Alumni in Real Estate: Q&A with Douglas Abbey, Ric Capretta, and Alexandra Stoelzle

Led by Faculty Director Chris Calott, Lalanne Chair in Real Estate, Architecture & Urbanism; Practice Director Carol Galante, the I. Donald Terner Distinguished Professor in Affordable Housing and Urban Policy and Faculty Director of the Terner Center for Housing Innovation; and Executive Director Dr. Greg Morrow, the MRED+D program covers the fundamentals of real estate markets, finance, urban economics, property and land use law, project feasibility analysis, public-private partnerships, and professional practice. In addition, students take courses on architecture and urbanism, resilience and urban development, and an interdisciplinary studio.

Well before the existence of a formal real estate program, a number of CED alumni forged successful careers in the real estate field. We interviewed three of them — Douglas Abbey (M.C.P. ’79), Chairman, Swift Real Estate Partners; Ricardo Capretta (B.Arch ’81), President of Capretta Architecture + Planning + Building; and Alexandra Stoelzle (M.C.P and IGCRE ’14), Director at Kilroy Realty Corporation — to understand the dynamics of this evolving area.

Abbey – I was an undergraduate English major with no background in finance or economics and somehow ended up working for a real estate market and feasibility consulting firm in Washington D.C. During that time I developed a strong interest in how cities and buildings work. I decided to go to graduate school and chose UC Berkeley because the business school had a very well-known real estate department and the planning program at CED was rated top in the country. I thought it would be a very good place to craft a program to understand how real estate and markets work. The planning program at CED was very flexible and permitted me to create a graduate degree that was equivalent to a degree in real estate. I took a third of my courses in the business school and a course in the law school.

Capretta – After completing my undergraduate degree in architecture at CED, I worked for an architecture firm whose client base was primarily developers and became involved helping the developers create investment presentations. They were both architecturally driven and also financially driven. I found that it was more interesting to be able to control the design process as a developer/owner versus being an architect working for developers, with less control over the design process. After one year there, I went to UCLA where I entered a 3-year joint masters program — an MBA and a Masters in Architecture and Urban Planning. After graduation, I landed a job as a project manager with a national real estate development company.

Stoelzle – I am half German and grew up flying back and forth between my family in Michigan and in Germany. The first time I was on a plane alone I was seven years old and I remember always looking out of the plane window and being so intrigued by the landscapes of cities. So, I came into CED interested in the real estate field. I had studied international business for my undergraduate degree and decided to study city planning to understand that part of real estate. I did my concentration in urban design so that I could work with the architects on the design as well as understand cities’ goals and how they correlate with the goals of a development company.

Abbey – I took a course in urban economics from Wilber Thompson from Wayne State University who was at Cal on an exchange program. He invented the field of urban economics and I used his book on economic base theory to understand what makes cities grow and decline. It was very helpful in my professional career as I was investing in cities throughout the country. In order to understand the growth prospects of cities, you have to delve into the economic base, that is which industries are exporting goods and services outside the region — it was a valuable construct for thinking about what makes cities work or not work.

Capretta – Well, I developed a permanent desire to practice architecture after being fortunate to study under great architects such as Donlyn Lyndon and Dan Solomon. Their passion for architecture, their respect for the works of great architects who preceded them and their drive to continue pursuing the optimal design solutions was very motivating.  In my senior year, my advisor Howard Friedman placed me in an internship with a San Francisco firm and it was there that I developed a keener focus on executing great design solutions combined with finding a way to have more control over the design output than it seemed most architects could have.

Stoelzle – One great thing was the opportunity to work on obtaining an interdisciplinary graduate certificate in real estate (IGCRE). It allowed me to take courses in the law program, in energy and resources management, and take real estate courses in the MBA program. The ability to curate my CED experience by matching supplemental coursework from other programs really helped frame my CED experience.

Abbey – My first job out of college was teaching elementary school in the Bronx. I loved it. In 2005 I retired from the company I cofounded, AMB Property Corporation, not sure what would come next.  Within a week I was asked to teach the real estate investment course at the Stanford Graduate School of Business. Being in a classroom again and around smart motivated young people has been the most rewarding thing I’ve done since “retirement”.  Nb: lest you think I am a complete traitor, I do enjoy coming back to Berkeley as a guest lecturer.

Capretta – For me, the most interesting thing about being a real estate developer is that you need to be a jack-of-all-trades and a master of all. On any given day I’m dealing with at least a half-dozen of the eight key disciplines involved in real estate, ranging from acquisitions, project financial capitalization, architecture, construction, leasing, marketing, property management, and disposition. All of these disciplines also require a strong knowledge of legal matters. Being exposed to so many different disciplines is what makes development interesting, but having to be proficient is also what makes it challenging.

Stoelzle – It’s all very interesting. Development is a fast-paced field that requires you to be on your toes at all times, and no day is the same. The most interesting thing for me at this point is seeing how the design of a project evolves throughout the entire process based on the ideas of all the different parties involved — the city, the neighborhood, current tenants, the company, and the different departments within the company. I’ve been working on a project for four years and the design has really evolved throughout that process. It’s fascinating how that happens.

Abbey – Over the last 40 years, it has transitioned from being dominated by local developers and entrepreneurs to large public enterprises.  Frankly it’s taken some of the fun out of the business.

Capretta – The business has become very institutional with significantly more competition and capital chasing development business. As an example, when I started 35 years ago REITs [Real Estate Investment Trusts] were not as prominent as they are today. Real estate hedge funds and private equity funds have also become very prominent.

Another big change is the government approval process and the communication and negotiation with various interested parties that can affect a development. With overdevelopment, and the subsequent daily impacts such as traffic that effect more individuals, the anti-development voice is justifiably louder, government regulation is much greater, and more interested parties have a say in a final development outcome.

Stoelzle In my brief experience, I think the field has changed for the better. Real estate has historically been an old boys club and it has been and continues to be hard for women and people of color to break through the glass ceiling. However, there is a greater focus in recent years on diversity and inclusion. At Kilroy, for example, our CEO is very focused on making sure that we have women in leadership roles and on the board. We need a diverse workforce because we are building for everyone. A lot of developers are realizing that in order to create desirable communities, both commercial and residential, the company needs to be more closely aligned with the neighborhoods they are serving. Groups like the Urban Land Institute and NAIOP are also starting to realize that this is a big issue we all need to work on together, and have created initiatives, such as ULI’s Women’s Leadership Initiative and NAIOP’s Diversity Resource Center to help address the issue.

Abbey – It is critical that students get deep into the numbers. An understanding of real estate finance, real estate economics, and real estate markets is the most important requirement for a successful career in the real estate development and investment profession. How do projects come together, get financed, get built, and become successful. The basic math is not complicated, mostly addition, subtraction and asking your computer to solve for an IRR. Don’t be afraid of the numbers!

That said, for a student considering a graduate degree, the opportunity to go to Berkeley for just one year and to learn at one of the world’s greatest educational institutions is a real privilege. I’m very grateful for the two years I spent at Berkeley — they were critical in launching me in my real estate career.

Capretta – For students who are really focused on real estate development, doing a 12-month drill down with a heavy focus on real estate development is a great investment. Even better if it’s on top of having a bachelors degree in business. However, I believe the major focus at the end of the day is how you get projects built. In order to do a quality pro forma, you need a lot of knowledge — you have to have an understanding of the eight major facets of real estate development I noted before. You have to understand what the cost of capital is both on the debt and equity side. You not only need a full understanding of architectural design, but also a full understanding of what it costs to build that design, get it leased, and operate it. I always say, beautiful projects that are sitting in a drawer are failures. Winning is getting quality projects built. Developing an understanding of these eight major development facets is the main focus MRED+D students should have.

Stoelzle – It’s all about networking. Participating in competitions is also important. While at CED, I participated in the ULI Hines Student Design Competition and the NAIOP Golden Shovel Challenge, and I now have leadership positions in both of those groups. Competitions are also an opportunity to connect with leaders in the industry. For example, in the NAIOP Challenge, you present a business plan to over 300 real estate professionals — you meet people who are interested in what you have to say and it gives you a view of what is out there. Students should also take advantage of the Berkeley Real Estate Club (BREC) and the Fisher Center at Haas – I met the CEO of Kilroy Realty at the Fisher Center Policy Advisory Board meeting, where I was a graduate student guest. Once they graduate, MRED+D students will have the opportunity to join the Berkeley Real Estate Alumni Association (BREAA), which consists of alumni of several Berkeley programs.

Lastly, I looked at several planning and MRED programs all over the US and Australia, and I have zero regrets about choosing the city planning program at CED. I don’t think I could have had a more well-rounded planning and real estate education or a better graduate student experience than what I gained at CED.