Background. Harkening back to my Wisconsin heritage and the teachings of my mentor, Jim Graaskamp, I recognize that real estate decisions that affect the spatial side of the industry are irretrievable commitments of scarce resources. That is, it is too expensive and costly to replace a recent development with one that may be a better or most fitting use. As such, it is critical that we "get it right" when developing real estate. On the capital or financial side of the industry, the poor decisions can have even more dramatic outcomes ranging from the riches of unearned windfalls to the pain of unexpected wipeouts. When the spatial and capital sides of the equation are put together, the results of poor decision-making can be devastating, as we are experiencing in the current real estate market.

Types of Questions. In my view, the magnitude of the collapse of the residential, commercial and capital markets and the devastation that came with it could have been dampened, if not avoided. The failure to avoid it is simply unacceptable. I believe that if we had paid attention to fundamentals, remembered “lessons learned” from the past, maintained a proper balance between the capital and spatial sides of the market, and paid attention to the behavioral nature of the asset class, we would be going through a normal cycle; not the devastation we are facing. So now, it’s time to take a hard look at how we approach the discipline; to explore the tough questions that will help us raise the bar on ourselves as academicians and professionals. That is what I intend to do with this section of my website.

DrD

The responses to these questions represent my humble opinion; okay maybe not so humble but clearly my opinion. They are not provided to render advice or counsel, but to provide food for thought so you can develop more informed positions on a variety of real estate issues.

• Q112. Market Timing and Recovery. When do you think things will turn the corner for the economy and for real estate markets? How will we know we turned the corner and what do we look out for so we know when it's here?
• Q113. Cap Rates. What is your outlook for cap rates and when will they peak?
• Q111. Real Estate Outlook 2010. We are seeing a lot of negative press about the real estate market. What is your outlook for the economy and the commercial real estate market for 2010?
• Q110: Institutional Equity Real Estate Performance. How has the institutional market performed over the past year and what are the prospects for the next 2 years or so?

• Real Estate Market Conditions. This topic focuses on current and prospective real estate market conditions, covering major property types and markets.
  • Q104: Real Estate Cycles. We are hearing a lot of talk about real estate cycles. Why do we have cycles in real estate and is real estate cyclical or countercyclical with respect to the broader economy?
  • Q106: The Three C's. In one of your articles in the Appraisal Journal you mention the "Three C's." Can you expand on that concept and explain what you meant and its implications for the industry? What are some of the lessons learned?
  • Q108: How did we get where we are in mid-2009? A number of observers suggest that we are in unchartered territory for the commercial real estate market. Is the situation we face in mid-2009 really unique? How did we get here? What is your outlook?
• Institutional Real Estate Investment. This topic covers the full array of institutional real estate investment activity.
  • Q107: Inflation. I was very impressed with your insight and pragmatic business approach to the current real estate cycle. I am preparing for a strategic planning session and wanted to get some insight/information on how real estate performs during periods of high inflation. 

• Sustainable Real Estate. This topic covers the broad area of "sustainable real estate" ranging from optimal land use decisions to green buildings.
  • What is sustainable? There's been a lot of talk about "sustainable real estate." What do you think about the concept and how should the real estate market address it?
  • Most Fitting Use. You make reference to "Most Fitting Use." I'm not familiar with that concept but have learned that real estate should be put to its "Highest and Best Use." Please explain the difference and why it's important.

• Growth Management and Real Estate. The political/regulatory environment, policies and practices have a significant impact on the real estate market. This topic will explore various issues surrounding efforts to manage growth wish special emphasis on unintended consequences.
  • Density. We hear a lot about density as a solution to urban sprawl. What are your thoughts on density as a planning tool? What are the issues that should be considered regarding density?

• Real Estate Capital Markets. This topic covers a range of economic and capital market topics, many of which are covered quarterly in my Market Updates.
• Real Estate Fundamentals. This topic will explore "fundamental" reale estate issues affecting supply and demand. It will also cover emerging trends and issues.
• Retail Real Estate. This topic will cover a range of issues surrounding the retail industry including formats, trends and outlooks.
• Real Estate Issues. This topic will cover a range of contemporary real estate and related issues.
• Real Estate Education. In this topic I will respond to questions regarding my thoughts on the state of real estate education.
• Real Estate as a Behavorial Science. I am a proponent of elevating real estate to the level of a behavioral science. This topic will explore my thoughts on the discipline and how it can be elevated to a distinct, interdisciplinary field.

If you have a question, Contact Me. If you are looking for clarification or expansion on a particular question, please indicate the ID# in the lower right of the answer.