CRER Vol. 08 (2010)

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    The 2009 Cornell Real Estate Conference Highlights
    The 27th annual Cornell Real Estate Conference was held on September 24 and 25, 2009 in New York City featuring key note speaker Wes Edens, Founder and Co-Chair of Fortress Investment Group.
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    Alternatives to Golf Course Developments in an Environmentally Sensitive Market
    Grooms, Tyler (2010-07-01)
    Developers usually seek to maximize their land’s value. Amenities are often used to accomplish this purpose. One of the most popular amenities of the past half century has been the golf course and the integrated golf course development. Today, however, U.S. golf course developments are overbuilt and represent, to some, a tired model for development-supported amenities. Furthermore, trends in sustainability have led to the creation of denser and less impactful developments, in contrast to the typical sprawling and ecologically impactful golf developments. These trends have forced developers to consider alternative amenities for driving land values and sales pace. Amenities, such as open space preserves, organic farms, urban parks and community centers, create unique centerpieces for new developments and in many cases represent a better value proposal than traditional golf developments. However, in markets where golf courses are not overbuilt and strong demand exists, unique implementations can both satiate golf demand and provide an environmentally functional purpose for the development to placate shareholders and stakeholders alike.
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    Sun Arrow Apartments: Investment Analysis of an Apartment Complex Acquisition
    Hagedorn, Randy (2010-07-01)
    The Sun Arrow Apartments Case Study focuses on the evaluation of an investment opportunity for a 275-unit apartment complex in the El Paso, Texas market. After taking Sun Arrow out of bankruptcy, Frank Markowitz of Fannie Mae informs the case study’s protagonist, Geoff Grayson, that he has thirty days to complete the acquisition of Sun Arrow. Grayson’s task is twofold. First, Grayson must determine how to get the funds necessary to quickly close Sun Arrow. Second, Grayson must assess his risk tolerance because various market and property risks exist in connection with any Sun Arrow acquisition. The Sun Arrow case study assists students with critical thinking skills vital to the real estate acquisitions decision-making process and provides opportunities to consider quantitative and qualitative issues in real estate acquisitions.
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    Miscellaneous Frontmatter
    Editorial Board, Cornell Real Estate Review (2010-07-01)
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    Industry Leader Profile: Art Gensler
    Editorial Board, Cornell Real Estate Review; Gensler, Art (2010-07-01)
    Gensler is a global architecture, design, planning and consulting firm with more than 2,000 professionals across 33 locations. Gensler is a multiple winner of the Business Week/Architectural Record Awards, the U.S. benchmark for business design innovation. Art Gensler founded the firm in 1965. An architect, he is widely credited with elevating the practice of interior design to professional standing. He is a Fellow of the American Institute of Architects and of the International Interior Design Association, and a professional member of the Royal Institute of British Architects. He graduated from Cornell University's College of Architecture, Art and Planning and is a memeber of its Advisoty Council. A charter member of Interior Design magazine's Hall of Fame and a recipient of IIDA's Star Award, he has also received Ernst & Young LLP's Lifetime Achievement Award and the Cornell Entrepreneur of the Year Award.
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    Information – The Key to the Real Estate Development Process
    Bulloch, Ben; Sullivan, John (2010-07-01)
    Information generation and sharing is an integral part of the real estate development process, but can this information flow be effectively modeled? Is there a simple yet informationally-rich methodology to detail and understand how it is shared between parties in a complex development process? Because the process is unpredictable, many developers fail to plan accordingly, relying on their past experiences or ability to solve problems as they arise. Practitioners who do attempt to model the development process typically use scheduling and project management software to list out the necessary tasks that occur. While these tools work well when tasks are done in sequence, they are incapable of showing the rework and iteration that occurs as ideas are refined in response to new and unpredictable information. As activities in the development process are completed, other tasks need to be revised and updated. It’s a process that is constantly evolving. The Design Structure Matrix (DSM) is a tool that can help us understand and model this iterative process. The DSM has been used successfully in numerous other product development industries (i.e. aerospace, microchips, etc.) to enhance the understanding of information generation and flows. This paper demonstrates the applicability of DSM methodology to the real estate development process and the insights that can be gained from explicating information flows in complex, information-dense processes. Improved understanding of the process can reduce risk and improve project development efficiency.
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    Green Initiatives in the U.S. Lodging Industry
    Liu, Peng; Sanhaji, Zied (2010-07-01)
    Most hotels maintain resource-intensive operations in order to serve guests around the clock. Therefore, it is important to consider lodging properties with respect to environmental concerns. Though the public has become increasingly cognizant of the environmental impact of real estate in general, it has, for a long time, ignored the specific contributions of hotels to today’s environmental decay. However, a growing number of hoteliers realize that a shift in demand towards more sustainable practice has occurred, and the recent introduction of lodging properties to green rating systems testifies to this shift. The present study is intended to provide convincing evidence of the economic value of green certifications through the lens of the lodging industry.
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    Funk, David L. (2010-07-01)
    [Excerpt] The Cornell Real Estate Review (CRER) continues its tradition of providing faculty, real estate industry practitioners, and graduate students a conduit to share practice and applied research from all fields related to the profession.
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    Redefining Distressed Opportunities
    Thypin, Ben Carlos (2010-07-01)
    [Excerpt] As the commercial real estate (CRE) industry embarks on a new year and hopes to put the pain of 2009 behind it, industry players should keep in mind that much of the wreckage left in the wake of the world financial crisis remains unresolved and billions of dollars in looming CRE loan maturities further cloud the outlook. By the end of Q1 2010, nearly $222 billion worth of CRE was distressed, of which $27 billion had been resolved. At the beginning of 2009, many predicted that a flood of distressed assets would be coming to market and hundreds of billions of dollars were raised to target the supposedly imminent opportunities. However, most of these investors have found the inventory of distressed opportunities wanting. If all of these properties are still in trouble and investors are aching to deploy their capital, why aren’t more deals getting done? Will 2010 be the year when the levees break? This report seeks to answer both of these questions.