A multidisciplinary education helps keep pace with the evolution of technologies and infrastructures around us.
Ever since Clayton Christensen coined the phrase “disruptive innovation” in the mid-1990s, no one in the world can escape the word disruption in the context of any business activity. We see it all around us. Amazon has disrupted how people purchase goods and services online. The internet has disrupted how we access information and news. Smartphones have disrupted how we communicate and opened up the possibility of being in touch with the rest of the world regardless of our location. Disruption is everywhere.
However, the real estate industry has been at the forefront of technological disruption for a much longer time. For example, innovations in transportation technology shaped how cities developed. Just over 150 years ago, London saw the innovation of underground rail to bring large numbers of people by train into the city. This led to the growth of suburbs, shopping opportunities outside the city, and allowed people to purchase larger homes than they might find in a dense urban setting. New York, Paris and most major cities in the world followed in developing underground light rail systems and the suburb was born. This created opportunities for developers and real estate entrepreneurs to build the housing and infrastructure demanded by this change and for skilled professionals to profit.
Innovations in architecture and materials allowed mid-rise and high-rise building development in the early part of the 20th century. While it is difficult to imagine a modern city without skyscrapers, less than 100 years ago there were few buildings over 10 stories in almost any city. While some of the technology and materials were around at the time, what prompted the development of large skyscrapers like those we know today? The scarcity of land in downtown areas and the hemming in of the city by the suburbs is one part of the process. From a real estate perspective, lower development costs, high land prices and technological innovation in construction met to form the downtown skyscrapers that are present in most major cities. Once again, real estate meets innovation.
The modern city is also built on financial innovations developed around 50 years ago. For example, real estate securities in the form of Real Estate Investment Trusts are part of many stock and investment portfolios. REITs own, develop and manage real estate in much the same way that wealthy private individuals or companies did before but under tax and financial structures that allow people to invest in shares. REIT structures are now all over the world, with many countries allowing similar financial and company structures for real estate investments. Other financial innovations over the past 50 years include mortgage-backed securities, the development of private secondary mortgage markets and real estate syndicates.
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The process of disruption shapes how we live and work. Those wishing to understand the process of disruption must also understand real estate. Why? It is a necessary part of disruption. Every technological innovation described above required well-prepared and highly motivated industry professionals with knowledge of how real estate markets work in order to profit and take advantage of disruption. Specialized programs, like the Master of Science in Real Estate at the Runstad Department of Real Estate at the University of Washington, put disruption to work. Real estate is multidisciplinary. Innovation and change can come from anywhere. It’s common for real estate students to have backgrounds in law, economics, finance, teaching, construction, planning, psychology and the military.
Disruption is and will always be a part of real estate markets because it is impossible to run a business without real estate. Disruption is not just about technology. It is the idea that innovation creates new markets and opportunities to add value. In that sense, the real estate industry has been responding to disruption and adding value since the beginning of time.
The Runstad Department of Real Estate at the University of Washington offers programs in an intellectually stimulating, creative and innovative environment that engages with and empowers real estate leaders and the community to transform our built environment.