BY Sydney LakeJune 15, 2022, 7:13 PM
A view of the Cornell Tech Campus and TATA innovation center at Roosevelt Island, as seen in March 2021 in New York City. (Photo by Roy Rochlin / Getty Images)
A major heatwave in the US market that kicked off during the early part of the COVID-19 pandemic has since cooled — and dramatically so — to what some experts are now referring to as the Great Deceleration. But the commercial real estate market is holding up, and strengthening, despite rising interest rates — a bright spot for both the industry and one business school.
Matching the momentum in the commercial real estate market, Cornell University announced last week that it received a $ 30 million gift to establish the Paul Rubacha Department of Real Estate. The department will be managed by the Cornell SC Johnson College of Business, which Fortune ranks as one of the best full-time MBA programs in the country, and the College of Architecture, Art and Planning (AAP).
Cornell alum Paul Rubacha donated $ 30 million; $ 5 million of that will go toward incentivizing more donations through a matching fund challenge. Rubacha is a partner and co-founder of Ashley Capital, which has a current portfolio of about 25 million square feet of commercial real estate.
The gift will also go toward strengthening the existing Baker Program in Real Estate, a specialty master’s program that is currently co-hosted by the colleges of business and AAP. “It’s not just about finance and investment, but it’s also about design, environment,” Andrew Karolyi, Cornell SC Johnson College of Business dean, tells Fortune. “It also gets into issues like sustainable cities. We like to call it the holistic approach to real estate. ”
Fortune sat down with Karolyi to learn more about what the investment will mean for Cornell’s business school and what it plans to do with this money.
The following interview has been edited for brevity and clarity.
An investment in real estate education, NYC market
Fortune: Why invest more in real estate education at Cornell?
Karolyi: The gift, in its essence, is a testimonial to the deep passion that so many Cornellians have for the topic and the subject of real estate. I mean not just within our college of business, but also in other colleges whether it’s engineering, human ecology, agriculture and life sciences, and of course the partner college on this gift, which is Architecture, Art, and Planning. It’s not just about finance and investment, but it’s also about design, environment. It also gets into issues like sustainable cities.
We think that the students out there in the marketplace are very much craving a holistic perspective on real estate as far as their training goes for their long-term careers. They could become property developers, or work on the asset management side of a ledger, or the operational side of it, or on the design side of it. Knowing all aspects of it is our big differentiator with this program. We have great ambitions for it.
How do you plan to invest in the New York City market?
We have the physical footprint in New York City, but it’s about utilizing it for this purpose. We have space at Cornell Tech through the Johnson Graduate School of Management; we actually have about 22,000 square feet at the Tata building at Cornell Tech on Roosevelt Island. We also have a wholly fitted-out seventh floor of 570 Lexington Ave., which I think would be the more ideal spot for the Baker program in real estate.
We want to hire some faculty to be there on the ground. That’s the beauty of the New York City presence is we’ve got all of the professionals right there in that ecosystem that could really be transformational for these students. It’s really going to make this program compete effectively in the marketplace.
What the program means for Cornell’s business school
Will real estate programming be available to undergrad and grad students?
This $ 30 million gift is going to take us to the next level by really fortifying our graduate-level education in real estate. That’s where there’s a real desire in the marketplace. People come from undergraduate degree programs in economics or engineering, or maybe they’ve taken some courses in infrastructure or design. But they want to come and basically capture this holistic approach. They’re thinking long-run career — this pivot for what we call a specialized master’s in real estate. I think that’s really where the energy and attention of the Rubacha gift will really deliver.
There will be spillover benefits to strengthen even further the undergraduate programs in real estate for our Nolan hotel school students — but also campus-wide. We also have a big, big aspirational goal to have a huge New York City presence for that program. That’s really an important part of this. This gift is going to give us the resources in this department for the Baker program in real estate to have this New York City platform. That’s really going to be an enabler for the students.
What type of demand are you expecting considering what’s happening in the real estate market?
It’s more accessible, more open. We’re not under any illusions of the competitive nature of specialized master’s programs in real estate. We know we’re going to have to fight with our competitors. We know we’re going to have to invest and support career management functions. We’re under no illusion about all of that. But I think the real differentiator is this bigger-minded approach that comes from the multi-college structure that is there in place.
When can we expect to see changes to the real estate program?
The program has been in existence for quite a while. There’s not a minute too soon for us to start to actually invest. We’re going to be investing strategically right away. There’s going to be a planning group with this inaugural faculty that will be associated with this department that’ll be working on the curriculum for that New York City program right away for, ideally, a delivery a year hence. The students who are coming into the program even this fall will have the benefit of that in the second year of their program. We’re jumping right in.