LAI KeyNotes: February 2007

Spring Land Economics Weekend in Dublin, Ireland
Wednesday, May 30 through Saturday, June 2, 2007
Register Now!

There Are Still Registrations Available for the Spring Land Economics Weekend!
We didn’t mean to scare you. The only “sold out” part of the Weekend is the dinner in Dublin at Malahide Castle on 30 May. This is the first of the Weekend events. The castle has limited space for dining and arrangements for an excellent alternative dinner location has been made for those not accommodated at the castle. Naturally registration fees will be adjusted accordingly.
However, the balance of the Land Economics Weekend is not sold out--yet. The group will tour Dublin on Thursday, 31 May and then will travel by motor coach to Belfast on Friday. The Belfast tour will include a visit to the Titanic Historic District where the S.S. Titanic was built. This is now the largest redevelopment site in Europe.
These visits to Dublin and Belfast promise a wealth of information about this dynamic country, not to mention good comradeship with fellow LAI members and their guests.
We have only 20 spaces left for the Weekend. So please register as soon as possible to guarantee your attendance for what promises to be a stellar Lambda Alpha event!

The whole of Ireland has arrived at an economic crossroads, from which there seems to be no turning back. Under sustained pressure not only from the United Kingdom government but also from the many well-wishers in the United States, the sectarian, division between the Catholic Republic of Ireland and the still largely Protestant province of Northern Ireland (otherwise known as Ulster) is disappearing. This is on the back of the realisation that in an ever more competitive world there are profound economic benefits in the whole or Ireland working together.

Malahide Castle

The Republic has seen a huge renaissance over the last decade, such that not only has inward investment been high but there has been significant net immigration to the country. Arguably the best has already been seen, but the Republic continues to enjoy high growth.

By contrast Ulster, so long plagued by security concerns, has only now begun to catch up with the south as the politicians of all hues have slowly learnt to trust each other. Belfast, Ulster’s capital, is now in a buoyant state, already having seen major urban rejuvenation and with much more in train over the coming years.

Spencer Dock

For visitors to Ireland, both north and south, 2007 will be a great time to see the impact of the growing cross-border linkages, strongly fostered by business and academe on both sides of the border. The Republic is having to learn how to manage success by keeping up the momentum of the last decade, while in the north the transition within Belfast is one of the most striking current examples of urban regeneration in the western world.

Titanic Quarter

LAI’s Irish Weekend will give ample opportunity to see all the changes in train and to meet a wide range of the most influential people on both sides of the border driving the changes. Dublin’s recent success is palpable, while the work in hand in Belfast, the subject of a day trip, should certainly impress. For those looking at investment opportunities in Ireland, there will be much over which to ponder.

All in all, the Irish Weekend will be an exciting occasion, full of interesting things to see and hear. For those who can spare a little more time, the Irish countryside, regardless of the border, is beautiful to behold, while travel around the whole island is easy. And for those tempted to include England, Scotland and Wales on their itinerary, these are but a short hop by air across the Irish Sea.

Dr. Karen Sieracki

LAI member Agenda for the Dublin Land Economics Weekend (pdf)
Registration form for the Dublin Land Economics Weekend (pdf)
Registration form for the Dublin Land Economics Weekend (doc

Letter from the President

Dr. James A. Fawcett

A good number of you have indicated that you’ll participate in our Land Economics Weekend to Dublin and Belfast in May. I’m delighted to hear that so many of you will be there and I’m certain that it will provide a view of Ireland and Ulster to which you would not otherwise have easy access. That said, there are some solid reasons for our visit there and I’d like to give you some of that background.

In 2005, as Mike Maremont was just beginning to pull together what would be the core of an incipient New Mexico/Zia Chapter of LAI, he asked if I would meet in Albuquerque with his core group of interested member-prospects. I was happy to do so. As luck would have it, an international urban affairs meeting was taking place simultaneously in Santa Fe attended by Karen Sieracki and Bob Gibson of the London Chapter. To give the New Mexico group of prospects a greater sense of the reach and mission of LAI, I asked Karen and Bob to join our meeting. In return, they asked if I would join them in Santa Fe the following day and discuss LAI with a group from the University of Ulster. From that initial meeting grew our interest in holding a meeting in Ireland.

The major point that we have perhaps made too little of in our discussions of LAI is that we are a wonderful locus of neutral ground where all manner of professionals from the various land use professions can meet and discuss issues of mutual interest. One of the attractions of LAI is that even though members might have professional differences with one another and, given other circumstances, might be sitting on opposite sides of the table, at least at LAI meetings, there is a common focus on how to solve our urban issues. To the founders of the Zia Chapter, that has been a significant value to membership in LAI.

It may hold equally well for our new friends in Ulster and the Republic of Ireland. We’ll have the opportunity to talk to both groups about our common interests and offer a model for land use professionals to gather and work at resolving mutual land use concerns.

Your support of this effort will certainly turn out to be a great view of a fascinating and energetic part of Europe. And, perhaps with a bit of the luck of the Irish, we may even see an interest in new chapters there. Either way, we’ll have a great time and learn a lot thanks to the efforts of our emissaries from the London Chapter: Roger Kallman, Karen Sieracki, Bob Gibson and John Dallimore.

ALAN N. NEVIN
DIRECTOR OF ECONOMIC RESEARCH
MARKETPOINTE REALTY ADVISORS
JANUARY 2007

THE U.S. RENTAL APARTMENT MARKET

In most places in the United States, 70% of the households own their own home (a ratio that is fairly common in highly industrialized countries). That leaves 30% or more than 35,000,000 households in the Nation that rent.

In the United States, most of those renters live in privately owned apartment projects. That is a far different story than in most other industrialized countries where privately-owned rental projects rarely exist. In those other countries, the laws that prevail over property owners preclude the possibility of a market such as ours. The laws in those countries are so top-heavy with tenant-oriented regulations, that it is very onerous to displace a tenant or raise rents to market value. Therefore, the rental markets in those countries consist predominantly of persons who rent individual homes or condominiums to renters.

In the United States, most renters live in a traditional garden apartment. It is typically a two or three story walk-up in a suburban location. The age of the apartment is typically 40+ years old and the project is in mediocre condition.

The Country’s apartment industry plays a crucial role in housing our population. Apartments satisfy the shelter needs of the four types of renters: lifetime renters (estimated to be 20% of all households), households who are destined to be homeowners in the future; persons who are suddenly displaced from sale housing (the divorce/separation market) and households on temporary duty (military, students, et al).

Given the economics of housing, it is likely that 1/3 to 2/3 rental/owner ratio is a long-term supply/demand balance. In most of the metropolitan areas in the United States, sale housing has been so inexpensive that virtually anyone with a job could qualify for a loan. In those low-cost markets, the ownership tenure rarely passes 75% and in most cases 70%.

The profile of the renter in the United States is predominantly young folk, persons under 35 years of age. Seniors (and there are 40,000,000 of them in the nation over age 65) represent a relatively small share of the rental population as 80% own their own homes (most free of encumbrance).

In most places in America, rental apartment construction is feasible. In other words, the cost of building is sufficiently low to allow developers to build luxury apartments and obtain rents that will yield an acceptable cash flow. Not moderate rent apartments by any means, but at least new luxury apartments.

There are two places in the United States where apartment feasibility is not possible. Manhattan and coastal California. In those places, the ownership tenure is barely half. The low ownership tenure in those states is due to a constricted land situation. In other words, there is either no room left to build or in the case of coastal California, the local governments have opted to have zoning restrictions and/or onerous development fees that virtually prohibit new apartments from making sense as a development investment.

In coastal California, most cities have development fees that are the same for a new apartment unit as they are for a $2,000,000 home. It’s their subtle way of saying renters are second class citizens and we don’t want anymore here, especially if they happen to be a minority.

From an investment standpoint, as “for sale” housing gets more expensive, it is inevitable that a major portion of the 2,500,000+ persons added to the population of the U.S. each year will have to live in rental apartments. We also know that it is virtually impossible to build rental units that are affordable by the masses. What pencils are high quality rentals which are affordable by less than 10% of the rental population? And the total production of market-rate units is rarely more than 250,000 annually.

Therefore, it is my contention that apartments will continue to be strong investment vehicles for the long term. Yes, management is a headache, but the rewards are great.

Employee turnover in mega numbers is underway in the workplace of America. This change will do more than provide new development opportunities to serve these retiring “boomers” it is going to have a huge impact on the workplace.

The real estate and land development professions like all other aspects of the work force are going to feel the impact of employee turnover at unprecedented levels.

“With one-fifth of American workers reaching retirement age by 2020, an estimated 25 million people are poised to leave the workforce. The mass exodus will not only create a shortage of workers to fill jobs –one Bureau of Labor Statistics estimate puts the shortfall at 2.3million by 2014 – but it will precipitate a “boomer brain drain” that will be felt for decades.:(Melissa Hennessy, “Retirement Age: Baby boomers will soon be leaving the workforce in droves. Are your ready to replace them?”) the message is that over the next ten years, managers who focus on this problem will be successful. Managers who don’t will muddle through with a very high turnover and decreasing organizational competency.

Think about your organization and those you do business with. Ask yourself if leadership development is underway that will continue the level of competency necessary to give you the edge you will need for your organization to thrive in a time of such great change.

We often hear the question, "Where are the leaders who can inspire me, today?" This is an especially common statement from the next generation who are, today, looking for role models they can emulate.

Lambda Alpha International and LAI Chapters are home to both role models and leaders in the many fields of endeavor that relate to land use and management. Members of LAI have made contributions to their profession and to their communities. They have earned the respect of their peers and of the next generation of leaders.

Through the LAI Awards ceremonies every other year, we are able to give special recognition to a few very special members and other leaders in fields of endeavor related to Land Economics:

Four awards recognize service to land economics professions or to the organization:
Edward L. Johnson Member of the Year Award
International Public Official Award
International Urban Affairs Award
International Fellow Award

Two awards honor the memory and contributions of distinguished LAI members:
Richard T. Ely Distinguished Educator Award
Gerald D. Hines International Humanitarian Award

Two awards recognize special professional skills and contributions:
Journalism Award
Author Award

Finally, The International Skyline Award is selected from Chapter nominations for individual Chapter Skyline Awards and recognizes: "noteworthy and commendable instances of the practical application of the principles of land economics in the preservation, development, or utilization of our land resources."

Descriptions of the various awards can be found at the LAI web site. March 31, 2007 is the deadline for Chapters to submit nominations. The Awards will be Presented at the LAI Fall Land Economics Weekend in Los Angeles, CA on October 18 - 21, 2007.

This is your opportunity, as a member and as a Chapter, to recognize and to honor those special people who inspire you, your peers, and the next generation of leaders in the land economics field. Take a moment and think about the many men and women who contributed to your professional development.

Thank you.

Fereydoon Ghaffari, Chair,
International Awards Committee