Multifamily properties — apartments — are a hazy area, yet Gillen again cuts away the haze.
“You value multifamily properties the same way you would value other commercial properties, via the income approach,” meaning the rate of return on your investment, he said.
“You value single-family properties via the hedonic and/or comparables approach,” Gillen said, meaning using sale-price comparisons of comparable properties over time to determine value.
A couple weeks ago, I was given the chance to rub elbows with many of the Philadelphia region’s big names in commercial real estate as one of 30 judges of Villanova University’s second annual real estate challenge.
The competition pitted teams from several colleges and universities — Drexel, Villanova, Lehigh, Penn, Cornell, New York, and Monmouth, among them — that were given a 94-acre section of a parcel being redeveloped in Whippany, Morris County, N.J., and told to come up with a financially viable plan to present to the developers.
The students (and judges) got to see the plan for the first time on a Monday. The student teams had to have their completed proposals, including Power Points, ready for presentation at Ernst & Young’s Commerce Square offices by Friday at 9:30 a.m.
Judges were divided into four groups, with each reviewing three presentations. Each group picked the best presentation, and then, after lunch, four student teams performed for the judges and those not in the final competition on the stage of World Cafe Live.
After 45 years as a reporter, I’m not easily impressed, and I learned the hard way at my first newspaper not to review amateur productions. But some of the presentations — and the judges’ questions — were phenomenal.
Some youthful ideas about people my age were amusing, however.
One proposal for age-restricted housing offered mostly three-bedroom units. When asked why, a team member said something about the owner of the unit being 88 years old and needing the space to accommodate the 65-year-old child moving in to care for the parent.
Other teams figured out that assisted-living housing could eliminate the need for extra bedrooms.
Most of the students assumed, wrongly, as the judges informed them, that it takes a month or so to get any project through the government-approval process.
One creative team considered the problem and believed that offering to finance Little League fields on land that couldn’t be built on anyway would overcome any opposition to the proposal.
First place went to the team from Lehigh University. Though the members didn’t offer visuals of their project, arguing that they were following the lines of the plan they were given to work with, they did provide comprehensive lists of every potential problem matching every piece of their proposal.
They got my vote without a moment’s hesitation. I’ve seen too many empty lots marked with rotting advertising signs because no one had the sense to consider what might go wrong.
Contact Alan J. Heavens at 215-854-2472, firstname.lastname@example.org ,or follow on Twitter @alheavens.