Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2014. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Cataloged from student-submitted PDF version of thesis. / Includes bibliographical references (pages 75-81). / Enrique Peña Nieto, Mexico's current president, voiced strong support for extending the social mission of INFONAVIT -- the largest mortgage lender in Mexico -- to embrace quality of life metrics. He also indicated a strong interest in expanding housing opportunities to segments of the population who are currently not being served by the housing funds and banks to the extent that the right to a dignified home is enshrined in Mexico's Constitution. In order to continue giving greater importance to quality of life metrics and not just lending volumes, INFONAVIT strategy will focus on the creation of cities that are more efficiently organized and less segregated in an unprecedented effort to move towards an inclusive, prosperous Mexico on the basis of orderly and sustainable urban development. INFONAVITs 2013-2022 financial plan projected cash flow growth of 8.82 % CAGR and its strategic agenda focused on four dimensions: i) Housing needs: providing funding and housing solutions that enhance the welfare of workers; ii) Social balance: ensuring housing quality and sustainability and promoting urban planning with a focus on employment growth; iii) Scope of policies: expanding connections with other housing institutions and aligning programs and policies with strategic sector guidelines; and iv) Risk & Return: sustaining strong financial and operational performance. The process of urban development is incremental for low-income households in Mexico since a significant percentage of the population has no possibility of living in dwellings constructed by the formal sector. Mexico is currently facing significant challenges in its future housing requirements. Specifically, this thesis will focus on three different proposals that complement the vision of President Enrique Peña Nieto and that could enhance the affordable housing sector in Mexico in order to create a better future for local residents. The proposals are: i) the creation of affordable Mexican edge cities, ii) the exploration of the Section 8 tenant-based housing voucher program practiced in the United States, and iii) the use of housing development as a regional development tool coupled with an industrial policy to rescue the Mexican southern region from deep-rooted stagnation and to potentiate the multiplier effect on the economy. Housing is a strategic sector for the economic growth and social development of Mexico since it triggers investment, creates jobs, strengthens the local market, and improves the quality of life of Mexican families. In order to analyze these proposals, this thesis reviews multiple reports from the Mexican government, industry, and academia. This is an exploratory document that will aim to provide useful information to policy makers in Mexico. / by Alba Medina Flores. / S.M. in Real Estate Development

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2015. / Cataloged from PDF version of thesis. / Includes bibliographical references (page 47). / This paper examines the spatial structures of commercial real estate buildings (Offices, Retails) in four Chinese cities: Beijing, Shanghai, Shenzhen, and Guangzhou. In contrast to previous studies, this paper focused on the changes of the spatial pattern by involving the time variables to categorize the buildings into 3 time periods (Before 1995, 1996-2005, and 2006-2015). The research questions are: How strong and general is the tendency of offices and retails to cluster? At which spatial scale these clustering occurs? How does the clusters change with time? To test the localization in those cities, I applied distance-based agglomeration measures developed by Gilles Duranton and Henry G. Overman (2004) in this largely new context - to measure spatial structure in different time period at the metropolitan scale, which avoid problems relating to scale and borders. I find that: (1) Agglomeration forces cause offices to cluster in all of the four cities, but the clustering is much weaker in retails than offices. All four cities exhibit some localization in both types of real estate products. (2) With the development of cities, the clustering scales for all of the four cities are expanding. (3) There are some differences in the spatial structures among the four cities, the reasons might relate to the functions and the development stages of each city. Overall, the more mature a city's real estate market is, more dispersal spatial pattern is observed. (4) With the expansion of cities, the sizes of shopping centers and offices are increasing, too, especially between year 2006 and 2015. / by Meng Xu. / S.M. in Real Estate Development

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2016. / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 79-80). / The affordable housing crisis in the United States is real and persistent. In the face of growing economic inequality and the failure of public housing programs, American cities need the development industry to deliver more affordable housing units than ever before. Instead, the affordable housing development process is regarded as a fragmented nexus involving multiple public and private sector parties. Raising capital for affordable housing projects is notoriously complex; it is common to see individual apartment buildings funded by a mix of any of the following: public grants, federal tax credits syndicated through private lenders, interest-free debt from community lenders and municipalities, mortgage debt from commercial lenders and private equity. A good affordable housing developer must be adept at understanding the covenants and eligibility requirements of every source of funds as part of the development process, and work with the myriad parties to compete or apply for funds. This long and convoluted process raises high barriers to entry into the industry and slows down the production of a public good. This thesis investigates the possibility of an alternative funding model for affordable housing development and proposes that developers go public to raise capital, adopting the same tried-and-tested method of financing real estate development that commercial developers have relied on for nearly 30 years. This thesis will argue that a REIT can function as an organizing mechanism to simplify the process of raising capital across different pools of institutional equity, private wealth and public funding. By being able to turn to the widest capital markets for fundraising, affordable housing developers can be nimble in choosing when to raise capital and flexible in deploying it to build experimental mixed-income and workforce housing, two typologies of housing that have been identified as helping to make urban areas more inclusive. Through this thesis, I posit that the affordable housing development REIT can serve as the central platform to consolidate the various pools of triple-bottom- line investors and to create for the first time a public market for an asset class that exhibits all the features of a stable, long term core investment. / by Xiang Ying Estelle Chan / S.M. in Real Estate Development

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2018. / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 61-65). / One might argue real estate is entering a period where technological innovations have greater impact on investment returns than conventional metrics related to the overall economy. While this has already been demonstrated by e-commerce disrupting the retail and logistics landscape, industry leaders are now starting to become more and more attentive to mobility related implications, resulting from the recent advent of ride-hailing providers like Uber, Lyft, and Didi. Broad literature, generated over the past decades and applying widely recognized econometric concepts, emphasizes the significance of public transport access for residential real estate values. More recently, claims arose that the value of proximity to public transport is being challenged by ride-hailing, serving as a substitute for rail and bus services. While the existence of a certain substitution effect is supported and documented by academic studies, research about its impact on real estate is rare. This thesis analyzes the value change of public transport access over time, by applying a hedonic regression model to a sample of 257,100 residential real estate transactions which have taken place in New York City between January 2005 and June 2018. The distance between each individual home and the closest of 550 heavy rail transit stops is used to determine the value of proximity to public transport in these transactions. Contrary to anecdotal claims and economic theory, the results of this analysis suggest that the value of proximity, i.e. rent gradients towards heavy rail transit stops, increases over the observed time period, especially since the emergence of Uber and within walking distance (0.5 miles) from transit access points. Since mobility innovation's long-term effects might not be in line with short-term implications and notable regional variances might exist, the thesis recommends ongoing analysis of the subject matter and expanding the research from New York City to various markets with different urban shapes, transportation modes, and demographics. / by Dietmar E.A. Weissmann. / S.M. in Real Estate Development

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Program in Real Estate Development in Conjunction with the Center for Real Estate, 2012. / Cataloged from department-submitted PDF version of thesis. This electronic version was submitted and approved by the author's academic department as part of an electronic thesis pilot project. The certified thesis is available in the Institute Archives and Special Collections. / Includes bibliographical references (p. 101-102). / Recently, we have observed significant changes in which corporate offices and residential buildings have been relocated from the suburbs back into the city. Does the observation mean that there is a real economic movement back into the cities by firms or households? If there is any movement, how does this trend drive any changes in the commercial real estate properties? Does it significantly affect the performance of properties in the cities as opposed to the other areas? Does the performance of the properties in the city exert any influence on the investors who prefer commercial real estates in the US metropolitan areas? This thesis aims to provide answers to the major question on the "back to the city" movement and its influence on real estate markets. The answers are summarized as five major conclusions. First, the result of this study clearly points out that there is the "back to the city" movement although the change has happened only in the Urban Cores (UC) not the entire Metropolitan Statistical Area (MSA). Second, the economic performances between UC and MSA maintain a close link with each other. However, the volatility of the office net rental rate is much less in UC while the change in gross rental growth is almost same between UC and MSA. The UC rental growth of the multifamily is a little less volatile than the MSA growth. Third, the investment performances in MSA closely relates with the capitalization rate of UC. While the level of cap rates of UC offices is more volatile, the UC cap rate of apartments is more stable than the MSA rate. Fourth, the effects of population and employment on the real estate market enable the research to understand the current pricing behaviors. The difference in population and employment between UC and MSA explains the disparity in investment performances of the two areas. However, while the MSA rental growth explains the movements in the cap rate of MSA in accordance with the "rational" pricing, the effect of UC rental growth rates on the cap rate doesn't match with the pricing model, indicating that the rental growth rate of UC empirically leads to increases in the cap rate of the area. The nature of these outcomes offers that the UC market is not explicable by the "rational" pricing model. The result also indicates that the difference in rental growth rates reveals the positive relation with the gap in cap rates, which is complete opposite to the "rational" investors' behavior. Lastly, finding the differences in economic and investment performances between UC and MSA motivates to explore the determinants of the relationship. Although the study experiments the effects of manifold market characteristics, the explanatory variables used in the model do not fully explain the inequality between two specific markets. Thus, it is required to study further the determinants. / by Inae Hwang. / S.M.in Real Estate Development

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Program in Real Estate Development in Conjunction with the Center for Real Estate, 2011. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Cataloged from student-submitted PDF version of thesis. / Includes bibliographical references (p. 91-94). / This thesis explores the likely impacts the proposed changes to lease accounting would have on corporate real estate decisions. The Financial Accounting Standards Board (SFASB) and the International Accounting Standards Board (IASB) plan to establish a unified set of principle-based accounting systems into a unified set of principle-based standards in an effort to improve financial transparency and comparability across world markets. One component of this plan, centered on reform of current lease accounting standards, would eliminate the distinction between capital and operating leases and require almost all leases to be recognized as an asset and liability on the balance sheet. This represents a significant departure from the current accounting guidance under Generally Accepted Accounting Principles (GAAP), which requires American companies are only required to disclose only limited information about future operating lease requirements in the footnotes of financial statements. What's more, empirical evidence suggests that many companies structure leases to obtain this type of offbalance- sheet financing that operating leases afford. For companies with relatively large operating lease portfolios, the new accounting standards would have a significant impact on their balance sheets. If these companies consider accounting treatment in their real estate decisions, they may be inclined to pursue alternative real estate strategies to mitigate this impact. That being said, the corporate real estate decision-making process is complex; therefore any strategy aimed at achieving a specific accounting treatment must consider other relevant and potentially more important factors. This study analyzes the proposed changes to lease accounting and explores how corporate real estate managers consider the effects of accounting in their real estate decisions. Specific hypotheses are tested through targeted interviews with a diverse group of public and private tenants and landlords to identify the variables that would determine a particular company's incentive to change its real estate strategy in response to new accounting guidelines. Results of interviews are discussed and predictions are made regarding the future of real estate leasing strategies. / by Timothy R. Canon and Christina A. Fenbert. / S.M.in Real Estate Development

Thesis (S.M. in Real Estate Development)--Massachusetts Institute of Technology, Program in Real Estate Development in Conjunction with the Center for Real Estate, 2011. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Pages 93 and 94 blank. Cataloged from student-submitted PDF version of thesis. / Includes bibliographical references (p. 90-92). / Prevalent methodologies utilized by resort second home development professionals to quantify demand for future projects are identified and critiqued. The strengths of each model are synthesized in order to formulate an original, composite methodology for demand quantification with industry-wide applicability. This "best practices" synthesized model is then applied to a real world case study and back tested in an effort to gauge its accuracy. After analysis of its performance, modifications are made and an innovative method for forecasting absorption is added to its framework. The resulting product of this effort is the creation of the Comprehensive Resort Second Home Demand Forecasting Model. / by Christopher J. Wholey. / S.M.in Real Estate Development

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2016. / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 105-108). / Robot van der Rohe is a redevelopment proposal for the Seagrams Building at 375 Park Avenue in New York City. A concept for a Conscious Building is developed after a thorough introduction of financial, architectural and technological underpinnings. The topics of innovation economics, real estate finance, building design and construction, architectural history and theory, ubiquitous computing, sensor technologies, urban economics and design, zoning and network science are covered. Robot van der Rohe represents a future vision of a dynamic and fluid high-rise, mixed-use office tower. By utilizing a sophisticated suite of sensors, the building is able to better respond to the needs of its occupants, operate more energy efficiently and encourage a productive and happy workplace. By quantifying how teams work within the building, Robot van der Rohe represents the next generation of office environments and will allow for the reduction in the economic cost of social capital. By reducing the cost of a fundamental input of production, such a Conscious Building is poised to capture entrepreneurial profits through increased rents. In the world of the Conscious Building, the computer programmer augments the architect and the building owner becomes curator of a forever-innovating network of tenants. / by Charles Alexius Steelman-Dyer. / S.M. in Real Estate Development

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2014. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Cataloged from student-submitted PDF version of thesis. / Includes bibliographical references (pages 50-51). / We all know for diversification purposes we cannot "put all our eggs in one basket." Markowitz's Modern Portfolio Theory leads us to diversify our portfolio to achieve the highest Sharp ratio. Fama-French's Three-Factor Model links the asset's characteristics to the risk-return profile and further advances the portfolio theory. However, in practice, due to uncertainty and lack of data, none of those theories gets implemented in a way that can help construct a complex portfolio and generate portfolio optimization strategies. Especially for the Commercial Real Estate Industry, investors face challenges in long-term data collection and a tremendous amount of data processing. In 2009, Michael W. Brandt, Pedro Santa-Clara, and Rossen Valkanov explored a new approach that fundamentally improves the portfolio optimization methodology. They modeled the portfolio weight in each asset as a function of the asset's characteristics and the associated capital market conditions. The coefficients of this function are found by optimizing the investor's average utility of the portfolio's return over the sample period. This approach is computationally simple, and can be easily modified to include more asset characteristics and capital market variables. In a later study, Alberto Plazzi, Walter Torous, and Rossen Valkanov applied Brandt, Santa-Clara, and Valkanov's methodology to optimize commercial real estate portfolios, and explored several techniques in commercial real estate portfolio management. This thesis follows Plazzi, Torous and Valkanov's research framework, applies the methodology to a specific real estate investment fund, and proposes several innovations to further explore the application of this theory in real estate fund management. First, I propose to rebalance the portfolio annually because real estate transactions are less frequent compared with other types of assets, such as stocks or bonds. Second, I construct sub-portfolios by property type and region because the sub-portfolio optimization can provide practical suggestions to specific asset managers in charge of a specific type of property or a specific region. Finally, I include capital market indicators, such as the Chicago Fed National Activity Index and Liquidity Metrics. These innovations use academic research to inform practice, thus providing asset managers practical suggestions to guide wealth allocation across different commercial properties, and to take advantage of movements in expected returns arising from the changing macroeconomic conditions. / by Yanjia Liu. / S.M. in Real Estate Development

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2014. / This electronic version was submitted by the student author. The certified thesis is available in the Institute Archives and Special Collections. / Cataloged from student-submitted PDF version of thesis. / Includes bibliographical references (pages 62-63). / The main objective of this study is to understand and analyze the risk adjusted returns of office building and portfolios and determine whether institutional real estate investors are allocating capital efficiently. NCREIF data from years 1999 to 2014 years will be analyzed. The data will be split into three proportional classes, upper (Class A), middle (Class B), and tertiary (Class C) classes based on asset price per square foot and then their risk adjusted returns will be analyzed with the Sharpe Ratio. Further, based on these findings, the thesis will determine whether a quantitative measure of building classification can be established. Currently, real estate assets, office or otherwise, are only classified qualitatively / by Nason Khomassi and Swapn Shah. / S.M. in Real Estate Development