Just as there are radiologists, neurologists, dermatologists in the medical community, professionals in the real estate community specialize as well.
The UNC Kenan-Flagler Real Estate Club hosted Asset Class Day to introduce first–year MBA students to a variety of asset classes.
From retail and industrial to multi-family, self-storage and office, speakers from top industry companies ventured to McColl Building to share their wisdom – and offer their take on the changing landscape (pun intended!).
Pete Otteni (MBA 00’) of Boston Properties opened the day. Operating as a REIT – it must distribute 90 percent of its taxable income to shareholders each year – Boston Properties focuses on Class A offices and notable buildings such as Salesforce Tower. With each property, Otteni and his team weigh a host of questions – from the tenant improvement allowance to what the notice period would be for a tenant wanting to vacate.
Expansion rights – which allow the tenant the option to contract a larger space while simultaneously curbing the owner’s ability to rent it out to other willing tenants in the interim – were discussed.
Otteni’s advice: “Nine out of 10 times on expansion rights, we wish we hadn’t done them.”
Katie Bucklew (BSBA 05’, MAC ’06) of Edens’ Washington office introduced the retail asset class sector. Edens looks at communities with 100,000 people making more than $100,000 annually – and then scouts opportunities within a certain radius.
Retail ranges from malls and outlets to lifestyle and power centers (big box retailers). Edens works to diversify tenants and entice foot traffic in their complex. Accordingly, 95 percent of its portfolio has a grocery component – and it uses strategies such as implementing a farmer’s market to bring people to the shopping center. While some offer the future of retail is shaky, Edens believes it is experiencing a transformation.
The event featured a sister act. Kim Bucklew (BSBA 05’, MBA ’11) from Alliance in Atlanta introduced the multi-family asset class. Alliance is a developer of multi-family assets and builds across three categories: garden, mid-rise and high-rise units. Of the three, Alliance believes garden-style is the least risky. Alliance is a merchant builder, which means it builds a property, leases it up, and then sells it. Despite the significant supply of multi-family emerging in many of the markets, Bucklew and Alliance continue to anticipate a demand for this construction in many markets with housing prices out of reach for many target demographics.
Josh Jones of Johnson Development Association introduced the class to the industrial and self-storage space. JDA forecasts significant growth in the last mile distribution centers. Jones and his team often consider the risk between building on spec versus building for a client. They do not forecast the industrial cycle will end soon and have been more comfortable building on spec.
Asset Class Day speakers provided foundational knowledge as well as insights about trends in real estate. And while there is are a variety of other classes in the market, the opportunity to build a base of understanding so early in the academic year was far and away the real asset.
By Martha Morris (MBA ’19)