Theory may talk a big game but it doesn't entitle land, sell a project to investors or tap into capital markets. That's a message that a growing number of real estate educators are conveying to graduate students in an effort to keep their feet planted firmly on the very ground that they'll soon be selling, shaping and leveraging. Gone are the days when a cocky young broker, armed with a gunslinger mentality, a new suit and a B.S. degree, sufficed for new blood in a large commercial firm.
“Today, real estate requires a very broad base of skill and knowledge,” says Joseph Gyourko, professor of real estate and finance at The Wharton School and director of its Samuel Zell and Robert Lurie Real Estate Center. “Real estate companies are seeking recruits who are better managers of complexity, and they are demanding that we provide our kids with the many institutional details needed for the job.”
With real-life development projects, specialized curriculums and a nudge from advisors and mentors active in real estate, the country's approximately 15 dedicated real estate grad programs and additional 30 MBA programs with a real state emphasis appear to be adjusting as quickly as possible to the fast-evolving industry.
Visionary real estate teacher and innovator James Graaskamp foresaw the approach in the 1970s and 1980s when he routinely told University of Wisconsin students they'll need to “become renaissance men and women” to thrive in the business.
“It's not an industry where you can keep doing what you've always been doing,” says Stephen Malpezzi, professor and department chair of the University of Wisconsin's real estate program, which dates back to the 1920s.
Real estate education is also getting much more competitive as new schools open, “and that's a good thing for students and a good thing for the industry,” says Malpezzi, who teaches real estate and urban-land economics. Wisconsin is revamping its program in part due to competition.
Even though their numbers are swelling, real estate grad students are still dwarfed by their abundant MBA counterparts, according to Elaine Worzala, director of the new real estate graduate program at the University of San Diego (USD).
Because so many real estate firms voiced to USD officials that they needed grads who were better grounded in the business, the school decided to launch its own real estate master's program, says Worzala. It will hit the ground running this fall with 70 companies — ranging from full-service real estate firms to financial, investment and valuation companies — advising it.
“Real estate is extremely complicated, and the mistakes you can make early on can be absolutely huge,” says Worzala, who studied under Graaskamp at Wisconsin. But grads of real estate programs “can be expected to work at a higher level and even focus on a specific asset class right out of the box,” she adds.
On the Growth Track
Although no official data is available on the growth of graduate real estate programs, several new ones are being formed, including at USD, University of Illinois-Chicago, Marquette University in Milwaukee and Baruch College of The City University of New York. Several other schools are seeking approval for additional real estate grad work, according to Gayle Berens, vice president of the Urban Land Institute's real estate development practice.
“It appears that existing programs are doing very well and are fully subscribed and expanding,” Berens says. “And there are many more real estate development certificate programs that are being offered forand planning students.”
Raphael Bostic, incoming director of the University of Southern California's real estate master's program, believes the rise in the number of real estate graduate programs nationally “is due to the industry getting a lot more professional, and not just relationship-driven as in the past. Companies are looking for people with real skills and real substance.”
Adds Brad Olson, director of Cornell University's real estate program: “The industry obviously needs a reservoir of talent other than just those who they try to steal away from other companies.”
Officials for Cornell, Columbia University, New York University and other schools with real estate graduate programs all say their real estate graduate students enjoy close to 100% job placement. Many take advantage of sizable real estate alumni organizations and corporate internship/mentorship programs to network before and after graduation.
George Slusser, president of Parsippany, N.J.-based Coldwell Banker Commercial, says the caliber of talent coming out of grad schools is improving.
Yet while today's grads are better at comprehending technical requirements, that's not necessarily the case with communications and sales skills, he says. “Of course, it's all really different in the real world — like black and white,” he says. “[The graduate] is not a finished product.”
Although Los Angeles-based CB Richard Ellis still hires new grads, the company has cut back on that policy because it can actually cause attrition, explains Bart Reinhardt, senior managing director for the firm's Los Angeles area.
“When [graduates] come here, they don't have anything to compare us to, so they think the grass is greener and they will leave to go sample another environment. Then they end up coming back. So now, we tend to let them get their feet wet elsewhere first.”
Reinhardt says the firm is “very picky” about the grads it hires and puts candidates through a minimum of five interviews and a maximum of 10. As a rule, Reinhardt won't return an initial phone call from graduates seeking a position in order to gauge their determination. “If you give up on us after one call, then odds are you didn't have the persistence to succeed here in the first place.”
Hired grads go directly into a two-year “wheel” internship program at CBRE and rotate through four different offices and specialties in the first year, before being placed with a specific team and specialty the second year. “That way, we don't hire John and put him in industrial and find he really loves office. A lot of new people actually end up doing things they never thought they'd do.”
Reinhardt believes more universities should align themselves with companies such as CBRE. “They could get 80 hours of on-the-job training, which we could accommodate.”
DePaul University's grad program is getting more inquiries about student job placement than ever, says Suzanne Cannon, associate professor of finance and director of the school's real estate center. “A lot of alumni call and say, ‘Have you got somebody for me?’”
The three-semester grad program at Texas A&M University regularly places interns and full-timers with Wal-Mart Realty, J.P. Morgan, USA Insurance and other large national firms, says Wayne Etter, a professor of finance and real estate. Increasingly, companies are seeking real estate graduates via on-campus visits, he says.
Mentors Provide Guidance
Jaime Zadra, a spring graduate of the real estate master's program at the Anderson School of Management at UCLA, started her professional real estate career as an associate at Prudential Mortgage Capital Co. in Los Angeles in mid-July of this year. Zadra participated in class case studies and took such courses as securitization and real estate finance. But she says the hands-on experience she received while interning for two developers, as well as a team consulting project, gave her the most practical insights. “Simulated cases only take you so far.”
Zadra was part of a student group that was asked to size up real estate investment opportunities in Australia's emerging financial markets. She and four classmates designed an investment strategy for CB Richard Ellis to utilize capital from Australia's employer trust-fund network, which consists of groups of companies who join together to establish larger funds. “We interviewed fund managers, consultants, trustees,and others,” she says.
Students also benefit from mentoring programs that match students with real estate pros who can serve as a sounding board for career advice and questions about industry challenges, says Sharon Nakamura-Brown, director of business development for the UCLA program. “Unlike a formal job interview, it gives them a chance to ask less-restrained questions,” she says.
Who's Attending and Why
By nature, real estate grad students seem to have more business seasoning than the typical student. “Our average student is close to 30 years old and has three to five years of professional experience,” says Olson of Cornell.
Michael Buckley, director of Columbia University's real estate development program, says his students are also typically in their upper 20s. “We prefer a more sophisticated student who has decided on real estate as a career.”
The schools are making headway in trying to introduce more international, minority and female students into an industry that has represented the three groups poorly in the past in comparison to other industries. Fifteen percent of participants in Wisconsin's grad program are minorities and 33% are international students, according to Malpezzi. About 20% of Columbia's real estate grad students are international and 20% are female, Buckley says.
Last year, DePaul had more African-American students (10%) than the general commercial real estate population, “but unfortunately it's still very low compared to the general population,” says Cannon. While about one-third of all MBA students are female, those numbers shrink in graduate real estate programs at DePaul and other schools, she adds.
But there is a diversity of structure and size in real estate graduate programs. Degree work takes anywhere from eleven months to two years to complete. Some colleges use only adjunct professors who are active in the real estate business, while others use full-time professors exclusively, though many use a combination of the two.
USD will have 25 students in its first class, while NYU has more than 400 enrolled in its program. At Cornell and other schools, the real estate master's program uses faculty from its civil engineering, hotel management, landscape architecture and management schools, among other areas.
Columbia's emphasis “is more on training people to be on the check-writing side of the table,” says Buckley. “That way, you are executive producer of the show, not the actor or the cameraman.” About a quarter of Columbia's real estate graduates become entrepreneurs, he says.
The NYU program, and similar programs across the country, can cost students up to $45,000 to complete, not including living expenses, says Lawrence Fiedler, an adjunct professor of real estate at NYU and president of JRM Development Enterprises.
Many schools prep their students with real-life development projects. At Cornell, students study a piece of land that companies such as Lennar Co. or Toll Brothers have under contract and come up with their own financial and physical plans, says Olson.
At the end of the spring semester, executives from the companies sit in on the presentation and usually end up implementing many of the student recommendations, he says. Other class projects have included the study of urban shopping malls that are in need of repositioning.
At UCLA, students vie for $10,000 fellowship stipends for developing and writing the best real estate-related case studies, says Nakamura-Brown. An annual student competition between the UCLA and USC real estate schools features a question about a contemporary real estate topic, such as last school year's challenge to determine the highest and best use for downtown Los Angeles' Wholesale District.
Schools in major metro areas such as Chicago, Los Angeles and New York argue their programs have a leg up on the competition because they operate in the middle of huge centers of commerce.
“We think Chicago is real estate central,” says DePaul's Cannon. “Trizec Properties is here, RREEF and Heitman are here. There also are lots of REITs here, including First Industrial, and lots of lenders and big players in general, and we have grads placed with all of them.”
NYU real estate grad students are able to participate in several roundtables, organizations and symposiums around the city, including NYU's annual Real Estate Capital Markets session that's attended by 500 professionals around the country. They also have access to seasoned industry veterans who live and operate locally.
Fiedler believes that the urban environment promotes cross-pollination. “I get as much education from my students as I give to them, because they keep me current while I keep them current,” says Fiedler.
Columbia recently established a Center for High-Density Development, a research initiative that explores the real estate impact of high-density projects in such areas as infrastructure, value creation, cap rates, and workplace and fiscal efficiency. Each successive class adds data to the topic, according to Buckley. “Our research showed that appraisers assign premium value to capitalization rates in high-density projects. That's nice to know, if you're a big pension-fund investor.”
Entrepreneurs in the Making
Legendary educator Graaskamp once wrote that real estate must be taught as a process of “dynamic interactions rather than functional and historical facts. The result should be a real estate entrepreneur with the creativity of Leonardo da Vinci, the sensitivity for the natural world of John Muir, and the political humanity with cash management for profit of James Rouse. Of course, the graduate student should be something more.”
Whatever course of education that would-be real estate players take, the schools, students and companies should have realistic expectations for the new graduate, says Fiedler. “You're just not going to come out of school and be King Kong. If you want to be the top banana, you still have to start at the bottom of the bunch.”
Steve McLinden is an Arlington, Texas-based writer.