Stuart S. Rosenthal.

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Equity and prosperity: 5 questions with Real Estate Chair Stuart S. Rosenthal

This semester, the Paul Rubacha Department of Real Estate, jointly led by the College of Architecture, Art, and Planning (AAP) and the Cornell SC Johnson College of Business, welcomes Professor Stuart S. Rosenthal as the department's inaugural chair. Previously the Maxwell Advisory Board Professor of Economics and a senior research associate at Syracuse University's Center for Policy Research, Rosenthal brings to his new position a deep understanding of the interconnected forces that push communities to grow and change. In collaboration with fellow faculty, he is poised to lead a department that educates tomorrow's leaders in the multidisciplinary field of real estate, spanning the built environment, finance, and social policy.

Your path to the study of real estate markets and cities has largely been through economic considerations. How has your interest in economics led to this deep intersection with real estate?

All of my career I have been especially interested in learning more about the opportunities and challenges that arise in cities. Around the world, cities are mostly engines of growth, enhancing labor productivity and contributing to rising standards of living. There are reasons for this, grounded in economics: entrepreneurs choose to operate in expensive cities because proximity to other companies is valuable. But the marvel of urban productivity is not without cost. Cities also suffer from congestion, pollution, and, in many instances, social tensions associated with inequities. Some of those tensions arise as a consequence of urbanization, as is often the case with the sorting of high- and low-income families into different neighborhoods, and the subsequent differences in access to local services (e.g., resources for local schools). In other instances, urbanization has the potential to amplify racial and ethnic differences, especially when race and ethnicity are correlated with income. This can reinforce segregation along demographic and cultural lines in ways that can impede economic opportunity and upward mobility.

Economics helps me think about how and why these patterns arise along with opportunities to enact policy, both in government and business practice, that has the potential to enhance the positive sides of urbanization while mitigating the negatives. In nearly all instances, decisions by households, entrepreneurs, and local government officials have direct effects or links with real estate markets, including property markets and financing. For example, the appeal of a neighborhood's local amenities affects property values, as does the opportunity to build more housing. The presence of complementary businesses enhances the potential for new businesses to thrive, increasing commercial rent. The road and transit systems created by local governments affect the ability of individuals to travel between home and work, and that too affects property values and economic opportunities for residents in different communities. All such development requires financing, and so financial markets are intertwined with property markets. In short, very little happens in cities that is not directly related to real estate, broadly defined. A focus on cities requires a focus on the economics and financial aspects of real estate.

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