When Stan Ross began his real estate career in 1961, the industry wasn't nearly as sophisticated as it is today. Career opportunities were limited to development, construction, property management and basic finance. The concept of tenant representation had not yet been introduced. The U.S. Congress had just approved the creation of real estate investment trusts, opening the door for smaller investors.
Today, with the industry broadening, deepening and globalizing at a rapid pace, the possibilities are endless, says Ross, chairman of the University of Southern California's Lusk Center for Real Estate and governor of the Urban Land Institute.
“Few people are aware of the breadth of career options within real estate,” says Ross, author of The Inside Track to Careers in Real Estate. “Most people think about housing or development. As an industry, it's surprisingly misunderstood and often overlooked.”
But that's quickly changing. For the last three years or so, interest in real estate has skyrocketed, driven by a booming housing market. With the residential side of the industry now flattening, interest has suddenly shifted to the commercial side of the business. “Students have been very quick to adapt,” Ross says.
Now in its 20th year, USC's Masters in Real Estate Development program is a prime example of the diversity in modern real estate education. USC trains students in fundamentals, such as design, zoning and construction. On the vertical side, students are exposed to various product types. There's also a heavy emphasis on finance — cash flows, modeling, instruments and securities — and on international real estate. Enrollment varies from about 45 to 75.
There's good reason the classrooms are filling up. Lusk Center MBA graduates in the Class of 2006 commanded average annual salaries of $76,700 plus a $17,000 bonus for careers in asset management. For brokerage, construction or law, salaries averaged $100,000. Finance posts paid an average of $79,000 with a $28,300 annual bonus; and development paid $95,200 with a $29,000 annual bonus.
Nearly half (47%) of Lusk Center grads opted for careers in the single-family or multifamily sectors, followed by mixed-use (20%), office/industrial (18%), retail (11%) and land (4%).
Future demand, Ross says, will come from these traditional sources. It will also stem from rebuilding efforts following disasters and from the burgeoning area of “green” or sustainable development. Finance will continue to be hot, as will international real estate.
Despite the uptick in interest, there's a shortage of young, qualified real estate talent to meet the demand. Many were scared off by real estate's downturn in the early 1990s. Later that decade, it was all about technology and Internet commerce. This dearth of qualified candidates is particularly true for non-sexy segments of the industry like real estate valuation, says Donnie Sherwood, managing director at Integra Realty Resources.
“Most get into real estate thinking about development because it's glamorous and a little more razzle-dazzle,” he says. “Secondly, they look at the brokerage side because of the unlimited revenue potential.”
Badge of knowledge
Sherwood serves on Texas A&M University's Real Estate Roundtable, which functions as a real-world advisory board to the Mays Business School. The college offers one of the few specialized graduate real estate degrees in the nation, recently changing the name of the degree from a Master of Land Economics and Real Estate to Master of Real Estate.
The change was made to reflect the program's growing focus on real estate capital markets. Since it was introduced 35 years ago, the program has grown from 14 to 80 students. Over the last 10 years, 100% of the graduates have found jobs within 30 days of graduating — 75% have a job in hand before walking across the commencement stage.
Sherwood says the competition for quality graduates is fierce. “It makes it hard for smaller organizations like ours,” he explains. “Wal-Mart is hiring these kids right and left in their real estate departments and giving them phenomenal responsibilities at a very young age.”
The University of Texas also relies on an outside team of professionals to help shape curriculum through its Real Estate Finance and Investment Center. UT has about 30 real estate students in its MBA program. Sheridan Titman, professor of finance and director of the real estate center, says he advises students to choose a sector that will fit them personally, not one people see as “hot.”
Focus on finance
The real estate program at Northwestern University's Kellogg School of Management emphasizes investments, from both a private-equity and institutional perspective. Ever since the dot-com crash, enrollment in real estate classes has substantially increased, says Joe Pagliari, the program's associate director. Favorable real estate returns relative to stocks and bonds have made the industry very attractive to the entrepreneurial student, he explains.
Kellogg incorporates case studies into the curriculum and participates in competitions where students create redevelopment plans for Chicago-area properties. The evolution of the industry puts pressure on MBA programs to perform, Pagliari says. It also creates tension between real-world knowledge and theory.
“It's a constant balancing act between giving students enough practical knowledge so they can hit the ground running, but also preparing them to make important decisions five, 10 or 15 years down the road,” he says. “You can't get too product-type specific, but you can't get too ‘ivory tower’ either.”
Wooing the talent
Pagliari says the flow of job offers for Kellogg graduate real estate students is as strong as he has ever seen it, with offers coming from developers, private equity shops, institutional investors and commercial lenders.
Among those actively in the mix is Chicago-based Jones Lang LaSalle. Taryn Karchmar, the company's recruiting manager, says the global brokerage firm targets a handful of schools that vary from year to year, based on the caliber of the programs, student demographics and geography. The firm hires anywhere from six to 12 MBA students each year directly off college campuses.
In the past, the challenge has been to get students interested in the industry as a career, Karchmar says. “It's great for us that a lot of universities are offering more real estate classes, whether they have to do with leasing or finance,” she says. “Real estate clubs on campus also have enhanced knowledge of the field.”
One of the oldest programs in the country is the Franklin L. Burns School of Real Estate and Construction Management at the University of Denver, which began as the Building Industry and Real Estate Program in 1938. It currently has about 500 students — 225 in the graduate program, 175 in the undergraduate program and about 100 in executive education.
The Burns School takes a hands-on approach. Residential students form home-building companies and develop projects from concept through sale. Commercial students develop, invest in and manage properties. Graduate students also have the opportunity to complete requirements for industry licenses and designations, such as CCIM (Certified Commercial Investment Member).
“It's a very entrepreneurial, custom-designed program,” says Dr. Mark Levine, director and professor at Burns. “We're very concerned with our students adding immediate value. A lot of schools turn out students who are only partially prepared. It reminds me of when I got out of law school and went to work at a law firm. They handed me a stack of documents and said, ‘Here, file these.’ I asked, ‘Which drawer?’ I knew nothing about the courts and had no practical training.”
In addition to development and construction management, Burns' students study real estate abroad. The school hosts three, 14-day trips a year to Europe, the Middle East, Asia, Canada, Mexico — even Iceland. Levine says the school has placed students in jobs in virtually every major city in the world.
Demand for multi-lingual real estate pros far exceeds supply, he says, especially in Japan. Candidates with solid real estate experience who understand the U.S. real estate market and speak fluent Japanese can make as much as $300,000 to $500,000 a year, Levine says. Recent graduates can make between $100,000 and $150,000, plus housing and other benefits and the opportunity to quickly move up the ladder.
Much in real estate has changed since the Burns School was formed nearly 70 years ago. Levine says it's a formidable battle for graduate programs to keep up. “We're doing a much better job of educating students, but we have to because the world is more sophisticated,” he says. “No matter how much we know, we don't know enough.”
Christine Perez is a Dallas-based writer.