Innovations BUSINESS How Do We Build From Here?

As the world of real estate is reimagined, Professor Matthew L. Cypher outlines how structures and raw materials drive economic growth and why real estate professionals are adopting a new approach in a changing marketplace.

Matthew L. Cypher brings 20 years of real estate experience to to the McDonough School of Business as the director of the Steers Center for Global Real Estate. In this role, Cypher is committed to engaging with emerging issues in real estate and is passionate about educating students and other industry professionals on the latest trends, innovations, and opportunities for advancement within the industry.

In a dynamic industry like real estate—where market conditions are driving change at an extraordinary rate—there is a strong need for a relevant real estate education grounded in both rigorous academic coursework and experiential learning. That’s what compelled Cypher to develop the new M.S. in Global Real Assets program, which takes a holistic approach to real estate and infrastructure within the context of environmental, social, and governmental (ESG) concerns.

Here Cypher shares his thoughts on the changing real estate landscape and why now is the time to expand existing real estate concepts through the adoption of real assets.

BUYING: Real Assets—Investing in the Future of the Built Environment. Global investors are using a broader definition of alternative investments that includes not only real estate, but infrastructure and energy-oriented assets. Real assets tend to perform better during periods of unexpected inflation while offering diversification and better riskadjusted returns, with lower volatility. When we talk about real assets, we talk about the physical structures and raw materials that drive economic growth. The industry needs professionals who look beyond the concept of traditional real estate to include infrastructure assets such as digital, social, and transportation. In fact, there are emerging career opportunities at leading real estate firms focused on adapting these very concepts into their operations.

Real assets contribute a significant amount of global greenhouse gas emissions and by their definition, have a significant influence on the way people live—both good and bad. These ESG implications will continue to increase in importance over time, and we believe that aspects of ESG will improve investment performance.

SELLING: Real Estate as a Narrow Definition. Investing in today’s environment has become more complex as issues of rising interest rates, inflation, COVID-19, and ESG dominate the daily headlines. Investors once narrowly considered commercial real estate investments to be office, industrial, apartment, and retail buildings, but the asset class has meaningfully expanded due to a dramatic shift in how commercial real estate is utilized in a world where individuals work from home, investors find value in sustainable business practices, and communities seek a more holistic approach to their infrastructure.

Infrastructure assets such as digital and social facilitate cloud computing and address the need for affordable housing, respectively, which factor very prominently in what is sought by global investors today, and this is just an illustration. While a flashpoint in the media today, aspects of ESG will result in outperformance for those investors who can identify what will drive value. Institutional investors want to know how you are managing ESG-centered risks within your real assets portfolio and innovators will be the beneficiaries of more capital flows.

Joining Forces

FINRA envisions ways to better its business

As a private company charged by the government with regulating 624,000 brokers and billions of investments, the Financial Industry Regulatory Authority (FINRA) has its organizational hands full. In an effort to help—and to take advantage of their data, analytics, machine learning, and predictive modeling expertise—McDonough’s Custom Executive Education team worked with analytics professors Sudipta Dasmohapatra and Greg Lyon to build an eight-week immersive program in partnership with the authority as a way of exploring new models of operations, and how best to use data and analytics to solve real issues at the nonprofit. We caught up with three FINRA employees and participants in the program and asked about their capstone project for the course.

Pramit Das (P’19), Senior Director, Advertising Regulation

The Problem: Das’ group reviews about 65,000 to 70,000 communications a year submitted by member firms. They then apply any FINRA or SEC rules to those communications. Das and fellow FINRA employees had the idea to use AI to create a risk assessment tool that can look at communications filed with the department to try and identify higher risk communications using data from decisions that had been made in the past. That model, however, couldn’t identify why communications were problematic.

The Solution: In the Georgetown program, Das and his team wanted to take the FINRA model a step further. They built a model with “sentence-level classification,” essentially a tool that will crunch communications coming in and identify the problematic sentences or language. The accuracy rate, Das points out, is still not where he needs it to be, so he and his team will continue to refine.

Christelle Niamke, Senior Director, Operations, Procedures and Standards in Member Supervision

The Problem: Manual risk assessments take time and are exacerbated by a lack of transparency across business units, as well as a systematic prioritization of reviews.

The Solution: Niamke’s group included individuals from technology, market regulation, and operations. The goal was to integrate information from disparate FINRA systems (alerts, risk scores, investigations) to highlight the risk of a firm sooner and more broadly across the organization. The benefits include prioritized reviews of firms that warrant immediate focus, bringing more timely impactful cases to enforcement partners and the SEC.

Christian Collard, Senior Principal Investigator, Member Supervision, Special Investigations Unit

The Problem: Identifying retail-investor suitability and best-interest concerns, and proving actual violations by stockbrokers, is a complex and time-consuming task. Existing conventions (e.g. 20% cost to equity and 6% turnover) are dated and overly prescriptive.

The Solution: Collard and his team worked to study and develop an academic basis for establishing risk metrics and defining suitability/best-interest parameters, which then informed traditional risk-monitoring tools, surveillance models, and exploratory data analysis tools. The flexibility in the model allows them to be more inclusive and accurate in their identifications.

Major Flex

Career resilience is the ability to adapt to challenges and changes in your professional journey by tapping into your strengths and available resources. Like a muscle, your resilience gets stronger with practice. Kerry Kidwell-Slak, director of career curricula and communications at the McDonough Career Center, offers these training tips:

Nurture A Growth Mindset

Be curious and continue to learn new things about yourself, your industry, and emerging trends. You have tremendous potential to acquire additional knowledge and skills.

Energize Your Network

Take advantage of opportunities like mentoring and advisory boards to meet new people. Intentionally build mutually beneficial relationships so you have voices to call on when considering future career moves.

Take Time To Reflect

True to Georgetown’s Jesuit heritage, reflection on past actions, feelings, challenges, and successes is a foundational element of resilience. By examining what has gone well and where you can use insight, future steps become clearer.

Bright Ideas for Emerging Markets

Amrita Kundu, assistant professor of operations and information management, explores how after-sales service increases overall customer satisfaction and helps drive technology adoption in emerging markets.

Your research examines the significance of after-sales service implementation on technology adoption in developing countries. What are your key takeaways? Part of my research looks at how the private sector can be brought into social and environmental development in emerging markets. The research findings, which focus on service wait times for first-time users and their impact on the adoption of solar home systems in off-grid communities in Uganda, suggest that customer acquisition is not enough—especially when you are thinking about providing life-saving or technologically advanced devices in emerging markets.

Your research targets the off-grid solar market in Uganda. What can environmental and policy experts learn from studying this part of the world? Technologies that seem to have very clear economic benefits in developing countries often are not adopted at the rate one might expect them to be. When it comes to solar home systems and thinking about people living in the dark in Africa where there isn’t an electrical grid, the focus has been on spreading awareness: telling people about the technology; making them understand its value; or providing subsidies to be able to afford it. However, our research shows good after-sales support is extremely important to increase customers’ confidence in the technology, and for its continued use by existing users and uptake by new adopters. Policymakers should take note of the role of good after-sales service and develop and support service providers in these regions to increase the rate or adoption of novel technology.

What were some aspects of your research that surprised you?

These are complex products that break often, so it was strange that companies and investors have been focused on customer acquisition with less effort ensuring the products are actually working and satisfying customers. When there is positive word of mouth following an after-sales service, your customer acquisition will come naturally, and nearly free of cost.

Small Bites

Each year, an estimated 54 million Americans will face food insecurity. It’s a massive problem expected to get worse, but Naomi Hansen and her team at Fresh Food Connect have found a source that might contribute to the solution— backyard gardens.

BY MAUREEN HARMON PHOTOGRAPHY BY TIFFANY LUONG

AS NAOMI HANSEN (B’95) BEGAN TO CLIMB THE CAREER LADDER AT DOLE PACKAGED Foods, she became increasingly disenchanted. She had been with the company for a few years, and had moved up through the marketing and management ranks to become head of innovation at Dole, which to her, meant thinking critically about the future of food: how will the food system adapt to and address water shortages, nutrition, and food insecurity? At trade shows, however, Hansen saw a different definition of “innovation” on display.

“A lot of it was people coming up with the latest niche-y snack treat and thinking about how quickly they could exit and sell it to Kraft.” Hansen kept coming back to a lesson of her Georgetown education: “One thing I took away from Georgetown was the real emphasis on service, and I always circled back to that and would ask myself, ‘what are we really contributing?’”

When Dole reshuffled during the pandemic, she found herself asking bigger questions about her next career step. “Is it meaningful,” she thought, “for me to go back and put more packaged, processed goods on the shelf?” So Hansen decided to step back from the corporate world and explore other areas of the food industry. “One of the things I felt strongly about—and still feel strongly about—is the importance of local food as part of the solution to food insecurity,” she says.

Her first move was to found a consultancy aimed at supporting companies and individuals trying to create change in the food system. That consultancy work led her to a marketing position with Planetary CARE, a regenerative agriculture startup, and later Fresh Food Connect, a startup that focuses on addressing food insecurity by making it possible for frontline hunger relief organizations to access homegrown food from local gardeners. Her job as director of marketing: tell the story of the company and help it grow to more and more gardeners and partners across the United States.

THE BACKYARD OF HEATHER AND TERRANCE GRADY’S

HOME

IN DENVER,

Colorado, used to be a parking lot. After years of reimagining it, leveling it, and prepping it, they created a more natural space in their urban area—a true backyard where they had hoped to build six raised garden beds to grow their own food in the heart of the city. It was a smart plan for the two-person household: By making the most of their backyard farm, they would save water that others might use to keep a pristine lawn. It also was important to them to know exactly where their food was coming from—about 200 feet beyond their back door. When the pandemic hit in 2020, their garden project took on new proportions. The six beds turned to 13, because what better way to spend their

When Dole reshuffled during the pandemic, Naomi Hansen found herself asking bigger questions about her next career step. “Is it meaningful,” she thought, “for me to go back and put more packaged, processed goods on the shelf?” days at home than growing tomatoes and cucumbers?

A problem with their plan, however, soon sprouted: two people (and frankly, all their friends, family, and neighbors) couldn’t possibly consume all the food that was bursting from the beds. So Heather began to dig around to find the best places to send her backyard leftovers. She quickly found one organization, but they were particular in what they would accept, and zucchini was high on the list. But Heather had a lot more than zucchini to put to good use.

Eventually Heather found Denver Food Rescue and read about its partnership with Fresh Food Connect. Suddenly the Grady surplus had a home, and Heather began to grow produce she never had before (tomatillos for example), because she knew they were important to the community that was consuming them. All Heather had to do was harvest her food, log on, schedule a pick-up, leave her extra produce on the porch, and know that she was helping to feed her community simply by doing something she had come to love.

Finding people like Heather and Terrance Grady isn’t very difficult—seed sales soared when the pandemic hit and gardeners, from novice to expert, turned to their backyards and community gardens amid food-shortage fears. “The Gradys just started out with a small garden, trying to see what they says Hansen. “Knowing they had a place to put all the extra produce was a really motivating factor for them to grow even more. And they’ve converted their whole backyard into a giant garden.”

The Gradys eat a small fraction of what they produce, and it allows them to grow additional crops with intention. “I think the beautiful thing is they’re moving more toward growing culturally relevant foods for their community,” says Hansen. And that, ultimately, is what makes Fresh Food Connect different from other organizations working to address hunger and food insecurity: creating deeper connections within communities.

While local gardeners like the Gradys are ready and willing to help, the picture gets more complicated because local hunger relief providers (often run by just a handful of community volunteers) don’t have the capacity to coordinate donations from many individual gardeners. It’s also difficult for food pantries to gain access to fresh, local produce. Hansen works to make the impact, value, and simplicity of the app clear to everyone involved.

“We’re working with on-the-ground people who have a small office and do distribution maybe once or twice a week. We’re also working with backyard gardeners, who might have a pint of tomatoes, or 10 cucumbers,” says Hansen. On an individual level, 10 cucumbers may not make a dent in a community’s food problem— and may not be worth the effort of a food rescue to accept. “But when you apply technology, it becomes scalable and easier to coordinate 10, 20, 50 gardeners from your neighborhood to bring excess food to their local food rescue, and you can make a larger impact.”

Suddenly those 10 cucumbers have grown to 100, 200, or 500 cukes—and those numbers make a big difference to those organizations and the people using their services. “That’s the beauty of it,” says Hansen. “We’re creating local food systems, but because we’re web-based, it’s scalable, and we can distribute that process throughout the country.”

FRESH FOOD CONNECT WAS IN THE WORKS BEFORE COVID HIT, AS THEY DEVELOPED and implemented the app, but the app’s launch came just in time for the pandemic and rising food needs. The organization—which measures time in gardening seasons—has just wrapped its second season, and in that small amount of time, Fresh Food Connect has branched beyond their headquarters in Denver to reach 28 states. In 2022 alone, partner organizations have distributed over 75,000 pounds of homegrown produce, the equivalent of $350,000 in grocery sales. They’ve supported 58,000 meals to more than 45,000 people across the country.

What’s more is that wasted food contributes to climate change through the production and transportation of food that just ends up in the garbage. Fresh Food Connect prevented 14.6 tons of greenhouse gasses from entering the atmosphere through their work in 2022.

Food insecurity has crept further throughout the nation thanks to the COVID pandemic in 2020 and inflation in 2022. And the truth is, the problem won’t be abolished anytime soon.

Because Fresh Food Connect is web-based and scalable, the nonprofit can create local food systems—between gardeners and food rescues—and replicate that model throughout the country.

According to the USDA, grocery costs are expected to continue to rise. Though not at the pace they had risen through 2022, growing food costs will continue to put more and more people in the United States at risk of becoming food insecure. At the same time, according to Fresh Food Connect, households account for nearly 40% of food waste—more than stores, restaurants, and farms. For Hansen and her fellow workers, the answer for the future is obvious. Continue to develop ways to get excess fresh, local food into the hands of people who need it.

It’s service at its core—and what gives Hansen purpose in her work these days. But ultimately what she saw in the corporate world was companies finding purpose in selling themselves or their products. Her nonprofit work is much different. “It’s not about me or my team necessarily,” says Hansen. “It’s about the people we’re serving. It just creates a very different motivation for what we’re doing, and for me, that’s been huge.”

Sometimes people are paralyzed by the size of the world’s problems—figuring any small move an individual or family can make can’t possibly make a difference. But Hansen will tell you it does. “I think we tend to think: if I can’t change it and fix it, why bother?” she says. “But every little bit helps—whether it’s garden produce or finding a way to help in your community. What I’m learning is that it takes all of us to move the needle.” GB