Educating New Class of Developers at USC : Graduate School: Master’s program features ‘hands-on’ training and the advice of experts. Most enrollees have experience in related fields.
On a recent afternoon, a handful of USC students were sitting around a conference table mapping out plans to build a medical office building.
That’s a pretty heady task for students, but the extracurricular planning session known as “The Real Deal” is an integral part of the learning experience they’re getting in USC’s Master of Real Estate Development course.
The program is the only one of its kind in the West and one of five in the country.
“Our sense is that this is a field that needs serious academic attention,” said Alan Kreditor, who began the program in 1986 and oversees it as executive director of the Lusk Center for Real Estate Development at USC, where the program is housed.
“We need to create a profession out of what’s been an industry,” said Kreditor, dean of USC’s School of Urban and Regional Planning.
Historically, developers have entered the field somewhat incidentally from a related field, such as construction, real estate finance or brokerage.
But, Kreditor said, “It’s a much more sophisticated, far more important and socially relevant field than I think a lot of people have fully recognized.”
The program, which is in its fourth year, with 46 students, up from 19 in the first class, offers highly specialized courses on topics such as site planning, market feasibility and design, besides staples such as finance and law.
Other comparable master’s of real estate development courses also exist at MIT, which began the first program in 1984; Texas A&M;, Columbia University and New York University.
Academicians see the programs as part of an overall trend toward the growing importance of higher education in the area of development.
“I think the undergraduate lays certain groundwork,” observed Marvin Nadler, who teaches a 12-week course on shopping center development at UCLA Extension.
“The master’s program, in my opinion, then gives you an in-depth look as if you were getting the on-the-job training,” said the real estate educator, who is president of Financial Advisors Realty Co., shopping center development consultants in Encino.
“In today’s world, unless you have an excellent educational background, you’re not going to go very far in development,” he said.
The development degree at USC is a 10-month course of 32 credits of core classes and eight credits of electives. It begins in July and runs through May.
At $450 a credit, the private university’s course costs a hefty $18,000, which has forced some students to take equity lines on their mortgages, rely on spousal support or even tend bar at night to make ends meet.
And, because the program is mainly geared toward applicants with at least a few years of professional experience, many people who join up may even be trading in vice president stripes and fat salaries as well.
But attracting students who have work experience, besides strong undergraduate records and good test scores on a graduate-placement exam, is of paramount importance, according to the program’s organizers.
“By having gone for people who have already had some experience, we’re getting them when their learning curve is very sharp,” Kreditor said .
That requirement also enables students to relate better to the development professionals who lend their time to the program.
“We’ve gotten very, very close to what we regard as the best of the development industry for their counsel and support and advice and their willingness to bring their experiences to the students,” Kreditor said. “They do more than just write us a check; they’re there.”
“Some of the developers have taken students out to sites and walked around the projects,” noted Susan Kamei, director of administrative affairs for the Lusk Center.
“Their participation with one another and with the faculty and staff here is very symbiotic,” she said of the professionals. “They learn by it. We learn by it.”
John Lusk, chairman of the Lusk Co., a development firm in Irvine, said that that aspect of USC’s approach was part of what motivated him and his son, William, Lusk’s vice chairman, to donate $4 million to establish the Lusk Center last year.
“What attracted me was the practical manner in which they were running the division,” he said. “They were having well-known developers come in and talk to the students.”
One aspect of that involvement is the developer-in-residence program, in which three developers regularly come to the school to speak to students, conduct round-table discussions and consult with them one-on-one.
“Developers as such can provide some interesting war stories and probably some interesting success stories,” said Harry Newman Jr., chairman of Newman Properties, a Long Beach company specializing in shopping center development and asset management, who is currently a developer-in-residence.
What’s also important, according to Newman, is being able to keep students up-to-date with the development industry, which has evolved rapidly in the past two decades.
“It is essential that they become sensitive to environmental issues and that they become more familiar with planned growth and how that affects whatever specialty they’ve chosen to practice,” he said.
“The field has gotten very, very complicated,” echoed Nadler, the development consultant and teacher, “and you need to be professional, and you need to know what to look for and what experts to bring in.”
Of the 46 students currently enrolled in USC’s program, 33 are devoted to the development course exclusively--23 on a full-time basis and 10 part-time--while of the 13 others, six are completing the development program and earning a doctor of law degree simultaneously, and seven are earning the master of real estate and a master of business administration.
Last year, there were 21 full-time students in the program, five part-time students and five simultaneously pursuing MBAs.
Kreditor said the program is exceeding its projections for growth in enrollment, but he pointed out that the school has set a limit on the number of students it will take of the more than 100 applications received each year.
“Our goal is to have 35 full-time students,” he said. “We have no ambitions of seeing it any bigger than that.”
He also said that “each year we’re finding that our application pool gets broader geographically.
“The first year, we were all Southern Californians, the second year, we had some Northern Californians, the third year, we started to go national and this year, we started to go international,” he said.
The current class includes students from 10 states, as well as Japan, Taiwan and Hong Kong, and seven women, the most ever.
The Lusk Center promotes its students by compiling a “profiles book” of current class members and then sending another book of their resumes to 2,000 developers across the country.
“There’s a big surprise when they see the profiles book,” said Richard Peiser, director of the Lusk Center. “They just don’t realize until they see it that this is an older group that is very diverse.”
The current crop of students includes people specializing in everything from securities to international relations to psychology to the more-expected real estate backgrounds.
Both the students and the professional developers see that melting-pot effect as beneficial.
“My view is that the diversity is the strength because it encourages the expression of a variety of viewpoints and values, which I think can be a real stimulus for growth among all those people participating,” said Newman, the developer.
“I think that it’s actually one of the best aspects of the program,” said Bo Kaemerle, 25, who’s going through the real estate program part time while also pursuing his law degree.
His undergraduate background is one of the more unusual ones in the class: He holds a bachelor of science degree in biology from the University of San Diego.
Fellow student Tom Tillisch, 28, is a licensed real estate broker who earned a bachelor of science degree in business administration from USC in 1983.
“Most of the people that go into development are coming from one discipline,” he noted. “As a broker, I worked with many developers, and you could see where they would be strong because that’s the area they came from, say marketing or architecture.”
But Tillisch believes he’ll emerge from USC’s program as a more well-rounded developer.
“In my first project, it’ll give me the ability to look at everything with some confidence, look at all of the different disciplines and kind of work with the architect and the lawyer, etcetera, instead of just having them dictate everything.”
“I think (the program) gives them an edge,” Newman said. “You know that they have been exposed to a lot of situational thinking and they have a broader picture of the development field than somebody who has been in a single job for a period of time.”
“Several people (who are graduates of the program) have consummated their first deals on their own and that’s one of my long-run barometers of success,” said Peiser, the faculty member.
Kreditor added that USC carefully tracks the placement record of its students and said so far “everybody that wanted to go out and get a job in development got one.”
Julia Lord, 28, the first woman to graduate from the program, lives in San Francisco now, where she is developing projects with Thad Doyka, 36, who finished the program with her in May, 1987, in USC’s first real estate development class.
“I use something probably every day that I picked up there (at USC),” Lord said. “I probably would not be developing out on my own today if I had not gone through the program.”
Mark Rettig, 30, another one of the 19 students in that first class, is now in charge of special projects in the office of the president at IDM Corp., a development company in Long Beach.
He said the program was “wholly and completely worth every nickel, dime, penny.”
Rettig recently invited the current class of Lusk Center students to tour the Greater Los Angeles World Trade Center in Long Beach, IDM’s major project. “We got another perspective,” recalled Kaemerle, who adds that the experience “was pretty inspiring.”
But the USC program also gives students a taste of what it’s like to fail.
In one Real Deal project, students put together $10,000 to develop a building in Desert Hot Springs, but the tenant pulled out at the last minute and the entire deal fell through.
“I thought it was in many ways much better than if they had suddenly built it and sold it off and tripled their money,” Kreditor said.
“As one of our board members said, the worst thing that could happen to a developer is that he makes money on his first deal, because he then walks around believing it’s easy.
“It’s a little like going into Vegas and putting money on a number and it comes up, and you say, ‘this gambling’s a cinch.’ ”
