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Research Sponsors Meeting - Chicago A Research Sponsors Program meeting was held in Chicago on May 16th at the Standard Club. Research Sponsors, Executive Committee Members and their guests gathered to hear Professor Christopher Mayer, Associate Professor of Real Estate at The Wharton School present "Real Estate Cycles: What Does Research Tell Us about Property Pricing in Times Like These?" This is the second 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. After a welcome by Professor Joseph Gyourko, Martin Bucksbaum Professor of Real Estate and Finance and Director, Zell/Lurie Real Estate Center there followed a report on current research and a discussion of the future research agenda of the Zell/Lurie Real Estate Center. Professor Mayer then 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 new construction at this time remains in line with growth and demand. Credit has not been a large problem and price increases have been more restrained than in previous cycles. Baltimore, Boston, Houston and Denver are among only eight markets that have prices more than 15% above predicted prices, based on fundamental demands. The presentation was very well-received and engendered a most spirited discussion. 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:
Faculty:
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