and 24/7 security so you can run your business, not your building
-Sustainability — you're more sustainable without the upfront costs

We also discussed the trends in adaptive reuse of existing structures. We mainly focused on:
- the market rationale for adaptive reuse,
- social impact of such approach to revitalizing particularly abandoned structures - especially impact on local governments

The next topic of discusssion was educational trends. We mainly discussed:

- online learning and its growth as an alternative to traditional educational methods;
- potential adaptive reuse concerns for existing physical facilities especially in higher learning centers.