Mark J. Riedy, PhD

The wrenching realignment of real estate and capital markets is forcing everyone to re-think their operating structures and strategies — a topic we will cover in-depth at our upcoming 14th Annual Real Estate Conference. This represents a substantial shift away from thinking that the "new normal" will look similar to what it was earlier in the decade.

Rather, more and more industry leaders are asking the right questions: How can I re-invent myself for survival and a career that offers a reasonable possibility of prosperity? How should our firm revise its structure, functions and target markets to protect what we have left and restore our bottom line going forward?

Like the era that mandated unprecedented and rapid change in technology products and services, real estate and capital market entrepreneurs similarly have been whipsawed by forces that in many cases were beyond their control. Change has always been a feature of real estate and capital markets. Cycles come and go, sometimes with major impacts, but never in our lifetime have change and cycles hit with such devastating force. The aftermath has many calling for "a return to the fundamentals." Yet, those fundamentals may well have fundamentally changed.

With these issues in mind, the Center's 14th Annual Real Estate Conference on Jan. 29 has been structured with speakers who can address these essential questions. Each year, we attempt to provide not just another conference, but rather programming and speakers that address real-time issues facing real estate and capital market professionals. While I would not wish today's current environment on anyone, it does provide an outstanding opportunity to present a program with industry players noted for their ability to respond to change, re-invent themselves and their firms, and challenge themselves to be successful over careers of cycles and change.

To see our conference line-up and to register, go here.

On Dec. 8, attendees at the Center's 10th Annual Residential Real Estate Conference: Outlook 2010 heard a blend of realistic pessimism and determined optimism from the three economists presenting to the sold-out room.

	Jay Brinkmann, PhD

Jay Brinkmann, PhD, chief economist for the Mortgage Bankers Association of America, said in his outlook that one of his greatest concerns going forward is the "roll rates" — delinquent houses that will end up in foreclosure. Brinkmann said that even though the number of units for sale in California has been decreasing since October 2007, the number of mortgages 90 days or more past due has been increasing over the same time period. Brinkmann estimates that 75 to 80 percent of the 690,000 delinquent properties in California will convert to foreclosure.

Ryan Ratcliff, PhD, assistant professor of economics at USD, said his concern is that when the impact of the federal stimulus efforts runs out in the summer of 2010, Americans may not resume spending on their own. Ratcliff said that the contraction in state spending in California also may offset much of the federal stimulus. He said, however, that he is starting to see green shoots and a light at the end of tunnel, which used to be completely dark.

Alan Gin, PhD, associate professor of economics at USD, said that while 50,000 San Diego jobs were lost in 2009 and the year will turn out to be the worst in San Diego history for residential permits, he was encouraged because "things are less bad than they have been." Gin said that he expects another stimulus plan to be put into play — one that will offer aid to state and local governments.

He also joked that because of the huge amount of debt America owes China, the United States has become "too big to fail."

To view the PowerPoint presentations from the conference, go here.

The Burnham-Moores Center was well-represented at this year's GreenBuild International Conference and Expo, held in Phoenix Nov. 11-13 by the U.S. Green Building Council. The conference drew close to 30,000 sustainable building professionals from across the country and around the world, who heard a keynote speech by former Vice President Al Gore.

	Professor Norm Miller and MSRE student Evan Favilene speak with a visitor to the Burnham-Moores Center's booth at GreenBuild 2009.

The Center's exhibit space attracted great interest from conference attendees, who became familiar with the university's real estate programs and the Center's new Journal of Sustainable Real Estate, which just launched the week prior to the conference. MSRE students Evan Falivene and Sunny Patel helped staff the exhibit booth, while MSRE students Brooks Klassen and Ronald Scott visited some of the more than 1,800 exhibit spaces in the massive two-floor exhibition center.

On Nov. 13, Norm Miller, the Center's professor and director of academic programs, co-presented his new groundbreaking research on the improved productivity levels of employees in green buildings. This was Miller's second time as a GreenBuild speaker; he presented to over 900 people last year in Boston.

Stephen E. Roulac, PhD

When the fictional detective Nero Wolfe tasks his confidential assistant, Archie Goodwin, to pursue an investigation — often these assignments are not all that different from a property due diligence or site inspection — he advises him that decisions are to be made by applying "intelligence informed by experience."

What does an acerbic 20th century detective, who seldom left his house, have to do with real estate in 2010 and beyond? You can detect the connection by applying the intelligence informed by experience decision rule that Wolfe himself modeled and instructed his staff to apply.

Now, people have even more choice about how and where they engage in the 10 critical activities that drive property demand. These 10 activities embrace the decisions people make where to live, work, meet, eat, learn, play, shop, worship, travel and prosper. These place decisions are implemented through various strategies applied to multiple levels of place.

One great insight can make all the difference in crafting successful strategies for the new normal real estate market in 2010 and beyond. You will not find this insight in real estate textbooks. But, if you understand it, you can know the source of demand for real estate, assess the likely success of any given real estate project, and evaluate how appealing to the market a particular real estate offer may be.

The cumulative application of technology informs, enables and drives the implementation of this critical insight. But the actions that people take concerning this signature insight reflect the application of their values.

Those who succeed in real estate do so because of their capacity to perceive patterns out of complexity, to distill clarity out of what to others is confusion, and to discern distinction in what to others is opaque.

Applying the intelligence informed by experience guideline that Nero Wolfe and Archie Goodwin employ, two critical challenges confront us today:

• How do you develop the right intelligence that is responsive to the challenges of 2010 and beyond?
• How do you interpret prior experience in ways that are profitable — rather than dangerous — in a new normal economy?

There are certain questions that you should consider concerning your real estate involvements for 2010 and beyond:

1. How would changes in the factors influencing the demand for property goods and services — economy, values, fashion, technology, productivity, business strategies, place competiveness, regulatory incentives — influence real estate in the 21st century?
2. How would demand for property goods and services in the new normal economy be similar to — or different from — the past?
3. How can companies provide a compelling value proposition in a highly competitive market, while simultaneously reducing the levels and quality of customer service?
4. How can places be appealing at the very time they are reducing public services — reflected by declining public safety staffing and declining quality of education — yet imposing higher taxes?
5. How can the United States be a competitive place in which to live and do business if the value of its currency — the global referendum on the competitiveness and appeal of a country's place brand in the international marketplace — declines?
6. How can real estate justify and regain investor confidence after such extraordinary adversity and losses?
7. What are the implications of massive debt refinancing, when the primary sources of providing such funds-structured financing via CMBS arrangements and private bank loans — are greatly reduced and/or largely unavailable?
8. What are the prospects of economic recovery without a sound and solid real estate sector?
9. How viable are the new construction and development sectors of the economy in an environment characterized by supply surplus and weak demand?
10. Should real estate building and investment decisions in the new economy of 2010 and beyond be the same as — or different from — what they were before?
11. How should real estate financing/investment decisions in the new economy be different from those that applied in earlier times?
12. What are the prospects of a real estate services business in which capital is hard to come by, investor confidence is shaky and the transaction pace is much reduced?
13. What will be the most rewarding real estate strategy?

In answering these questions, it is wise to consider the astute observation by Albert Einstein: "We can't solve problems by using the same kind of thinking we used when we created them."

To request a free white paper report addressing these issues and others, e-mail experts@roulacglobal.com or call 415-451-4300.

Stephen E. Roulac, PhD, is a globally recognized expert on strategic management, capital markets, securitization, institutional investing and property analysis/valuation. He will be one of the featured speakers at the Center's 14th Annual Real Estate Conference on Jan. 29 in San Diego. His Web site is www.roulacglobal.com.

Four MSRE students traveled to the ULI Fall Meeting in San Francisco Nov. 2-4, where they attended conference sessions, met industry contacts and acted as booth representatives for the University of San Diego. Students also met with San Francisco-based MSRE alumni Brad Flewellen '09 (MSRE), Leah Taylor '07 (MSRE) and Joseph Phair '09 (MSRE) over dinner to discuss the program and career opportunities within the Bay Area.

The Burnham-Moores Center is offering a 2½-day course at a discount to help members of the San Diego real estate community better understand green building and LEED core concepts and to help them prepare for the LEED Green Associate exam. At the end of the course, participants will receive a certificate of completion, which will make them eligible to sit for the exam. The course is scheduled for Feb. 26-27 and March 5, 2010. The cost is $250 per person, $200 for USD alumni or $1,000 for a company sponsoring five people. For more information, contact Ines Kraft at ikraft@sandiego.edu or (619) 260-4150.

The research, which was co-authored by Dave Pogue and Ray Wong of CBRE, reveals that employees in green buildings are more productive than those working in non-green buildings. The research is based on a study of 2,000 tenants in 154 CBRE-managed buildings across the United States.

For the complete study, go to www.usdrealestate.com

On Nov. 18, MSRE students (from left to right) John Kiper and Evan Falivene toured the Vista City Hall project in Professor Norm Miller and Ian Gill's Design and Construction Management class. While on the tour, students were given insight into the construction process, management and challenges on a project under construction from several of the project's team including: Fred Campton, engineer, Dave Cecil, senior project manager; Mark Dimmit, superintendent and building modification expert; and Mike Wood, general superintendent.

On Nov. 23, Miller spoke at the 32nd Annual Real Estate & Economics Symposium in San Francisco presented by the University of California-Berkeley's Fisher Center for Real Estate and Urban Economics. Miller was a panelist during the residential session, which addressed the question, "Have we turned the corner yet?"

Sudberry Development, the company founded by Executive Committee member Tom Sudberry, was recently awarded a Governor's Environmental and Economic Leadership Award (GEELA) in the Comprehensive Land Use planning category for the company's Quarry Falls community. GEELA is the state of California's highest and most prestigious environmental honor.

Gov. Arnold Schwarzenegger presented the award to Tom Sudberry and Marco Sessa, Sudberry's senior vice president of land development, at an event in Los Angeles.

The Quarry Falls site, which is located in Mission Valley, has achieved a Gold certification from the USGBC's LEED-ND pilot program thanks to its many sustainable features, including: transit-oriented and walkable design, a reclaimed water treatment plant and the use of sustainable and recyclable building materials.

A green building productivity study co-authored by Norm Miller was referenced in numerous national and international publications including: BusinessWeek, Investor's Business Daily, Yahoo! Canada Finance, GlobeSt.com, Reuters, The Daily Transcript, California Real Estate Journal, San Diego Metropolitan Magazine, My Green Education and Career, Facilities.net, Silobreaker.com, Theage.com.au, Mortgageorb.com, Welt Online, BusinessGreen.com, Cityfeet.com, Todayonline.com, Citybizisit.com, Businessday.com.au, Wasterecyclingnews.com, cbre.com, Buildingonline.com, Fmlink.com, Thefifthestate.com, Nevadacounty.com, Sustainablefacility.com, and Nacsonline.com.

The Burnham-Moores Center's MSRE program was featured in a Nov. 5 Daily Transcript story that discussed why more professionals are considering real estate graduate school in today's market.

Mark J. Riedy was quoted in a Nov. 5 commentary in The Daily Transcript on the challenges that the commercial real estate industry continues to face.

The San Diego Business Journal featured a story Nov. 16 announcing the release of the inaugural issue of the Journal of Sustainable Real Estate. The Daily Transcript featured a similar story Nov. 6.

Policy Advisory Board Commercial Real Estate Committee member Dave Davis was featured in a Nov. 13 story in The Daily Transcript on the importance of interpersonal interaction in the appraisal business.

Alan Gin was mentioned in several articles following his release of the USD Index of Leading Economic Indicators for San Diego County, which he compiles for the Burnham-Moores Center. Articles appeared in the San Diego Business Journal, San Diego 6, the San Diego Union-Tribune, The Daily Transcript, the San Diego Metropolitan Magazine, 10news.com, signonsndiego.com, and The San Diego Reader.