The Paul Merage School of Business is promoting “leadership for a digitally driven world” How do you see that relating to the real estate industry?
The digitally driven world is changing numerous dimensions of the real estate industry, and in ways that we haven’t yet observed or even thought of yet. But two things stand out. One is the way all of the participants in the industry are going to make use of the tremendous amount of information that becomes available in a digital environment. From information vendors to platforms that facilitate real estate transactions, the understanding that market participants will bring to their negotiations will potentially be far greater than in the past. Everybody will need to be on their toes just a little bit more than before. A second way that the digitally driven world will change real estate is in the physical nature of the buildings themselves. A prominent example is how so-called smart buildings are already increasing the energy efficiency of structures. Perhaps as important, research by prominent scholars has found that both tenants and investors are generally willing to pay more to occupy and invest in smart, energy-efficient real estate. Another dimension to the smart buildings revolution, as we saw at the most recent CRE-NAIOP breakfast, is how the productivity of structures that incorporate sophisticated digital technologies for inventory and logistics, and their links to well-known trends in online retail, have changed the game in the distribution real estate sector.
How is that changing the way you teach today and what you cover?
Classrooms at UCI have always been on the cutting edge of bringing digital content to students, and we as real estate and business instructors are foolish if we do not take advantage of the technology at our fingertips. Students expect nothing less. As for content, we want our students to be at the cutting edge, and to be ready to face the challenges that will confront real estate professionals. An awareness of the changes taking place is an important part of our curriculum.
What do you see as the greatest challenge for the next generation entering commercial real estate?
The Paul Merage School is committed to incorporating digital content into all of its courses, with the intent that its graduates be agile enough to respond to disruptive forces that change the way we do business. People in real estate already know that the potential for disruption is always a part of doing business. This business has always dealt with massive amounts of uncertainty; every project and product is inherently unique, so that more than in any other sector, past performance is no guarantee of future success. The greatest challenge facing every generation entering commercial real estate is dealing with, responding to, and earning a return in the face of, all the risks and uncertainties inherent in the business. The fact that the current generation is facing new kinds of disruptions from the digital revolution, in all its forms, is a difference in degree more than a difference in kind.
How would you characterize the SoCal commercial real estate market? Where are greatest opportunities? Where are greatest challenges?
I take the long view, that California and Orange County will always be a magnet that will draw innovative and industrious innovators and entrepreneurs from all over, that will create opportunities for those that can create the space for them to pursue those innovations ( and be innovative themselves in the process). Living and working in California will always be something that people aspire to, and that means that the long-term prospects for the real estate community here are as bright as they can be. That being said, there are numerous challenges in the short-to-medium run that are not going to resolve themselves. Granted, some of these seem like perpetual challenges. Prominent among these is the problem of creating affordable housing. While creating affordable housing is easy, it’s the interaction between residential and commercial development that’s hard. Creating affordable housing that is close enough to employment centers and other commercial development so as to minimize the personal and social cost of getting to these places is a real trick. Even defining the terms “affordable housing” and “close enough” are worth considerable discussion, and the role of transport-mode choice in these debates is of first importance. No doubt higher-density mixed-use development will be one broad strategic choice that we will see more of, especially as it increasingly appears to be the choice of many consumers as well.
What do you enjoy most about your new role at UCI?
Oh my goodness, what’s not to enjoy?! As a SoCal native, it is great to be back in Orange County. UC Irvine is a first-class university with first-class students, in a first-class environment. My predecessor, Kerry Vandell, established an incredible Advisory Board, whose members have been supportive and welcoming. I’ve got a great staff, too! I look forward to building on the foundations in place and create an even stronger center in the years to come.