Tag Archives: Real Estate

What is the Real Estate Industry?

So, how many times have you heard the phrase “the real estate industry” tossed around? In reality, the real estate industry is more than buying and selling real estate, renovating or constructing buildings, or renting versus owning property. It encompasses products and services that make a structure possible to be designed or located on a specific site, utilized or occupied for a specific purpose, or purchasable by an individual or entity. Products are not limited to raw materials which are combined to produce a structure. Services are not limited to listing, showing and transferring of property, or financing the acquisition of a property.

By definition, an industry is a particular form or branch of economic or commercial activity. The real estate industry encompasses design (architecture, interior or landscaping), engineering, buying and selling of land and buildings, financing, insuring, property management and construction. Each of these components has subsets or specializations. There are so many different aspects that you are not limited to a single area if one of the components is of interest.

Designing a building includes architecture, specifically interior design or decorating, and engineering. Architecture is the style and method of design and construction of a building. Interior design or decorating is the art and process of setting up a room, including colors, layout and placement of furniture and decorations.  Engineering is the science and design associated with site layout (civil engineering), including site setup such as grading (slope of the land) and the need for utilities to reach the structure, as well as structural integrity (structural engineering) which is the skeleton of the building and its ability to support the load or weight of the structure and its use. Other types of engineering are also critical, such as mechanical, plumbing and electrical, each of which is responsible for systems specific to each type of service required by a building for its intended occupancy and use.

There is also much to learn about the financial side of the process. A purchase transaction is more than simply borrowing money to buy a property. It requires a clear title to the property, so you can legally transfer ownership and rights of a structure or lot to another individual or entity. Sometimes legal agreements are made through contracts so that the continued assume use can transfer with the property to  its next owner.  Financing can include a third party lending money, such as a bank or a private lender, someone with the cash available loan it to another for a predetermined interest rate, or someone who can buy the property outright with cash. More often than not, an independent appraisal is required to determine if the purchase price is at market rate for the value of the property. If not, then the third-party lender, or even private lender, may require additional cash contributions or collateral to the purchase. If a transaction is made possible by any means other than buying with the proposed owner’s cash, then insurance is required to guarantee that the value of the structure is maintained in the event of damage.

For each of the previously defined components of the real estate industry, the need for entitlements exists. This includes approvals for use of the land for the intended purpose, which may require zoning variance approvals; design approvals of the proposed development, which may require design review approval or urban design approval, depending on the jurisdiction; approvals for construction or installation of utilities in the public right of way, which may require a public works agreement approval or developer’s agreement approval; and most definitely building permits for construction if that is part of the process.

Architects, civil engineers, financing institutions, developers, builders, all need to have their part of the project reviewed and approved at some point during the transaction or development stage. These entitlement stages can be managed by each participant, or it can be taken care of by an individual known as an expeditor. This role requires the ability to logistically manage the flow of information as well to understand the high priority of providing and disseminating information in a way that keeps the project’s review moving forward, while responses are being provided or changes being incorporated.

As generic as your interest may currently be in real estate, you will find that there are multiple areas of opportunity for you to learn about and eventually pursue.  Starting in one area does not limit you in terms of your professional development. In fact, the pursuit of multiple areas of knowledge and experience will only strengthen your core understanding, and make you a stronger participant in this vital industry.

Lisa Junker is an alumna, advisory board member of UB’s Real Estate program and Vice President, Project Coordination at Colbert Matz Rosenfelt, Inc.

Diversity, Innovation and Courage

Look up and not down; look forward and not back; look out and not in; and lend a hand.
-E. E. Hale

Hello everyone! I’m Monica Robertson, MSB Real Estate board member and architect.  Over my sixteen-year career I’ve seen many highs and lows in a profession that is always evolving.  The real estate community in general has experienced one of the most trying economic periods of our generation.  As an architect, I had the unfortunate position of feeling the effects of the credit crunch early.  Given that my area of practice focuses on multi-family housing design, it didn’t take long to see developers put their projects on hold, mostly to lack of debt and equity financing sources.  In a typical project, the design process for an apartment building takes around nine months and anywhere from twelve to twenty-four months to complete construction.  I remember thinking to myself that the contractors were going to be in for a big surprise once they finished projects that were already in the pipeline and that I’d need to do some planning with my colleagues for ways to brace for the downturn.  So, I wrote three words down in my notebook: diversity, innovation and courage.

The first word, diversity, reflects my thoughts on good business practice.  In general, it correlates to the old adage of not putting all of your eggs in one basket. With anything in your life I feel this saying holds true.  Be diverse, learn and do many different things.  While my firm has a significant practice designing housing, we also design places to heal, learn and play – hospitals, schools, arenas and many other building types in between. This diversity was like an airbag for us.  As a firm we were able to absorb the crash of the housing market better than some of our competitors.

The second word, innovation, came to mind because I knew we were going to need some new tools in our toolbox to set ourselves apart from our competition.  For the limited work that was in the market, there was downward pressure on our fees and upward expectation of better and more efficient designs.  Given that less money was available, we had to design smaller and smarter, capitalizing on well-organized floor plans.  The developers were rewriting their proformas based on new unit mixes, trending toward more studio and one-bedroom units, and increased density.  All signs were pointing to urban, transit-oriented sites with efficient unit plans and amazing resident amenities.  Looking back, I can truly say that some of our best multifamily designs were born in this recession.

The third word, courage, reflected my fear at that time of not knowing what was to lie ahead and knowing that I would need to find courage in times of challenge.  There are many things in life that will require you to be courageous.  If you do not have it, find it.  How? Empower yourself with knowledge and self-confidence.  UB is full of learning and networking opportunities. Ask yourself what interests you most in real estate, find purpose and direction. Absorb as much as you can while you are in school.  As your knowledge base increases, so will your self-confidence.  This will give you courage to move forward and not look back.

Today, my firm is busier than ever.  In nine months, I know that the contractors will be smiling again.  While we may not be out of the woods, the world is looking great out my window. Embrace diversity, be innovative, have courage and you will succeed.

Monica A. Robertson is AIA,  LEED, and  AP certified and a Principal and Vice President, Hord Coplan Macht, Inc. She is also a member of the UB Real Estate Advisory Board.