CRER Vol. 16 (2018)

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    Photo Credits
    Photo credits for Cornell Real Estate Review (2018), Volume 16, Issue 1.
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    Back Matter
    Back cover for Cornell Real Estate Review (2018), Volume 16, Issue 1.
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    Rental Housing in Bogota, Columbia: Challenges and Opportunities for Creating More Multifamily Properties
    Ruiz, Rafael Vivas (2018-05-04)
    This article examines the rental housing market in Bogotá, Colombia and the challenges in developing multifamily rental properties. A description of the factors that affect the development of this asset class is followed by recommendations to overcome the existing problems. Even though more than half of the population live in rental housing, there is almost no supply of rental housing projects at a large scale in Bogotá. Four reasons explain why this type of property has not been developed: (1) lack of financing; (2) laws that protect the tenants, making eviction a long and complex process; (3) market rents do not cover the cost of development; and (4) lack of firms capable of designing and operating rental housing projects. On the other hand, for sale housing projects have easier access to financing, can justify the high value of land, and gain the advantage of the mortgage system with governmental subsidies for mid to low-income segments.
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    Seoul Office Market: Occupancy Characteristics and Their Impact on Market Stability at a Global Level
    Ryu, Jongpil (2018-05-04)
    While other major cities in the global real estate market experienced a stiff downturn after the Global Financial Crisis in 2008, the Seoul office market remained very stable. Focusing on steady rent growth, this paper examines the characteristics of seventy-three office buildings in the city. The result shows three distinct features: (1) the office market, especially the manufacturing sector, is more diversified than that in other global cities, (2) the office space is chiefly occupied by local companies with a small number of foreign financial firms concentrated in the city center, and (3) Chaebols, the large family-based industrial conglomerates, constitute the most notable portion of major office buildings.
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    Steering Enterprise: How the Real Estate Community and Government Can Work Together to Modernize the Country's Maritime Infrastructure
    Trahan, Chris (2018-05-04)
    Industrial real estate in the U.S. is experiencing the one of the longest and strongest expansions on record. The expansion is being fueled by e-commerce companies such as Amazon, and the trend is likely to increase as retailers and logistics services focus on improving last mile delivery. Despite analysts’ optimistic forecasts for industrial real estate, however, U.S. state and federal policy makers have not adequately invested in the country’s maritime and intermodal infrastructure in preparation for either the increased traffic e-commerce has facilitated, or the expansion of the Panama Canal (Economist, 2013). Congress can aid the expansion by presenting a bill to the President that focuses on modernization and maintenance of maritime and intermodal infrastructure. The bill should modernize the country’s existing port facilities, invest in intermodal transportation, provide education for rural river ports to guide local harbor administrators to adopt economic development methods through promotion and advertisement of regional economic integration and competitiveness, and expand the number of ports that are capable to host “mega-ships.” This paper will outline why an initiative to modernize and maintain maritime and intermodal infrastructure is not only important to U.S. commerce and national security, but also essential to accommodating the needs of industrial real estate in the next decades.
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    Looking Beyond LEED: How the UN Sustainable Development Goals Can Provide an Alternative Framework for Sustainability in Hotels
    Behnke, Grant (2018-05-04)
    The Leadership in Energy and Environmental Design (LEED) certification program of the United States Green Building Council (USGBC) has been the path of many hotel industry professionals, particularly owners and real estate developers, wishing to demonstrate a commitment to environmental sustainability. LEED certification offers a framework for hotel industry stakeholders to pursue structurally and mechanically efficient buildings with eco-friendly components and unlock the accompanying financial benefits (USGBC, 2018). New evidence suggests, however, that LEED certification’s structure-centric, prescriptive scorecard may be misaligned with the day-to-day operational complexity of hotels (Behnke, 2017). In the wake of the United Nations’ call for more ambitious international goals to reduce global carbon emissions in the UN Emissions Gap Report 2017, hotels may find new opportunities for commingled financial, environmental, and societal benefits by leveraging their unique position in the built environment, reframing their sustainability efforts, and aligning with the United Nations Sustainable Development Goals (UN, “Sustainable Development Goals,” 2018).
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    Match Made in Heaven: Investment Benefits of Coworking Spaces in Historic Sacred Places
    Wright, Daniel (2018-05-04)
    Coworking has experienced exponential growth and established a global identity in the short period of a single decade. While the terms “coworking” and “shared work space” existed prior to the market collapse in 2008, their presence as an asset class and worldwide network had not developed fully. Philadelphia has seen firsthand the rapid expansion of coworking spaces with companies like WeWork and Benjamin’s Desk (1776) opening multiple locations with thousands of square feet in the space of a few years. These and other coworking companies continue to see growth with some seeking to expand into more suburban areas once a CBD flagship has been established. With growing membership and a need to be near members (either directly or through transit), where are the locations in Philadelphia where coworking companies should consider investing? As coworking demand increases, Philadelphia also has an increasing inventory of vacant historic sacred places—currently at thirty-nine buildings equaling approximately 500,000 square feet (Partners for Sacred Places, 2017). This paper will first define coworking and the coworker, give statistics on coworking growth, identify key real estate needs, and finally propose historic sacred places as an alternative for coworking expansion.
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    Multifamily REITs: Columbia's Opportunity to Attract Foreign Capital
    Brito, Juan (2018-05-04)
    The real estate market in Colombia has been very active during the past decade. Government spending through a free housing initiative and the stable and favorable political environment have incentivized capital flow into the country. All asset classes have benefited from the investments. Commercial real estate developments have taken advantage of this economic growth, but the residential market has been the strongest as an average of 230,000 units have been built and sold every year since 2013. Colombia still has room for residential expansion. Housing shortage is close to 4 million homes and it is estimated that 35% of the population are renters. This paper explores the history of the mortgage system, explains the current investment vehicles for real estate, and proposes an alternative to inject liquidity and stimulate housing production. The focus of the investments should be on operating the assets rather than selling them. The business model of building and renting out units has been overlooked in the country, with a potential rental market of 14 million people.
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    Sleepless Seattle Innovation: Demonstrating Recent Changes in Real Estate
    Trahan, Chris (2018-05-04)
    New ideas and untraditional perspectives can provide opportunity in unlikely places. This statement was in the Baker Program’s latest trip to the Seattle/ Tacoma area. The intent of the trip was to explore how technology merged with real estate can bring value to the world while disrupting traditional expectations. The site visits began with a visit to the NewCold storage facility.
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    35th Annual Real Estate Conference Recap
    Jain, Tiya; Mashian, Sean (2018-05-04)
    On October 13, 2017, the 35th Annual Cornell Real Estate Conference took place at the Pierre Hotel in Manhattan. Over 300 people attended the conference, including students, faculty, and industry professionals. The conference theme was “Mega Trends Impacting the Real Estate Industry.” The conference focused on how changes in how we live, work, shop and travel impact real estate.