Today marks the observance of Dr. Martin Luther King’s birthday and is, of course, also two days before the Inauguration of President Joseph R. Biden.
I have added two documents to the content of the website. Both are writings from the 1980s:
The market study I performed for East Brooklyn Congregations (EBC) that provided the empirical analysis for the feasibility of the “Nehemiah Program”. Nehemiah is an ownership-based affordable housing project that has developed over 6,500 residential units. It is still ongoing. Look for the document on the New York City page, under notable writings.
And, under Consulting/Landauer, you can find the 1987 Landauer Real Estate Market Forecast.
In the all-too-ephemeral world of blogs, and fast-click websites, why bother with such documents, originally written before the launch of the World Wide Web (August 6, 1991 by the way).
I’ll say that it is exactly because of their age and the tendency of many to push the lessons of the past from memory that it is important to not only make such documents available, but to underscore their contemporary relevance.
On Nehemiah, let me highlight four points.
Real estate is not just about ‘the elite’, about high finance, skyscrapers, and glitzy developments. One of the salient features of real estate - vital for all working in the industry to bear in mind, and for those seeking a career in this business to grasp early one - is its ubiquity. Only far at sea or beyond the stratosphere do we find ourselves outside the real estate domain. Every human being is connected to land and the built environment, across the entire strata of society.
Real estate performs both stabilizing and transformative functions across those social strata. As you can read in the Nehemiah market study, an in-depth (census tract level) analysis revealed that in the most physically devastated communities in New York impoverished areas, population stability and social cohesion was dramatically correlated with single-family home ownership. Yet the entire prevailing approach to “affordable housing” was large, heavily subsidized, rental projects. These were prototypically “bad density” developments, with associated levels of crime, poor health, and generational poverty. Nehemiah dared to be transformative by developing substantial blocks of new homes, at controlled levels of cost, supported by faith-based community action, requiring a level of real equity and responsible lending, and allowing homeowners to reap the equity gains of housing, in just the same way that “the middle class” had enjoyed in the post-World War II suburban housing boom. In all, more than a billion dollars of wealth has been created by this one program alone - in one of New York’s most difficult environments.
From an academic and professional standpoint, the study clearly illustrates how far we’ve come in terms of technical capabilities. The maps of the neighborhoods were created by coloring in a base of census tracts with “magic markers” and the statistical work was accomplished on old-fashioned spreadsheets - of the paper variety. But it also illustrates how attention to “the basics” pays off. This was a crude exercise in economic geography, but in principle it is just the same as GIS applications at work today. I will say that the conclusions of the study was hardly pre-ordained. In fact, when the EBC leaders first approached me with the question about how to revitalize these economies, it was far from clear that there were any economic anchors or positive trends that could encourage investment. It was an early example, to me, of what became my maxim: “There is no point in doing research unless you are willing to be surprised.”
As a final point, I’d say that Nehemiah makes a point about real estate ethics. My bosses at Landauer Associates (John White, Landauer’s CEO, and Ed Madsen, Chief Appraiser) authorized me to work on this project pro bono publico and to issue the report on the firm’s letterhead, just as we would have for a wealthy or powerful client. Real estate ethics, like all ethics worthy of the name, is about “doing the right thing” (pace, Spike Lee), not about mere legal compliance and staying out of trouble. My bosses were not afraid to commit the firm’s resources generously, even at the risk of raised eyebrows in the real estate community of that time. Ethics, among other things, is about virtue, and equity, courage, doing good, and beneficence have more to do with “right action” than simply staying out of legal difficulty.
These concepts find a degree of ratification, at a level more familiar to professional real estate practitioners and academics, in the Landauer Forecast series, including the 1987 edition posted today.
Compared with the previous year’s Forecast, 1987 marked a commitment to more sophisticated and transparent analysis. The crude computer graphics of 1986 were replaced by more professional work, thanks to the involvement of the talented Madelyne Kirch and other staff from J.P. Lohman Associates. “Every picture tells a story.” Elevating the graphic quality is not just a matter of “eyewash” (as Ed Madsen called much PR), but enabled the communication of complicated economic ideas when linked to thoughtful commentary.
The entire project worked, and helped bolster the firm’s reputation, by tying theory and practice intimately. It was the experience of real estate fieldwork, across the country and abroad, that gave credibility and generated insight far beyond the mere review of data and documents. (This, by the way, was a template for my teaching and academic writing as well. Good theory is not “just theoretical”; the test of good theory is in its applicability.)
As it happened, 1987 was something of a turning point for the real estate industry, and the Forecast addresses that in some detail. If today we are also at a turning point, there is much to learn from reviewing the interpretations, the economic and market dynamics, and the expectations (correct or incorrect) at such a critical time. John Kenneth Galbraith, in his A Short History of Financial Euphoria, pointed out the danger of short memories in the investment realm. Amnesia leads to repetitive (and potentially avoidable) pitfalls. History, as the aphorism goes, may not repeat itself but it does rhyme.
Here’s another thought worth passing along: a saying attributed to Albert Einstein reminds us “ Everything should be made as simple as possible, but not simpler.” Real estate has often been reduced to the “Location. Location. Location” mantra. Or some other triad beginning with “Location.” The 1987 Forecast dares to propose a more complex “American Property Formula” of seven elements
People
Economic Activity
Location
Physical Quality
Functional Suitability
Harmony, and
Government
Even in 2021 we could do worse than using these attributes as a screening device in the real estate business and in real estate education as well.
It was at the point when the 1987 forecasting effort was beginning the Landauer’s then-Honorary Chairman John White walked into my office and blew me away with the statement, “Hugh, I’m passing the mantle on to you,” meaning that I now had the primary responsibility for a project he had initiated in 1983. This was humbling, to say the least. I did not then - and have never since - had John’s legendary reputation at the pinnacle of real estate consulting, strategy, and investment deal-making. But I did inherit the responsibility!
John taught me many things over the years, but one was the willingness to bring team members together and to give them as much weight as they could shoulder, without ever leaving them without his support as a leader. That proved true in the 1981 Investment Analysis of the NY World Trade Center, the 1982 complex re-financing of the General Motors Building on Fifth Avenue, the 1985 site search for the Saturn Corporation automobile plant, and numerous other assignments.
Another remarkable trait which I’ve tried to emulate was John’s ability to have a synoptic grasp of the cross-hatching factors at work in real estate, and to articulate their meaning in plain English. John hated jargon and tried his best to banish it from the firm’s consulting reports. And he was never afraid to own his opinions, as you can read in the chapter of the 1987 Forecast headed “Commentary: John Robert White Views 1987.” He passed the mantle, but still wanted his valuable point of view available.
One final point, too easily overlooked by its placement on the back cover. In addition to Landauer’s seven US offices, three international shareholders who joined the firm’s ownership structure in 1985 are credited: in London, Hillier Parker May & Rowden, and the bank Baring Brothers and Company; in Paris, Les Societes Bourdais. The globalization of the real estate industry was afoot. Landauer had long represented international investors in the US, and now with the understanding that property was no longer merely a “local industry”, the firm institutionalized its commitment to a world-wide perspective. In the 21st century, there can be no more significant perspective to keep in mind.