Tuesday, November 30, 2010

Celebrate the holiday season with the WREAA

The holiday season has begun and Wisconsin Real Estate Alumni are celebrating with WREAA regional events.

The events are open to members. If you're not one already, please visit the WREAA website to find out how. The organization is open to alumni and friends of the Real Estate program at the Wisconsin School of Business.

Click to learn more and to RSVP. Bookmark the WREAA Community Calendar to keep up to date on all events and activities.

WREAA serves as a link between its members and the School, current students, and the real estate industry, organizing opportunities for networking and interaction for members and affiliates. Members contribute to the ongoing development of the Wisconsin Real Estate Program through WREAA's financial support at a departmental level, through its financial support of students, and through the organization of its nationwide network of alumni and affiliates who serve as "guardians" of the Program.

Wednesday, November 24, 2010

Global Power City Index 2010

Last month Wisconsin Real Estate, including a small group of our real estate MBA students, attended the Urban Land Institute's fall meeting in Washington, DC. I noticed recently that ULI has posted all of the presentations from the meeting online. It's a great way to go back and review sessions, catch up on ones you may have missed or even just get the benefit of the content if you weren't able to attend the show. With that as inspiration, I thought this would be a good time to share the viewpoints of one of our students who attended the meeting.

Second-year MBA Kan Zuo attended the “Global Power City Index -2010” session featuring the latest version of the Global Power City Index (GPCI) issued annually by the Institute for Urban Strategies at the Mori Memorial Foundation in Tokyo. His write-up follows:

This session in particular caught my attention because, as background, I've observed an interesting phenomenon in my native China along with its rapid economic development. Everyone in China is aware that their respective cities have changed much over the past several years, but they underestimate the development of other cities. All kinds of attempts to rank Chinese cities came about, and people sometimes fight fiercely when their cities are ranked lower than they expected.

The “Global Power City Index-2010” attempts to rank cities worldwide. It evaluated several indicators and calculated a combined score for each city. In its ranking, New York, London, Paris, and Tokyo were ranked from number one to number four respectively. The report on the research can be found here.

However, one of the difficulties in ranking cities is that cities are defined somewhat differently by different people. For example, in comparing Tokyo to U.S. cities, it is unclear whether Tokyo Metropolis (Tokyo-to) or the city of Tokyo (Tokyo-shi) should be considered. Creating a unified international definition of “city” is no easy task. This issue, if not handled well, could certainly weaken the value of any city ranking system.

It’s difficult to assess the value of such research and to interpret what the results mean. Even if we limit discussion to the “economy” indicator, the top ranked cities are all largest cities; does this mean these top ranked cities necessarily hold the best investment and employment opportunities? From our real world experiences, we can hardly conclude that this is the case. That being said, the presenters mentioned that the original motive of the research was to find out what features Japanese cities are lacking and make improvements accordingly. From that point of view, I would say that the research is a reasonable and worthwhile endeavor.

Kan Zuo is a second year MBA student in the James A. Graaskamp Center for Real Estate. Originally from China, he completed his undergraduate education at Beloit College in 2006 with a double major in Economics and Management and International Relations. As an undergraduate, he interned with the U.S. Senate Committee on Health, Education, Labor and Pensions. In his first year he participated in our on-going blog series Meet Our Current Students. You can read previous posts in the series here.

Monday, November 22, 2010

Rays of Research: Morris Davis

Last week, Morris A. Davis, associate professor of real estate and urban land economics at the Wisconsin School of Business, presented a summary of his ground-breaking research into the relationship between land and housing prices during the faculty seminar series: Rays of Research. As an often-cited expert on housing and its impact on the macro economy, his work on measuring and studying the determinants of land and housing prices is a particularly illuminating lens through which to look back at the housing crisis.


Click here to watch video of the presentation.


Rays of Research is an ongoing speaker series which presents the progress and innovations of the research done by Wisconsin School of Business faculty to other faculty members, staff, students and the community.

Other real estate faculty who have participated in this series include
Videos of these presentations are available through the links above.

Friday, November 19, 2010

Senior housing gets ready for a boom

The Graaskamp Center and the Wisconsin Real Estate Club were very glad to host executives from top senior housing and care real estate firms this week. The panel--including Ray Lewis, president of Ventas, Randy Richardson, president of Vi, and Ed Kenny, president of Life Care Services--was led by Robert Kramer, president of the National Investment Center for the Seniors Housing & Care Industry.

Their presentation to the club is available here. As you can see, the outlook is good for opportunities in a variety of senior housing types, driven by demographic trends. We look forward to watching developments in this sector.


MAPIC 2010: Retail developments in an uncertain world

Updated to post final version of presentation

To watch video of the presentation, click to visit the MAPIC website.

Thursday, November 18, 2010

Senior Housing/Care Symposium Tonight!

Alumni and friends of the Wisconsin Real Estate Program are invited to attend a special Real Estate Club meeting on tonight (Thursday, November 18) featuring a panel of four executives from top senior housing and care real estate firms. They will discuss the quickly changing and rapidly growing health care sector. You will learn how the Baby Boomers are already driving major changes in the product and how this combination of real estate and services is an explosive growth arena. Panelists include:

Randy Richardson, President, Vi
Ray Lewis, President, Ventas Healthcare Properties
Ed Kenny, President and CEO, Life Care Services
Robert G. Kramer, President, National Investment Center for the Seniors Housing & Care Industry

When: 6:30pm on Thursday, November 18th
Where: Pyle Center on 702 Langdon Street, Madison, WI
Attire: Business casual
RSVP: No RSVP necessary

Wednesday, November 10, 2010

MIPIM Asia 2010: Keywords redevelopment and sustainability

Wisconsin Real Estate is participating in MIPIM Asia 2010 this week in Hong Kong. In the first day of the conference, keywords that have already emerged are "redevelopment" and "sustainability."

Asia as a whole offers attractive investment opportunities and returns in a global economy still in recovery. Growing urban areas in China and other countries are ripe for redevelopment to meet the needs of the 21st century with an emphasis on green building techniques and "livability."

China remains the primary magnet for capital in the region with second tier cities commanding more attention as top tier cities heat up. Other markets also attracting interest include Vietnam, Singapore and Tokyo.

The U.S. economy has not been a top topic of conversation so far. However Nobel laureate in economics Professor Joseph Stiglitz is due to deliver a morning keynote address on Thursday on his thoughts on the U.S. and global economies and the outlook for recovery.

Wisconsin Real Estate is at the show conducting a survey of conference participants' investment targets and concerns and their opinions on investment prospects over the next 2-3 years. Results of the survey will be presented by Professor Francois Ortalo-Magne at the wrap-up keynote on Friday along with Nick Axford, CBRE Hong Kong.

Wednesday, November 3, 2010

Mark Olinger Talks About Madison's Plans for the Capitol East District

Join the Wisconsin Real Estate Alumni Association's Western Wisconsin Fall Program & Networking Event tomorrow night November 4th for a discussion of new directions in infrastructure investing.

Guest speaker Mark Olinger, Acting Director of Planning and Community and Economic Development for the City of Madison. Mark discussed the city of Madison's plans for the Capitol East District.

The event starts at 5:30 pm at the Brink Lounge in Madison.


The WREAA serves as a vital link between the university, students, the real estate market, and its membership. Membership in the Wisconsin Real Estate Alumni Association (WREAA) is open to all graduates of the University of Wisconsin Real Estate and Urban Land Economics Program and to individuals who are currently working in and share our passion for the industry and also share a strong interest in advancing the University of Wisconsin Real Estate Program.

If you're not already a member, becoming one is easy and the benefits are great! Learn how to join today!

Monday, November 1, 2010

Economics and elections

by Stephen Malpezzi, Professor and Lorin and Marjorie Tiefenthaler Distinguished Chair in Real Estate

One of the goals of my urban economics classes is to demonstrate how we can use economics, and data analysis, to understand a range of events in real estate markets, in cities, and in our society more broadly.

Tomorrow's midterm election provides us with a great set of teachable moments. I'm using the effect the economy can have on the election to illustrate some basic techniques of data analysis, critical thinking, and "storytelling;" and, as always, how "Reading for Life" can help us make sense of the world.

Today, I'd like to share just a few of these points, focusing less on the data analysis techniques and more on some interesting stylized facts and research results (mainly results from other people's research).

While much debate surrounds causes, timing, and attribution, the objective fact is that, by some measures, the economy is in the worst shape since the Depression. The next two figures show how two indicators, growth in GDP per capita and inflation, fared during the terms of the postwar presidents since Truman. (The data go back to 1947 and so the early part of Truman's term is omitted. The data run through Q2 of 2010, so the last few months of the Obama administration are also omitted). Let me start with two indicators that previous research has tied to electoral performance.FIGURE 1. President Obama, so far, has faced a lower growth rate of GDP per capita than any other postwar president. Of course, it's early days, and whatever our partisan leanings, we all hope for better performance in the next two years. Nevertheless, the anemic performance of GDP growth is a challenge for Democrats (who, of course, also control the House and the Senate, at least by the simple definitions of "control.")
FIGURE 2. On the other hand, Obama has held office during a period that's exhibited lower average inflation than we've seen during any other postwar President's term.

Are Presidents responsible for “their” economic averages?
A huge body of research argues the effects of economic policies (taxes, subsidies, deficits, regulations…) and Presidents (and other politicians) do affect these policies. However, the economy has a lot of inertia (lags) built in, and there is a lot of luck involved. (Luck, of course, can be good or bad.) Policies have their lags, too. The economy can react to the perception of future policies and uncertainty in the same. But fair, or not, there is a lot of evidence that election outcomes are affected by the performance of the economy, even over short periods.

Economist Ray Fair (Yale) has published several papers and a book about how to forecast U.S. elections according to the state of the economy. Recently he extended his work from Presidential elections (as in his book) to House elections, in “Presidential and Congressional Vote-Share Equations,” American Journal of Political Science, 53(1), January 2009, pp. 55-72

Ray Fair’s prediction of this week’s Congressional election
Fair’s model has three equations: for the Presidential vote, the “on-term” House vote, and the midterm House vote. The economic variables are derived mainly from growth in GDP per capita and inflation. Other variables include whether there is a Presidential election, and if there’s a war on. Fair’s latest forecast (10/29/10) is that the Democratic share of the House vote will be 49.2%, i.e. a razor-thin Republican majority. He doesn’t forecast Senate results.

What about unemployment?
Fair’s model shows the House vote as closer than most political pundits. The two main economic drivers in his model are GDP per capita growth and inflation. Current low inflation numbers are helping to keep it close. I think the other thing this model misses is our high unemployment and its extraordinary average duration. See the next two figures:


These are even worse than might be expected from our recent growth in GDP; see for example the analysis by the Federal Reserve Bank of San Francisco. High unemployment, and high duration, and how they are now driving foreclosures, are subjects my colleagues and I have discussed elsewhere.

Debate will continue on the efficacy of the policies of the Administration and Congress; between Republicans and Democrats; and the debate that’s always on within the parties.

Despite my PhD in economics, I’d never argue that elections are only about my favorite subject.

But objective data, and past research on elections, show that the state of the economy has an important effect on the electoral fortunes of the party in power. Fairly or not, economic conditions favor the Republicans this time around.


More "Reading for Life"