PLAN 74: Article
Exploring The Realities Of Realty

MSRED Students Tour US Development Sites

In a nine-day intensive this spring, eight candidates for the MS in Real Estate Development (MSRED) visited three major US cities to meet with representatives from 35 real estate companies, in the process gaining an inside look at real estate's micro and macro levels, focused especially on issues of sustainability.

Joined in San Francisco, Portland and Chicago by Tony Ciochetti, Chairman and Director of the MIT Center for Real Estate – which administers the MSRED program – students visited organizations ranging from small private enterprises to large pension funds to immense, transformative infrastructure projects.

One of their stops in San Francisco was the Transbay Redevelopment Project, part of an inter-agency effort to develop a new multi-modal transit terminal on the site of the existing Transbay Terminal. The project aims to transform the surrounding area into a mixed-use, transit-oriented neighborhood consisting of office, hotel and retail space, along with 3400 new housing units – 1200 of which are to be designated affordable.

The tour and discussion – hosted by a panel of MSRED alums who are involved in the project – gave students first-hand knowledge about the complexities involved in developing a project of this scale as well as the scale of MIT’s influence on the project.

The following day, students toured San Francisco’s huge Hunters Point/Candlestick Point Project. The project had its beginnings in 1991 when the US Defense Department closed the Hunters Point Naval Shipyard, leaving the land contaminated and the surrounding area depressed, then expanded when the revitalization of nearby Candlestick Point merged with the Hunters Point project.

Lennar Urban, one of the country's largest public housing developers, plans to redevelop 771 acres along San Francisco Bay with 8500 to 10,000 homes; 350 acres of parks and open space; an 8000 to 10,000 square-foot arena; 700,000 square feet of commercial and retail space; an artists' village; research and development facilities; and possibly a new football stadium.

Students learned of the myriad complexities of public/private partnerships – especially in a project of this scale – including challenges related not only to environmental mitigation and its negative public perception, but also to market fluctuations, and neighborhood and city politics.

Following those visits, and many others in San Francisco, students moved on to the city of Portland to learn how its policies have made it a leader in sustainability. Portland has been winning awards for smart growth ever since the 1970s, in part because of a state regulation that high-density development be contained within a specified border – the city's Urban Growth Boundary.

Portland's growth boundary, along with efforts of the Portland Development Commission to create economic development zones, has resulted in an overall increase in housing and business density and an increase in average house prices, all while maintaining modest growth elsewhere. Interestingly, Portland is one of the few cities where developers are generally not required to provide parking associated with a development – a convention that fosters more pedestrian traffic and greater use of mass transit.

When the students visited Chicago, one of their major stops was the rooftop garden at City Hall, part of the mayor’s Green Roof project to help turn Chicago into ‘the greenest city in America’. The prairie-like rooftop boasts over 100 varieties of plants and includes beehives that not only pollinate the flowers but also produce honey that the city sells.

A convenient measurement of the rooftop's solar performance is right next door. The building's other half is occupied by the Cook County government, which has not installed a green roof, and differences between the two halves of the building are dramatic: on days that City Hall's roof measures 95 degrees, the Cook County roof can approach 180 degrees, cooling that translates into significant savings on air conditioning, with the interior of the City Hall building being cooler by as much as seven degrees.

Another stop in Chicago was the Blue Cross/Blue Shield Vertical Expansion Project, perhaps the most dramatic execution of real options theory in the world. (See story in PLAN 72.) The Chicago headquarters for Blue Cross/Blue Shield was erected in 1997 as a structure of 33-stories and 1.4 million square feet; but it was built to allow for vertical expansion at some point in the future. Since 2006 the project has been rising to what will be its ultimate height – 24 new levels added to reach a height of nearly 60 stories, with a total floor area of approximately 2.2 million square feet – all while company operations continue uninterrupted.

Interestingly, the 33rd story – which once was rooftop level – has a ceiling height of about 30 feet. This height was necessary to allow enough overhead room for the cooling towers on the original roof to continue working as construction proceeded above them. After the new cooling towers went online 24 stories above, the old cooling units were removed; the high-ceilinged floor that remains will be used for a grand boardroom style conference space with sweeping views of the city and lakefront.

Students came away from the site with a keen sense of the implications for sustainability that building for flexibility can introduce, and of the complexities involved.

Read about the project in detail here.

This story is based on a report by Cambridge writer Michael Mack. For more detail on the trip, go here.