Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2017 / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 63-64). / Big Data Analytics is a term that represents an entire spectrum of analytical applications utilizing significant quantities of data, ranging from optimization at one end of the spectrum, to gaining new insights at the other end of the spectrum. This thesis focuses on the latter, leveraging private, public, and manually developed databases at the MIT School of Architecture and Planning's Center for Real Estate's Real Estate Innovation Lab (REIL) to observe, dissect, and ultimately improve our collective understanding of the current state of urban technology databases. The thesis seeks to explore how companies are providing data within the realm of the built environment, through a study of the information products that they offer. To preserve the confidentiality of the original commercial databases and limit the scope of the investigation, the dataset for this study contains only the data fields from 31 unique databases provided by 14 commercial real estate data aggregators. In essence, the dataset for this thesis is a database of databases, stripped of their numerical information and focused on a study of the variation in data. For analysis this employs computational, statistical, and graphical methods to interpret the information provided by the commercial real estate data aggregators. With an increasingly digital future ahead, this thesis proposes a general framework for examining numerous databases and their respective approaches to the built environment. This thesis also explores the merits of specific processes and presentation methods that translate an immense and disparate array of information into user-friendly analytical tools. / by Ryan Michael Stroud. / S.M. in Real Estate Development / S.M.inRealEstateDevelopment Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2017 / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 54-60). / The United States has a large supply of parking and with the adoption of autonomous vehicles, the demand for these spaces could change dramatically. Parking is among the most prevalent land uses occupying up to 31% of urban area. It is estimated that there are 3.4 to 8 parking spaces for each car in the US yielding 800 million to 2 billion spaces that could cover an area the size of West Virginia (Chester, Horvath, & Madanat, 2010). With fully autonomous vehicles expected on the consumer market by 2020, the $30 billion parking industry will experience enormous changes as cars evolve. This thesis models the effects of autonomous vehicles on the financial performance of urban parking garages. The future of parking and autonomous vehicles will be anything but smooth or certain, and this work harnesses the power of uncertainty through repeated random number simulation in financially modeling autonomous vehicles' impacts on parking garages. The results indicate that parking in the short term is a risky investment and in the longer term may not be a viable asset. As the only class of real estate explicitly built for vehicles, they have a high degree of exposure to changes created by autonomous vehicles. This is illustrated by significantly negative net present values and minimal returns of the simulation outputs. This exposure will continue to grow as the stock of parking spaces increases with minimum parking requirements for new construction. Recommendations from this research would be to limit new supply of parking to allow for greater utilization of existing stock, more beneficial use of urban land, and better use of construction and financial resources. / by Paige Pitcher. / S.M. in Real Estate Development / S.M.inRealEstateDevelopment Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2017 / Cataloged from PDF version of thesis. / Includes bibliographical references (page 44). / The purpose of this research was to explore portfolio diversification by property type for Korean institutional investors in the U.S. real estate market. In the process, we analyzed the rapidly increasing Korean investment in the U.S. real estate market and identified the points cross-border investors should consider for proper asset diversification by property type. One of the main reasons investors make cross-border investments is to diversify their portfolios. Thus, cross-border investors need to properly diversify their investments by considering correlations between foreign and domestic properties. However, Korean institutional investors have shown an apparent preferential tendency for the U.S. real estate market, much more than other cross-border investors, and as such, they risk under-performing compared to investors with more diversified portfolio strategies. Therefore, in this research, 12 optimal portfolios were calculated by applying Markowitz's modem portfolio theory. Following this, the Sharpe ratios of calculated models without limitations of investment were compared to investment solely in Korean properties and U.S. office properties by Korean institutional investors. These analyses revealed considerable inefficiencies in the current international investment trend of Korean institutional investors. In addition, the comparisons of the optimal portfolios with correlations from more recent market data suggested that if Korean institutional investors continue investing in only office properties in the U.S. real estate market, their investment inefficiencies will become much larger than they currently are. Thus, we concluded that they should diversify their investment in U.S. residential, industrial, and retail properties and Korean properties rather than just investing in U.S. office properties and Korean properties. / by Chaungwon Cho. / S.M. in Real Estate Development / S.M.inRealEstateDevelopment Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2017 / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 54-58). / Corporate real estate is increasingly seen as a strategic resource contributing to organizational performance rather than a mere operational asset focusing on overall business cost efficiency. There is considerable upside to be realized in making workplaces more efficient, productive and more conducive to work performance. Yet, the question whether good design correlates to increased financial outcomes has not been explored much. This thesis studies the economic impact of workplace performance by linking post-occupancy analysis to financial outcomes. The paper uses two data sets to explore if a correlation exists between good design and financial value by linking workplace performance and effective rents - Gensler's post-occupancy Workplace Performance Index (WPI SM) data, and CompStak's Manhattan rental database. The premium effect of WPI-scored leases is best observed when analyzed with respect to location characteristics (neighborhoods) and time-fixed effect (lease commencement date) reflecting a premium over non-scored leases. At the same time, there is a statistically significant indication that Below Average Work Performance, as reflected by their lower WPI Score, have lower effective rents compared to non-WPI scored leases. Workplaces with high WPI (SM) scores signify higher economic productivity compared to their lower scoring counterparts. The study is a first step towards linking workplace performance to effective rents to highlight the financial implications of developing high performing workplaces. The conclusions from the study are of value to stakeholders involved - real estate developers, landlords, tenants, architects, interior designers, and institutional investors. / by Suneeth P. John and Zoya Puri. / S.M. in Real Estate Development / S.M.inRealEstateDevelopment Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2019 / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 169-177). / Co-living, while a relatively new concept for the real estate industry, has become increasingly pervasive within the United States over the past decade. This form of communal rental housing offers reduced personal and private space in exchange for certain benefits, including a 15-30% reduced rental rate when compared to studio units. Changing social and economic factors have led to an increased interest in this type of residential product among both real estate developers and tenants alike. Today, there are approximately 30 co-living companies operating in the United States with close to 3,500 rooms in operation (JLL 2019a). Furthermore, this growth is expected to accelerate as global funding for co-living has increased by more than 210% since 2015 and around 7,000 rooms are planned to open in the United States over the next two years (JLL 2019a). However, while the concept has gained traction, it remains a nascent product type within real estate. Even with high growth, co-living's long-term sustainability remains to be proven. This thesis uses a mixed-methods approach to evaluate the long-term resiliency of co-living as a product type. Our research provides insight into the various types of co-living business models currently active in the United States, and we conduct a thorough review of the international and domestic co-living markets. Financial models are utilized to assess the financial resiliency of co-living given potential changes to certain market conditions and demand drivers. We investigate the planning policies affecting co-living in targeted markets in the United States. The thesis concludes with a report on the market perception of co-living from real estate professionals and the general populous. / by Sam Pepper and Aaron Manji. / S.M. in Real Estate Development / S.M.inRealEstateDevelopment Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2019 / Cataloged from PDF version of thesis. / Includes bibliographical references (page 86). / Joint ventures are widely used in real estate investments, and especially so in development projects where partners bring different value to the venture: an Operating Partner who has the desire and operational capabilities to manage the investment but lacks the capital to fund the entire project, and a Money Partner who has the capital, but lacks the expertise and the desire to manage the project. A formal joint venture (partnership) agreement governs the relationship between the Operating Partner and Money Partner in the development project. Real estate investment performance is generally evaluated at the property level (before considering the impact of financing) and then at the venture level (taking into account the impact of financing). Differing real estate investment performance within the venture, due to specific partnership terms, has generally taken a back seat for performance evaluation, and is less of a focus when the investment is performing well. / However, with the current competitive real estate market flooded with cheap financing options, partnership terms between the Operating Partner and Money Partner ought to be scrutinized more carefully, as certain terms can serve as additional sources of return, or "safety net", when dark clouds over the real estate market loom ahead. This paper will focus on partnership terms in a real estate joint venture which can be quantified, discuss the metrics that can be used to evaluate the investment performance of joint ventures, and explain the need to employ probabilistic modelling methods. After setting that context, deterministic modelling methods (Discounted Cash Flow, or "DCF") as well as probabilistic modelling methods (Monte Carlo simulation) will be applied to quantify the impact of relevant partnership terms on a hypothetical real estate development project. / This will be followed by a discussion on how one can use the results of the Monte Carlo simulation alongside traditional DCF with scenario analysis which is more commonly used in the industry. Lastly, the paper will provide a casual narrative from the perspective of a financial analyst who is doing financial modelling from the asset level down to the partnership and partner level and using Monte Carlo simulation analysis. / by Wee Kian, Alvin Ong. / S.M. in Real Estate Development / S.M.inRealEstateDevelopment Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2019 / Cataloged from PDF version of thesis. / Includes bibliographical references (page 36). / Leaseholds play roles in many different types of transactions -- from single-family home purchases to multi-tenant office tower developments. Despite their flexibility, however, leaseholds are rare in the US and are not widely understood by investors and developers. Compared with freeholds, leaseholds involve additional layers of complexity and can present valuation challenges. If not structured thoughtfully, they can substantially erode the value of the real estate by lowering its quality and usability. Nevertheless, leaseholds can be useful devices to facilitate real estate investment and significantly impact communities by bringing together parties that would not have otherwise worked together. This thesis focuses on leaseholds in the US: how they are valued, how they are structured, and what issues they pose. It analyzes the motivations behind each party involved in a leasehold and finds that they can benefit from acting more like joint venture partners rather than opposing counterparts, specifically concerning issues related to leasehold improvement financing and the redevelopment option. / by Justin Lai. / S.M. in Real Estate Development / S.M.inRealEstateDevelopment Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2019 / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 50-51). / This thesis affirms that self-storage is further maturing into a core type asset class in juxtaposition to the characteristics of the traditional core asset types: multifamily, office, retail and industrial. This shift is shown by an increased participation of traditional core investors in the space, the resiliency of the product and the future of the industry. Core investors seek a risk and return profile that favors the conservative end of the security market line. They seek more stabilized and forecastable assets than value add or opportunistic funds (Geltner, Miller, Clayton, & Eichholtz, 2014). Even though the percentage of self-storage in institutional portfolios is still small due to fragmentation of the industry and self-storage's total market share, the investment opportunity is growing due to its proven resiliency through market and natural disruptions. This resiliency is evident in the micro-level occupancy and cash flow performance of self-storage properties as well as the macro-level total returns of the class over time. The resilient nature of the class and the resulting higher long-term returns have attracted core asset investors to diversify their portfolios to include self-storage assets at an increasing rate. The future of self-storage is strong due to positive sentiment and culture associated with self-storage. Sophisticated parties on both the user and investors sides are increasing their participation in the industry. The resulting outlook is positive for growth and maturation of the self-storage asset class. / by Charles Hope. / S.M. in Real Estate Development / S.M.inRealEstateDevelopment Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2019 / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 55-57). / This thesis examines an emerging product type, single-family build-to-rent, and tests its potential application in tertiary markets of the United States. The build-to-rent ("BTR") model has proven successful in a number of fast-growing secondary markets, such as Phoenix. However, the attributes of these markets differ widely from tertiary markets. This paper examines the key drivers in Phoenix, such as demographics, land costs, construction costs, cap rates and rents that have made this product successful and compares these metrics against those of tertiary markets in an effort to evaluate whether single-family BTR is a viable product type in those markets. Case studies are used to compare secondary markets to tertiary markets. Oklahoma City, Tucson and Fresno are selected as the tertiary markets based on their varying affordability scores as measured by the Housing Opportunity Index. This index was chosen to test whether homeownership affordability predicts BTR success. While there are different varieties of BTR products, these case studies examine a hypothetical 20-acre project of 160 single-family detached homes of approximately 1,800 square feet each. Untrended Returns on Cost ("ROC") were found to be similar to Phoenix in Oklahoma City and Tucson. However, due to the slower rent growth and higher cap rates of these tertiary markets, Internal Rates of Return and Equity Multiples were found to be too low to justify this specific BTR design. However, further institutionalization of this asset class and a reevaluation of the pricing of SFR volatility has the potential to lower cap rates to a level that justifies the BTR product in tertiary markets. / by Bretton C. Finley. / S.M. in Real Estate Development / S.M.inRealEstateDevelopment Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate

Thesis: S.M. in Real Estate Development, Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate, 2019 / Cataloged from PDF version of thesis. / Includes bibliographical references (pages 54-60). / Digital-native retail brands have business models that sit at the intersection of two major narratives in retail: technology and brick-and-mortar stores. Founded online, they rely on technology to attract a Millennial customer base that gets most of their brand information over the internet. Digital-native retailers are also opening, not closing, brick-and-mortar stores at an accelerating pace. Recent studies have suggested that digital-native retail brands will grow from roughly 600 to over 1,400 brick-and-mortar locations in the coming years. However, these projections only consider existing brands, and industry trends suggest that the actual number of physical stores opened by digital-native retail brands will be significantly greater. Real estate owners that develop leasing strategies focused on the specialized needs of digital-native retail brands are positioned to benefit. / The brick-and-mortar store locations of digital-native retail brands provide key insights into their site selection criteria and brand strategies. Store locations are based on customer data from their online stores. As a result, the sites brands select indicate locations with strong target consumer demand. To analyze trends, we identified 58 major digital-native retail brands that have opened a permanent physical store location in the United States. Then, we collected the addresses of the 608 individual stores that they operate. Among other insights, the store location results indicate that digital-native brands concentrate in New York, Los Angeles, and San Francisco before moving into other major metro areas. Within each metro area, digital-native brands agglomerate into both shopping centers and retail streets located within high-income neighborhoods. / Retail property owners have an opportunity to leverage their expertise in physical retail to assist digital-native retail brands in successfully establishing themselves offline. A brand's first few brick-and-mortar locations are a high-stakes bet that falls outside of the company's core competency. Beyond leasing the physical space, landlords can offer support in identifying store locations, completing tenant improvements, and assisting in the store permitting process. Real estate owners and investors that provide low-capital, turnkey spaces and a streamlined leasing process will be attractive to a growing number of digital-native retail brands. / by Jeffrey Dougherty. / S.M. in Real Estate Development / S.M.inRealEstateDevelopment Massachusetts Institute of Technology, Program in Real Estate Development in conjunction with the Center for Real Estate