Commercial Investment Real Estate

NOV-DEC 2017

Commercial Investment Real Estate is the magazine of the CCIM Institute, the leading provider of commercial real estate education. CIRE covers market trends, current developments, and business strategies within the commercial real estate field.

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Part of History A few weeks before the class was scheduled to begin, a three-day coup attempt against Soviet leader Mikhail Gorbachev occurred, and there were still remnants of the resulting street clashes when Hudson, Shindleman, and Decker landed in Moscow. They arrived in their classroom to find an overhead projector, a microphone dangling from the ceiling ( "Our host said, 'Don't worry — it doesn't work,' " Shindle- man says.), and a picture of Lenin hanging crook- edly on the wall. The instructors found an enthusiastic batch of some 50 students. "They knew how to build buildings out of concrete and steel, but they didn't have any market reasons to do anything," Hudson says. "The city planners would tell them where they needed build- ings, but the reasons didn't have anything to do with the market." And, he adds, "the buildings were not eff i- cient. They had big inte- rior hallways, big windows — nobody had to build anything that had any economic efficiency. The restrooms and the elevator were on opposite sides of the building; there was no central core." The instructors taught in English, with a transla- tor, but they soon discov- ered, Shindleman says, "many of the things we taught, they didn't have words for. There was no word in the modern Russian vocabulary for amortization or mortgage or balloon payment." The instructors were impressed by how quickly their stu- dents embraced the concepts they were being taught. "No one ever thought about where to build," Shindleman says. "We got them to start thinking about supply and demand requirements and really opened up their thinking and their ability to dream of the possibilities. They came up with things that they had a business case for — maybe you should put a hotel or industrial parks near the airport, for example." U.S. Voyage The following month, a delegation of more than 40 Moscap- stroi managers arrived in the U.S. The group landed in Wash- ington, D.C., and then split up to tour five cities: Washington, D.C., Atlanta, Kansas City, Mo., Dallas, and San Francisco. In each city, CCIM chapter members acted as ambassadors and introduced their guests to multiple real estate projects, from apartment complexes to outlet malls to American-style office buildings. "They just soaked it all up like sponges," says Hudson, who escorted the group in Atlanta. "They really enjoyed meeting people, and I think they were impressed that so many people thought so much about market forces. We're always asking: Why should this be here? What's the best way to build it?" Shindleman was part of the San Francisco delegation. "I'm glad I went, because it was important to show them how they were right about the ideas they'd discussed in class — that the ideas that they came up with were already working." There were, of course, cross-cultural lessons for both guests and hosts. BK Allen, CCIM, describes herself as a den mother to the groups as they passed through Washington. She arranged transportation, lodging, and meals, as well as worked with several area developers to arrange tours to allow the visitors to see apartment and office building construction and the design and layout of Washington office buildings. They also received a copy of the Virginia condominium statute, "which they took home for further study," Allen says. She also got permission to take each group on a tour of the White House. "We thought we lost one," Allen says, "but we found out that he simply became bored, left, and found a Rus- sian cabdriver to take him back to the hotel." The visitors also were introduced to "big New York-style Reuben sandwiches," as well as American pizza and Kentucky Fried Chicken. "They loved it all," Allen says. The group who visited Dallas was interested in seeing the Southfork Ranch, shown on the TV show "Dallas." Host John Stone also took them to a Baptist cathedral, an apartment building that has been used as a CCIM course case study, and a Texas truck stop, where they marveled at the giant big rigs and the hospitality offerings for the truck drivers. Pivotal Change The exchange, as it turns out, was "like planting seeds," Hud - son says. By the end of 1991, the Soviet Union had dissolved, and the door was open to business from the West. Shindle- man points out that the CCIM classes were the first foray by any professional organization into Russia, and the ground- work that was laid proved valuable. "We really felt like changes were afoot," he says, "that there was opportunity for a Western-style real estate economy at least. There was demand, there was population, growth, and labor. We couldn't help but think that we were going to be helpful to a whole new generation. COMMERCIAL INVESTMENT REAL ESTATE / NOV.17 26 CCIM.COM "We really felt like changes were afoot, that there was opportunity for a Western- style real estate economy at least. There was demand, there was population, growth, and labor. We couldn't help but think that we were going to be helpful to a whole new generation." — Sandy Shindleman, CCIM

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