Real Estate for the Real World

By Jo Lynn Orr

Lary Cowart (left) and Chad Hagwood

Investing in property, as recent events attest, is a tricky business. That is why real-estate expert Lary Cowart, Ph.D., makes sure his students learn to keep their feet on the ground.

Cowart, a former School of Business faculty member who went on to become chair of the real-estate department at Morehead State University in Kentucky, returned to Birmingham to restart UAB’s real-estate program in spring 2007. The eight-course track differs from programs at other institutions, says Cowart, in its focus on the fundamental principles of real estate, along with the sophisticated investment strategies that predominate in today’s market.

“We offer bricks-and-mortar learning,” Cowart says. “I have students go out on the weekends and drive to a specific address, then come back and explain why a particular building is there. Then I send them to a different address where there is no building and ask them to describe what ought to be there.”

Real estate really doesn’t have any use in and of itself, except for the activity that occurs there, Cowart points out. “If students come back and say, ‘I’d put a shopping center on that land,’ they have to be able to back that up by describing the factors that make it attractive to be turned into a shopping center,” he says. “Visibility, traffic, and a lack of competition are great—but they won’t bring business to a retail center if there are no houses surrounding it, because there will be no shoppers. I pass a fairly large shopping center every day that’s almost always empty. There are probably 30,000 cars going by every day, and it’s within a tenth of a mile of the Interstate, but there are just not enough houses there to support a shopping center of that size.”

Learning the Value of a Dollar

Students who graduate from UAB’s real-estate program will primarily work for lending institutions, Cowart says, so the track’s finance courses focus on property transactions from the perspective of the lender. “They answer questions such as what the lender has to offer, how they price these instruments they’re going to offer, and what conditions they should set on these instruments,” Cowart explains. “To a bank, a mortgage is a complex instrument, especially if they turn around and put it in a pool with others and sell it to someone else.”

Lenders are often hard-pressed to find qualified employees with expertise in this market niche, says Chad Hagwood, a UAB alumnus who is now senior vice president at Capmark Finance, an international commercial real-estate finance firm. “You can find finance majors from many schools, but you can’t necessarily find people who understand both the bricks-and-mortar and finance aspects, as well as how the two are intertwined.” Hagwood felt strongly about the need for reviving UAB’s real-estate program, working with School of Business leaders to set the wheels in motion and endowing a scholarship that helped the program come to life. [For more on Hagwood, see “Commercial Success.”]

Even though the real-estate track made its debut just as a historic boom ended with a bang, Cowart says it will benefit from starting out in difficult times. “The real-estate market is in chaos right now,” he acknowledges. “But it’s really better to start a program when you’re at the bottom of the cycle so that you can have time to get rolling and be prepared for the top of the cycle.”