Getting the Pulse of the Market

Eugene F. Fama thought for a moment about his insights into the future swing of the 2017 real estate markets. “This is a market that hasn’t been studied that deeply,” the Robert R. McCormick Distinguished Service Professor of Finance said to a room of more than 200 business leaders, alumni, and students. Fama was one of the keynote speakers at the Real Estate Alumni Group Conference, held at Gleacher Center on October 30 and 31, 2017. In conversation with Joseph L. Pagliari, clinical professor of real estate, the 2013 Nobel laureate in economic sciences stressed the potential of the amount of data associated with real estate markets and the breadth of research that can still be done.

This is the 11th year for the conference, hosted by the Chicago Booth Real Estate Alumni Group. Attendees come from across the United States to engage with the expertise of business leaders, who discuss current trends and predict what will happen next in the market. Kenneth P. Riggs Jr, ’94, president of Situs RERC, gave this year’s US real estate market overview, while Pagliari presented on real estate pricing.

“It’s like getting the pulse of the market,” said Full-Time MBA student Chris Palencia. He and fellow Full-Time MBA student Sandy Gu found the conference valuable for the real-world debates and lessons they got from business leaders. They cited as particularly insightful “A View from the Top,” a session led by moderator Mike Kirby, ’85, cofounder, chairman, and director of research at Green Street Advisors. In it, panelists discussed everything from the purchase of Whole Foods by Amazon to affordable housing to the current number of REITs.

Participants Michael DeMarco, ’87, CEO of Mack-Cali Realty Corporation; David Helfand, ’90, president and CEO of Equity Commonwealth; Bruce Schanzer, ’01, president and CEO of Cedar Realty Trust; and David Schwartz, ’90, cofounder, CEO, and co-chairman of Waterton, emphasized adaptability and the importance of keeping track of the right information. They also discussed The Chicago Approach™ and how the grounding of a Booth education differentiates the school’s alumni in the real estate world. “It’s always struck me as an industry where there aren’t enough people who went to Chicago,” said Kirby. Helfand added that compared to his peers who didn’t go to Booth, “I think more about economics, macro and micro, and how that impacts our business.”

Sam Zell, another keynote speaker of the conference, spoke on how management can help the process of tracking information and making quick and careful decisions in the real estate space. The founder and chairman of Equity Group Investments, speaking to managers and aspiring managers in the crowd, said that by making yourself accessible, encouraging debate and disagreement, and never “killing the messenger,” you will cultivate a work environment that encourages growth and inquiry. “If my people are attended to, they excel,” said Zell, before telling the audience that in the past 50 years, only one person in a senior position at his company has been recruited away, and that person came back.

Encouraging growth through inquiry, in more ways than one, was the emphasis of the conference. Just after the opening remarks, Pagliari accepted the 2016 University Real Estate Challenge prize on behalf of the five Booth students who had won the Real Confidence University Challenge. Participants were given a theoretical sum of $1 billion and challenged against other university teams to see which school could best invest it in commercial real estate.

Out of 32 teams, the Booth team returned 23.64 percent on their portfolio over the course of the year, clearing the runner-up by 4.8 percent. Their strategy focused on mortgages—while other teams had higher monthly returns, Booth beat them all out by taking it slow and steady, and staying committed to their strategy.