glimpse into international & organized real estate industry

"Glimpse into Organized Real Estate Markets"

Presented by Norm Miller, PhD with help from Vivek Sah, PhD in behalf of

Sumant Kachru, MBA and the RSDS-11November 26th, 2011

What I will cover:

• A review of some of the non-profit trade associations that serve the professional real estate industry, noting that in the United States we have some over lapping and competing groups.

• A review of some of the private for-profit data vendors and a little illustration of what they provide.

• A willingness to answer any questions you may have on the global or US real estate industry as I see it or general economic trends.

Property Types

• Single Family (Mostly Owned)• Multi-family (Rental)• Office (Rented or Owned) often BTS• Industrial warehouses (mostly rentals) or

manufacturing (owned)• Retail – from 2 to 5 stores to large malls with

hundreds of tenants.• Hotels

Key Commercial Real Estate Organizations and Specialization

• AI, the Appraisal Institute, www.appraisalinstitute.org/

• NAR, National Association of REALTORS, www.realtor.org

• BOMA, Building Owners Management Association International, www.boma.org

• MBA, Mortgage Bankers Association, www.mba.org

Professional Trade Groups Continued

• ULI, Urban Land Institute, www.uli.org• NAIOP, National Association of Industrial and Office

Property, www.naiop.org• ICSC, International Council of Shopping Centers,

www.icsc.org• NMHC, National Multi-Housing Council, www.nhmc.org• IFMA, International Facility Managers Association,

www.IFMA.org• USGBC, United States Green Building Council,

www.usgbc.org

Other Specialized Groups• IREM, International Real Estate Management, www.irem.org• CCIM, Certified Commercial Investment Managers,

www.ccim.org• CRE, Counselors of Real Estate, www.cre.org• CREW, Commercial Real Estate Women,

www.crewnetwork.org• NAREIT, National Association of Real Estate Investment

Trusts, www.reit.com• NCREIF, National Council of Real Estate Investment

Fiduciaries, www.NCREIF.org• PREA, Pension Real Estate Associations, www.prea.org• ARES, American Real Estate Society, www.aresnet.org• Homer Hoyt Institute, www.hoyt.org

Why do these groups exists?• Promote a positive brand image to the public.• Professional education and advancement.

– Conferences (national one to three per year, regional, metro)– Webinars – Linkages with major universities

• Keeping up on trends and technology.• Networking and professional advancement.• Data exchange and funded research reports.• Self-regulation.

– Code of conduct and professional standards.• Recruiting new talent.

– Scholarships, internships, mentoring.

How are they funded?

• Membership fees– Various levels of membership and benefits– Students and academics are deeply discounted

• Sponsors• Endowments and foundations

A closer look at a few: BOMA

• Professional education and designations.• Data exchange on rents, vacancies and

operating expenses by type of property based on member surveys and organized by types of property and locations.

Appraisers (Valuation)

• MAI• SRA• FRICs

CCIM, Certified Commercial Investment Member

• CCIM Designation– 4 courses and a comprehensive exam– Oriented towards investment and financial

analysis– Available in many countries but not always

customized to local tax laws

NMHC, National Multi-housing Council

REALTORS and MLS (Multiple Listing Services)

• Localized systems controlled by REALTORs• Some private national vendors such as Zillow,

Trulia, Cyberhomes with neighborhood stats and trends that make their revenues by referral fees.

Commercial Listing Systems

• Nationwide systems dominate versus the residential systems that are mostly local.

• Detailed property information is available on the building and tenants and area.

The Value of Data • Historically brokerage houses kept data close to the vest.• Today we have several large private data vendors that replace some

of the internal data research staff of brokerage firms, but it is not cheap to subscribe.– CoStar and Loopnet– Real Capital Analytics– Excelligent– IPD– REIS– Specialized firms collect data on specialized property like hotels, shopping

centers, apartment rents.

• Public record data collected by private firms: – First American sweeps all public records as does Fidelity National

Information Services and they resell this data. (Property sale prices, physical attributes, age, mortgages and much more, photos, maps)

• Reliability is key.

Examples of CoStar

Summary

• Good trade associations help prevent over bearing government interference.

• Good trade associations can prove valuable for data exchanges, if the major players participate.

• Market transparency helps the market act rationally and forecast more accurately.

• Data vendors that organize and make data useful are also helpful to the market and save internal research costs.

• For accurate valuations and a more efficient finance system good data and transparent markets are essential.

• Letting go of data and inside information does not diminish your value as a real estate firm.

What does all this get you?

• Accurate trends on absorption.• Accurate rents.• Accurate selling prices.• Market transparency