Past Issues

• 2009
• 2008
• 2007
• 2006
• 2005
• 2004
• 2003
• 2002
• 2001
• 2000
February 2001

Research Sponsors Meeting

The first Research Sponsors Program meeting of 2001 was held in New York City on January 16, at the Algonquin Hotel. Nineteen Research Sponsors and Executive Committee members gathered to hear Professor Edward Glaeser of Harvard, a Visiting Scholar at the Zell/Lurie Real Estate Center, discuss "The Future of Cities" and our own Professor Chris Mayer report his research on "The Real Estate Cycle and Office Prices". This is the first of a new type of program, with the goal of increasing interaction and discussion between faculty and Research Sponsors on research findings of high importance to the real estate industry.

Professor Edward Glaeser: "The Future of Cities"
Starting from a premise that an attraction of cities results from a desire to eliminate transport costs for goods, people and ideas, Professor Glaeser documented that the growth of cities no longer is so tightly linked to the demand by firms to locate near natural resources or other producers or consumers. He then highlighted his conclusion that the successful cities of the future will be 'consumer cities' that thrive because people want to live there and, increasingly, because firms desire to be near the higher skill labor forces that want to be in or near 'consumer cities'. Professor Glaeser also discussed the potential implications of new information technologies, and noted that his research has shown this factor can increase the demand for cities and face-to-face interactions. Following his presentation, there was a lively interchange with the informed and obviously interested audience.

Professor Chris Mayer: "The Real Estate Cycle and Office Prices"
Professor Chris Mayer then introduced his research on "The Real Estate Cycle and Office Prices," a topic near and dear to many in attendance. Professor Mayer began his presentation by discussing the various theories of cycles - some of which involve credit constraints, others supply side shocks, and yet others demand side effects. He then presented the results of a model of office markets in which some consistently exhibited "excess volatility". Markets with excess volatility had prices that increased more than were predicted by fundamentals in good times and had prices that decreased more than were predicted by fundamentals in bad times. Professor Mayer concluded that most office markets remained in equilibrium at this late point in the cycle. However, there were a few large, primarily coastal markets in which current values were above prices justified solely by underlying fundamentals. Investment risk is greatest in these markets. The ensuing discussion focused on conditions in those markets and on the issue of whether the rise of the REIT market will make pricing more efficient and reduce investment risk over the cycle.

The meeting concluded with a discussion among the Research Sponsors about issues of importance to the real estate industry on which the Zell/Lurie Real Estate Center might be able to produce valuable research.

Those in attendance:

    Members
    Tracey Appelbaum, AvalonBay
    Monroe Carell, Jr., Central Parking
    Michael Fascitelli, Vornado
    Lizanne Galbreath, Galbreath and Company
    Paul Griesmer, E & Y Kenneth Leventhal
    Andrew Jonas, Goldman Sachs
    Jeffrey Kaplan, Cohen & Steers
    Steven Karpf, Fremont Group
    Michael Kercheval, International Council of Shopping Centers
    Robert Lieber, Lehman Brothers
    William Mack, Apollo Real Estate Advisors
    John Maher, Trammell Crow Corporation
    Robert Pfeiffer, GE Capital
    Donald Siskind, Rosenman & Colin
    David Solis-Cohen, Lend Lease Real Estate Investment, Inc
    Greg Susick, Central Parking System
    Myles Tannenbaum, Arbor Enterprises
    Michael Topham, Hines
    Jerry Wilkinson, The Wilkinson Group

    Faculty
    Edward Glaeser
    Joseph Gyourko
    Marja Hoek-Smit
    Chris Mayer
    Georgette Poindexter
Wharton