The Urban Land Institute hosted its Annual Fall Conference in Chicago this year, and Susanne Cannon, Director of the Real Estate Center and ULI Council Vice Chairman coordinated several events for Council members and hosted the Council meeting on Urban Revitalization at the DePaul Loop Campus.  Cannon also participated as a panelist at a session called the Voices from Tomorrow: The Next Generation that explored what students, recent graduates and entrepreneurs want from the places where they study, work and live.  The discussion also focused on strategies that cities, universities and businesses can use to develop the skills and talent needed to be competitive in the future.  Other panelists included, Anthony LoPinto, Korn/Ferry International; Darius Norrell

Nadia Crawley, a participant in One Million Degrees; David Scherer, Origin Capital Partners.

Susanne Cannon, David Scherer and Nadia Crawley

In addition, Forum48, a special program track of ULI that focuses on the importance of knowledge and innovation in creating great cities, hosted a roundtable discussion: the Chicago Knowledge Cities Workshop at the University Club on November 5.  Cannon led a breakout session on education where participants discussed changes that will make Chicago a more competitive knowledge city given that the delivery method of educating is rapidly changing to adapt to advances in technology. 

 

As another part of the ULI Conference, on November 7, the DePaul Real Estate Center hosted a delegation from the Chinese Real Estate Chamber of Commerce for an update of the downtown Chicago real estate market.  After a short presentation at DePaul, the delegation  was taken on a walking tour of State Street including a tour of the new downtown Target,  Macy's (the old Marshall Field's flagship store) and the new Walgreen's.  The tour was led by Steve Bell of the Real Estate Center and Mike Edwards of the Chicago Loop Alliance .  The tour concluded at the offices of Antunovich Associates for a review of the major new developments planned for downtown Chicago.  Joe Antunovich, AIA, hosted this presentation.

Finally, James D. Shilling, the Michael J. Horne Chair in Real Estate Studies at DePaul, gave a presentation to the Real Estate Research Forum at the ULI Conference titled Housing's Expected Contribution to US Economic Growth. 

Students Benefit from Travel Scholarship Program

The Susan M. Marshall and Charles H. Wurtzebach Endowed Scholarship provides funding for students to attend local and national real estate events.  Ten students were selected to participate in the Pension Real Estate Association Fall Conference held in Chicago this year on October 28-30.  In addition, nine students attended the ULI Fall Conference, November 5-8, also in Chicago.  The students were:
                                   

PREA		ULI
-Helen Bailey	-Marcus Harris	-Stevan Arandjelovic	-George Triarchou
-Collin Didier	-Timothy Littman	-Xiaoyu Gu	-Adriel Velazquez
-Nicole Drewery	-Jose Pizarro	-Trevor Kare	-Jason Viane
-Derek Fohl	-Scott Rosburg	-Paul Martin	-Michael Schlitctman
-Siqin Fu	-Ruben Vazquez	-Anthony Perrino

Paul Martin, Mike Schlitctman, George Triarchou, Susanne Cannon, DePaul Alum, John Oharenko and Xiaoyu Gu at the ULI Conference

A few of the scholarship recipients share their perspectives on attending the conferences:

Attending PREA provides students the perfect opportunity to build their professional network.  In addition, it also helped me learn more about how pension funds and endowments view real estate as an important part of their entire investment portfolio (Derek Fohl, MSRE Candidate).

As a first year MBA student, the ULI conference in Chicago could not have been a better opportunity to learn about Real Estate from the leaders of the industry (Paul Martin, MBA Candidate).

Mike Maglocci with MSRE Candidate, Nicole Drewery at the PREA Conference

Professor Steve Bell took his Sustainability class into the field on Saturday, November 9 so his students could see first hand the practical applications of the theories and practices they've spent the quarter learning about in the classroom.  The trip began with a tour of the Chicago Center for Green Technology, a LEED Platinum rated building that serves as a demonstration project and environmental resource center claiming increased energy efficiency of building materials and construction, use of reused and recycled materials and use of passive and active solar energy among other sustainable features. 



Students then boarded the bus and traveled to the The Plant which is a fish hatchery, hydroponic garden, commercial kitchen and brewery for both beer and kombucha tea.  The heart of the operation is an anaerobic digester which converts waste to biogas that is then used to power turbines that create electricity to power grow lights in the garden.



The final stop was Exelon City Solar, the largest urban solar power plant in the United States.  The powerplant uses SunPower solar tracking systems that tilt the panels toward the sun as it moves across the sky, increasing energy production by up to 25%.  These panels generate enough clean, reliable electricity to power up to 1500 homes per year.

The Institute for Housing Studies (IHS) is a research center situated in the Real Estate Center at DePaul University. IHS's mission is to provide reliable, impartial, and timely data and research to inform housing policy decisions and discussions about the state of housing in the Chicago region and nationally. IHS's work in particular focuses on affordable housing issues and understanding the changing dynamics of neighborhood housing markets.   Below is a sampling of some of the Institute's recent work:

*    City of Chicago Five-Year Housing Plan Data Book - IHS developed this data book to facilitate discussions around the housing market needs of Chicago's neighborhoods and to help the City craft the new Five-Year Housing Plan that will guide housing policy and investment from 2014 to 2018.
*    The IHS Data Portal  - The Data Portal is an interactive tool that allows users to explore 18 different housing market indicators by Chicago Community Area, Ward, suburban Cook County municipality, and Cook County region.  Attached is a presentation that provides more details about the data found on the portal and how to use it.
*    Crain's vacancy stories  - This is a package of stories by Crain's about the challenges facing the Chicago region related to vacancy.  IHS worked closely with Crain's reporters as they developed these stories and our data is cited throughout.  The main story discusses the land bank and there is an interactive vacancy map that utilizes data IHS developed.

Excerpts from a recent talk by James D. Shilling, the Michael J. Horne Chair in Real Estate Studies:

One of the key lessons of the last few years has been that the US housing market is much more sensitive to access to credit than most of us had previously recognized.  With more rigor being applied by lenders in providing residential mortgage credit - average credit scores for residential borrowers successfully getting a mortgage, for example, are now 710-730, much higher than in the past - annual construction of new single-family homes has plummeted, from the 1.7 million units in 2005-2006 to 550 thousand units at present.  With housing starts averaging well over a million units during the 1990s, the shortfall in housing construction now offsets the 3.3 million excess units that were built during the boom between the years 1997 and 2007.   Thus, since 2007 the US homeownership rate has decreased more than 2.7 percentage points, totally reversing the rise in homeownership since 1997.  That is a remarkable shift in a relatively short time.  
What the decline in homeownership is doing to the multifamily residential apartment market?

One favorable effect of the decline in homeownership (from a rate-of-return on multifamily residential housing standpoint) has been above average income growth rates on multifamily residential apartments.  Income levels on multifamily residential apartments are now 18 percent above long-term trend.  See chart.  Moreover, as single-family home mortgage lending standards have become tighter, and as the Gen Z (those born between 1995 and present) struggle with their huge student loans, this trend will be hard to reverse.
Under such circumstances, of course, multifamily property prices are likely to rise.  Needless to say, we have already seen multifamily residential property prices rise.  They are now 60 percent higher nationally than their trough in 2009Q4.  In comparison, property prices for office and industrial buildings are up only 45 percent.  Prices for retail shopping centers are 53 percent higher.  Observe, however, that even though multifamily residential property prices have surged more than retail shopping centers since 2009Q4, the 2007Q1 to 2013Q3 price changes are higher for retail shopping centers than multifamily residential apartments due to a much lower trough level.  See chart.

Are the trends in the multifamily residential apartment market likely to continue?

Obviously, no one can say with any certainty that the trends in the multifamily residential apartment market are likely to continue.  However, the one thing we do know is that asset class risks change with macroeconomic environment.  Thus, as the current macroeconomic environment with its emphasis on tighter residential mortgage underwriting standards favors multifamily residential apartments over single-family housing, and as annual construction of new single-family homes remains well below normal levels, the long-term prospects for the multifamily residential apartment market are for more of the same.