David Hartzell is the Steve Bell and Leonard Wood Distinguished Professor of Finance and Real Estate at UNC (University of North Carolina) – Chapel Hill, and Director of the Leonard W. Wood Center for Real Estate Studies. He teaches courses in real estate and finance, and is also serves as Faculty Advisor and is a Director for the UNC Real Estate Investment Funds, containing three real estate private equity funds that are managed by students in the real estate concentration at UNC Kenan-Flagler. The first fund was created in 2007, and two funds have followed with another planned in 2018. The funds are the first and only student-managed private equity real estate funds with private investor capital invested in risky real estate transactions.
Dr. Hartzell and Andrew Baum (Oxford University) wrote the book Global Property Investment: Strategies, Structures, Decisions (Wiley Blackwell, 2012), which is used by both students and practitioners of real estate. The book has been adopted for use at many universities in the United States and the U.K. including the University of Cambridge and Oxford University.
Dave is a former vice president at Salomon Brothers Inc. in New York, where his primary focus was on institutional real estate finance and investments. He also worked as a research associate for The Urban Institute and as a financial economist for the U.S. Office of the Comptroller of Currency. He served as president of the leading academic real estate group, The American Real Estate and Urban Economics Association (AREUEA), in 2000.
Dave serves on the board of directors of Highwoods Properties, Inc., a publicly traded real estate investment trust (REIT) that focuses its investment and development in the office sector in the Best Business Districts in the eastern United States. He serves on the investment committee and the audit committee of the board. He was also appointed by the NC State Treasurer’s office to serve on the Investment Advisory Committee of the $96 billion North Carolina Retirement System.
He received his PhD from UNC-Chapel Hill and his MA and BS from the University of Delaware, where he was a varsity soccer player.
Dave had been reading this column and reached out to me one year telling me about the Real Estate Development Case Competition held annually at Kenan-Flagler. He wondered if I’d like to attend and observe and I said, “Sure.” It was a great event and I was so impressed by the students that came from top graduate real estate programs around the country. I don’t know who solicited who but the following year I was invited back to be one of the judges and Dave and I got to know each other as time wore on. However, it took a long time for Dave to tell me that he was also a musician - he plays mandolin in a bluegrass band. Dr. Hartzell is one of a unique group of real estate academics that I’ve gotten to know over the years who are so very supportive of their students – while they’re in school, when looking for a job and afterwards. Talk about being a mentor and a sponsor!!
Q. How did you get your start in commercial real estate?
My dad, Russ Hartzell, was a community banker in Wilmington, Delaware, and I always wanted to follow in his footsteps. After college, I worked at the Urban Institute, with Jacques Gordon (LaSalle Investment Management), Steve Malpezzi (recently retired from the University of Wisconsin), John Weicher and John Tuccillo among many others. We did a lot of interesting research on housing markets with grants from HUD (U.S. Department of Housing and Urban Development) and the FHLBB (Federal Home Loan Bank Board), and hopefully influenced some policy.
My dream job after doing research on mortgages was to work as an economist at the Fed in Washington, D.C. All of those guys had PhDs so I thought, much to the shock of my friends and family, I should go back to school. I applied at a number of schools but after my first visit to UNC, my wife and I fell in love with Chapel Hill and decided that if I didn’t get into their PhD program, we’d stay in D.C. Luckily they let me in!
While there I studied under a banking professor, but in my first year I met Mike Miles, who had been on the faculty for five years. Mike and I became good friends, and he got me excited about the research he was doing on commercial real estate indexes. My dissertation, with Mike as my advisor, used PRISA (Prudential Real Estate Investors – now PGIM) data to update an appraisal-based commercial real estate index that had been first done by Tom McCue (another UNC PhD student). I got a lot of mileage out of it, and was able to publish a number of academic papers. After my three years in the program, Mike continued to update and improve our work. He then worked with the Frank Russell Company and then NCREIF (National Council of Real Estate Investment Fiduciaries) to help generate what we now know as the NCREIF Index. I graduated and joined the faculty at UT – Austin (University of Texas). Charlie Wurtzebach ran the program at that time (Mike had been his PhD student at UT), and we had a great time and a lot of fun during the two years that I was there.
I was contacted by a headhunter to see if I would be interested in going to work for Ken Rosen and David Shulman in the new Commercial Research group at Salomon Brothers, Inc. (SBI) in New York. It turned out to be a great place to learn more about the industry. While there, SBI issued a number of really interesting CMBS deals (Commercial Mortgage Backed Securities), and created the first senior-subordinated security, the predecessor of CDOs (Collateralized Debt Obligations). Our research group put out a quarterly report that was read by a lot of industry participants, and also a large number of research papers that would be of interest to the industry.
After a couple of years there, I decided that the academic lifestyle was better for me. My wife Randee and I were very fortunate to be able to move back to UNC where I joined the faculty, again working with Mike Miles. It’s hard to believe that this is my 30th year here.
What advice would you give to someone in the industry for just a few years or a student looking to get his or her start?
Many of us have worked in real estate for a long, long time. The people that you meet early in your career will become your best friends, and also sources of capital and real estate transactions for your whole career. Treasure those relationships, and always do the right thing. It’s never too late to say thanks to those who have impacted you personally or professionally.
Your last job will likely be very different from your first job, so use the early stages of your career to learn as much as you can, and as broadly as you can. Many young people are worried about the salary that they’re being offered, or whether they get a signing bonus. At the end of their career, the impact of your early wages and income on your overall net worth will be trivial. Young folks should be more concerned about obtaining a great learning experience with great mentors, and start to create equity positions in funds or deals.
As you look back on your career, is there anything you wish you had done differently? If so, what?
This is a tough one. When Jacques Gordon and I worked together, I’ll bet everyone we knew thought that I’d have a career in industry and he’d be an academic. It was likely he had already bought his sport coats with elbow pads! I’ve had an incredibly good life, but I left a lot on the table when I left Salomon and what we used to call the “dark side”. Surely my net worth would be a lot higher had I stayed, but not my quality of life. I watched my kids grow up, and got to spend a lot of time with them. I’ve also had the opportunity to meet thousands of students who have come through our program in the 30 years that I’ve been here at UNC. I’ve had the opportunity to do a lot of work for great companies, which has helped me keep a foot in the practitioner world.
Faculty members don’t get bonuses, stock options, or equity in their institutions, so my ‘equity’ is in the personal relationships that I have with undergraduate and MBA students who have come through our program. They are some of my best friends, and they’re all over the world now. My wife and I visit them wherever we go, and for us that’s priceless.
Who have been the major influences in your life and career? Why?
This includes a long list of people that I have been fortunate to know in my nearly 40 years in the real estate industry, but I’ll try to keep it short.
First of all, my Dad Russ Hartzell. He was the George Bailey (It’s A Wonderful Life) of Wilmington, DE. He died in 1983 when I was in the UNC PhD program. He was only 57 years old and I’ve missed him ever since. My wife Randee has been awfully influential as well. Our first date occurred when we were in high school. She was 15 years old, and I had just turned 17, and we’ve been together ever since. She and my two kids, Jamie and David, have always helped me remember the important things in life.
Professionally, those who have had the most influence are the folks I discussed earlier – Mike Miles, Charlie Wurtzebach, Ken Rosen and David Shulman – all of whom have provided great influence, guidance, and mentorship through the years. Others who in their own way have influenced me are the wonderful Mary Ludgin (Heitman), the incomparable late Susan Hudson-Wilson (founder of Property & Portfolio Research), and David Watkins (formerly of Heitman Capital Management, where I was fortunate to do research in the 1990s and 2000s). I’m also fortunate to be influenced on a daily basis by my faculty colleagues and our Wood Center staff.
In recent years, I have learned a great deal from the folks at Highwoods Properties, Inc., including Chairman of the Board Temple Sloan, the other board members and the leadership at the firm, notably CEO Ed Fritsch. They are all astute hard-working professionals with great vision and focus.
Finally, the thousands of students I’ve had the pleasure to teach and know here at UNC (and also at UT) have been a tremendously positive influence on my life, both as students, and also as alumni of our real estate program. Leonard Wood, retired founder of Wood Partners and Leo Horey of AvalonBay are two friends and alums that have been successful in the industry, and I’ve learned from them about giving back. Many of our students have been extremely successful in their careers, and I’ve enjoyed watching them start to think about a real estate career at UNC and later become industry professionals. To think that I had a small part in their academic and professional growth is pretty special.
Michael Kalmonson (1948 - 2018)
Michael Kalmonson ('Kal') passed away this past Monday. He had been suffering from Parkinson's disease for 17 years and it finally got him. Kal was not in the commercial real estate industry but he was one of my oldest friends. He and I met my first day at Fairleigh Dickinson University (FDU) in Rutherford, NJ. Some of the members of the freshman basketball team had flunked off after the first semester and there were tryouts for the open spots. Kal was on that team and I was trying out.
Kal was one of the most animated people I've ever known. When you talk about someone who is 'a character' - well, that's him.
He grew up in Bayonne, NJ and, among other adventures we shared together was when he invited me to play on a local Bayonne softball team called "Al Slootsky Association." I don't remember exactly what that was but for years, wherever I wore the t-shirt, I got the question "‘what the heck is that?"
After the softball games, he, John Fabrbiele and I would get in one of our cars and go for something to eat. But it wasn't like just going to the diner: we had a great routine. First we'd stop at Journal Square in Jersey City to get an Orange Julius. Then we'd go to a pizza place called Naples for their delicious mozzarella sandwich. Taking the Holland Tunnel into the city, we'd go to the famous Katz's deli for a corned-beef sandwich and then walk just a couple of blocks for a potato knish at Yonah Shimmel's. The last stop was Ferrara's in Little Italy for a cannoli.
While we didn't to this junket after every game (which were once a week) we did it enough to have it indelibly etched in my memory (and in my stomach)!
Kal and his wife Diane, whom he met when she was working in the FDU Library (possibly the only time he went there!) moved to Southern California right after they graduated. He and I didn't see much of each other for a long time and then, probably 20 years ago, started a more regular communication. Then, during the years they lived in Laguna Nigel, CA, I'd stay over once a year while I was in that area for a real estate industry event.
My purpose for writing is so that Kal can read this - you see he was an avid reader of this column. Virtually every time I published, I could count on getting a least one email from a reader: him. Generally either correcting me on something or simply busting my chops. Either way, he always made me smile. He made a lot of people smile during his lifetime.
Kal was a loyal and good friend. After the Parkinson's forced him to stop working he became an avid bocce player at the courts a few minutes from his house. There's a group of folks, the regulars, that played every morning and pretty competitively, in a fun way, at that.
Many times over the years, he'd take me along to play with the group. It was always so much fun and they loved Michael. He also became a terrific photographer and was proud of the fact that he could find the best price to buy anything and was an avid web surfer for merchandise - some things he needed, some things he gave to his friends and family.
Kal's mom Bertha, who moved in with Michael and Diane after her husband Phil passed away, is 97 and going really strong. In response to my email to her yesterday, she wrote this back: "Many thanks for your good thoughts. Why him instead of me, I'll never know! We never know what life has in store for us. We will all be strong and carry on. We donated his body to research, so maybe some good will prevail. He had his "schtick", but that was Michael. Michael will be truly missed by all. All we have to remember are the good things and think positive."
I'm not sure if he has access to email where he is now and so I don't know if he'll write me about this column. But, even if I don't hear from him, I can imagine what he'd write to me: "Why didn't you mention about me being sports columnist on the school paper? Why didn't you tell them about my old VW Beetle? Why didn't you tell them about the time I jumped into the drivers' seat of the FDU baseball team's bus? Why didn't you tell them about all the times I came to see your band, 'Everyone' and all those related stories?"
And, my response to him would be: You're right but there are just too many stories to relate. Michael was truly one of the most memorable people in my life and I will miss him. As Bertha reminds us, "Think positive."