Portland State University is introducing a new master’s program in real estate development this fall, making it one of only two universities in the Northwest to offer the degree. The Master in Real Estate Degree program includes classes in real estate, finance, public policy, and real estate project development as well as electives in the School of Business Administration and School of Urban Studies and Planning. Dr. Gerard Mildner, director of the school’s Center for Real Estate, talks to MHN about the program and its timeliness.
MHN: Why is this program being introduced now? Has what’s been happening in the market led the school to believe that students coming out of this program will be highly desired by the industry?
Mildner: There are several ways to respond to this question. We have been test-marketing the idea of a master’s degree program for several years with our Graduate Certificate program. We feel there is a need for highly trained professionals in this field. While vacancy rates are high for most product types (and development activity low), demand for all real estate programs across the country has fallen. However, we believe we are training students for the next 20 years, not just the next two. Many of the professions are aging and will need replacement hires. Finally, real estate as a career is largely immune from foreign competition. One of the benefits of starting our program now is that this is a great time to be hiring faculty.
MHN: What sectors of real estate will be focused on? Mostly commercial real estate? Our magazine focuses on multifamily, so we are of course interested in how much that sector will be studied.
Mildner: Our program is focused on commercial, multifamily residential and mixed-use development. The main thing this leaves off the table is single-family residential, which for better or worse remains an apprentice-and-master type industry that is highly decentralized and not requiring employees with graduate education. Because multifamily housing is one of the sectors studied, we include a housing economics course and an affordable-housing finance course as required in our curriculum.
MHN: Speaking of multifamily, some are expecting a building boom in the apartment industry. How does the timing of this program being introduced tie in to that?
Mildner: As you indicate, the multifamily market is the one sector where vacancy rates have remained low, partly as housing consumers have been scared off from buying single-family homes due to the fall in housing prices and partly due to the more stable financing environment for apartments. In our last three workshop classes, the students have focused on multifamily because that is the market with greatest potential. I also agree that with the eventual expansion of employment in the United States, apartment markets will be the first to expand. I don’t think any of this is related to the creation of our master’s degree program, but it probably means that students will likely do case-study and workshop projects from that sector of the market for several years to come.
MHN: Is there a particular need in the Northwest right now that needs to be met?
Mildner: There are several ways to respond to this as well. First, like a lot of cities, Portland and Seattle have continued demand for workforce housing, particularly near the downtown core. We need incentive programs and relaxed zoning regulation to make that happen. Second, Portland has a particular need for industrial land supply that our land use regulation is not meeting. Third, Oregon and Washington are following the same path of growth control and high land costs that have affected California in the last 30 to 40 years. The challenge is whether it will constrain economic opportunity and employment growth in the future. Of course, one of the main ways to adapt to the high land-cost environment that these kinds of regulations impose is multifamily housing. Oregon has been fairly aggressive in reducing the barriers to multifamily housing development, but we need to remain vigilant to ensure that remains possible.
MHN: Regarding some of those areas you just mentioned–incentive programs, zoning regulations, reducing barriers to development–will your students get the opportunity to engage these kinds of issues in the field during the course of their study?
Mildner: The fieldwork aspect comes through in our case-study sequence, Real Estate Development I and II, plus the capstone Real Estate Development Workshop. In RED I, students study a completed development, interview people, learn what worked and make an assessment. In the RED II course, students choose a developable site, possibly a parking lot, and study its market feasibility, its zoning restrictions; assess whether a zoning change is warranted and could be obtained; and do a pro forma. In the Workshop class, the entire class works as a team to develop a multi-block site, testing the zoning envelope, exploring incentive and subsidy programs, and seeing if the project fits well with local community plans.
In a classroom setting, they study LIHTC and other programs in the Affordable Housing Finance course. They study zoning and development barriers from a policy perspective in the Housing Economics course.