CCIM 50th Anniversary

Moscow Pioneers

A 1991 CCIM class in the Soviet Union opened the door to a new industry.

In 1991, if commercial real estate professionals had to choose a country where the CCIM Institute would hold its first international classes, the Soviet Union might not have been their first pick.

And in fact, says Parker Hudson, CCIM, “of all the places on earth - England, France, Scandinavia - of all the places to launch into in 1991, it really was an amazing thing.” 

Amazing, for a number of reasons. While the U.S.S.R. was slowly opening up to the West through perestroika, it still had a command economy; and real estate laws - never mind real estate education - were nonexistent. In the pre-internet 1990s, communication between the U.S. and the Soviet Union was slow and cumbersome.

And then there was the coup. 

Nevertheless, the two-week class that Hudson taught, along with Sandy Shindleman, CCIM, and F. Allen Decker, CCIM, was groundbreaking for international real estate education. The three traveled to Moscow in September 1991 to teach a group of about 50 Russian engineers the fundamentals of commercial real estate. And the next month, the Russian group arrived in the U.S. and traveled to five cities, where they saw the principles they had learned in the classroom put into practice.

“It was the beginning of a bridge,” says Hudson, which helped to standardize processes and link professionals between the two nations.

Series of Coincidences

At the time, the Institute was exploring venues for international offerings; classes were well established in Canada. Hudson, who was on the international committee, had been a CCIM instructor for about a decade; he also spoke a little Russian, which he'd studied in college in the 1960s.

Then CCIM President John Stone, CCIM, approached Hudson at a meeting and suggested that since he spoke Russian, Hudson might figure out a way to teach commercial real estate in Russia. After Hudson said he would consider it, there followed “an amazing set of coincidences,” he says, “that brought this together.”

“Our small company was in an office building in Atlanta and down the hall, on the same floor, was the one U.S. developer who had ever done anything in Russia,” he says.

Hudson talked to the developer, Earl Worsham, about teaching classes in Russia and whether he knew of a group that might be interested. “He said, 'My Soviet partner happens to be in town today. Why don't we have lunch?' ” Worsham's partner connected Hudson with Moscapstroi, a major construction trust in the U.S.S.R., which was interested in teaching its staff about Western commercial real estate practices.

Hudson's initial negotiations proceeded slowly. “At the time, there was a total of about 90 phone lines between the two nations,” he says. “So to fax anything or call anybody just took forever. You'd have to dial a number 100 times.”

In another coincidence, Hudson went to Kiev, then part of the Soviet Union, with a church mission group in May, and the group returned through Moscow on its way home. This gave Hudson the chance to meet with Moscapstroi in person and negotiate the deal for the classes and the U.S. visit.

“They told me at the time that they really didn't need to know too much market stuff, because the Soviet Union would never be a market economy,” he says. “That changed six months later.”

Hudson had four months to put together a course and have it translated for the Russian audience. “I took CI 101 and CI 102, and sort of like a deck of cards, shuffled them together,” he says. He found a translator in Atlanta who was able to produce written materials. “He had a Mac, and at that time, only Macs could do Cyrillic fonts,” according to Hudson.

Part of History

A few weeks before the class was scheduled to begin, a three-day coup attempt against Soviet leader Mikhail Gorbachev occurred, and there were still remnants of the resulting street clashes when Hudson, Shindleman, and Decker landed in Moscow. They arrived in their classroom to find an overhead projector, a microphone dangling from the ceiling (“Our host said, 'Don't worry - it doesn't work,' ” Shindleman says.), and a picture of Lenin hanging crookedly on the wall.

The instructors found an enthusiastic batch of some 50 students. “They knew how to build buildings out of concrete and steel, but they didn't have any market reasons to do anything,” Hudson says. “The city planners would tell them where they needed buildings, but the reasons didn't have anything to do with the market.”

And, he adds, “the buildings were not efficient. They had big interior hallways, big windows - nobody had to build anything that had any economic efficiency. The restrooms and the elevator were on opposite sides of the building; there was no central core.”

The instructors taught in English, with a translator, but they soon discovered, Shindleman says, “many of the things we taught, they didn't have words for. There was no word in the modern Russian vocabulary for amortization or mortgage or balloon payment.”

The instructors were impressed by how quickly their students embraced the concepts they were being taught. “No one ever thought about where to build,” Shindleman says. “We got them to start thinking about supply and demand requirements and really opened up their thinking and their ability to dream of the possibilities. They came up with things that they had a business case for - maybe you should put a hotel or industrial parks near the airport, for example.”

U.S. Voyage

The following month, a delegation of more than 40 Moscapstroi managers arrived in the U.S. The group landed in Washington, D.C., and then split up to tour five cities: Washington, D.C., Atlanta, Kansas City, Mo., Dallas, and San Francisco.

In each city, CCIM chapter members acted as ambassadors and introduced their guests to multiple real estate projects, from apartment complexes to outlet malls to American-style office buildings.

“They just soaked it all up like sponges,” says Hudson, who escorted the group in Atlanta. “They really enjoyed meeting people, and I think they were impressed that so many people thought so much about market forces. We're always asking: Why should this be here? What's the best way to build it?”

Shindleman was part of the San Francisco delegation. “I'm glad I went, because it was important to show them how they were right about the ideas they'd discussed in class - that the ideas that they came up with were already working.”

There were, of course, cross-cultural lessons for both guests and hosts. BK Allen, CCIM, describes herself as a den mother to the groups as they passed through Washington.

She arranged transportation, lodging, and meals, as well as worked with several area developers to arrange tours to allow the visitors to see apartment and office building construction and the design and layout of  Washington office buildings. They also received a copy of the Virginia condominium statute, “which they took home for further study,” Allen says.

She also got permission to take each group on a tour of the White House. “We thought we lost one,” Allen says, “but we found out that he simply became bored, left, and found a Russian cabdriver to take him back to the hotel.”

The visitors also were introduced to “big New York-style Reuben sandwiches,” as well as American pizza and Kentucky Fried Chicken. “They loved it all,” Allen says.

The group who visited Dallas was interested in seeing the Southfork Ranch, shown on the TV show “Dallas.” Host John Stone also took them to a Baptist cathedral, an apartment building that has been used as a CCIM course case study, and a Texas truck stop, where they marveled at the giant big rigs and the hospitality offerings for the truck drivers.

Pivotal Change

The exchange, as it turns out, was “like planting seeds,” Hudson says. By the end of 1991, the Soviet Union had dissolved, and the door was open to business from the West. Shindleman points out that the CCIM classes were the first foray by any professional organization into Russia, and the groundwork that was laid proved valuable.

“We really felt like changes were afoot,” he says, “that there was opportunity for a Western-style real estate economy at least. There was demand, there was population, growth, and labor. We couldn't help but think that we were going to be helpful to a whole new generation.

“When we were finished there, the elite in business and construction and economy knew what a CCIM was, knew that Americans and Canadians were nice people who were willing to share information and who were interested in us all speaking the same language of the commercial real estate business.”

Hudson adds that the experience was especially helpful when he went back to start a small brokerage in Moscow two years later. “In early days when I was a broker, there were very few Soviet laws that had to do with real estate marketing,” he says. “Think about it - you had people from all over the world all coming there both as commercial real estate people and as corporate users looking for office space and apartments. It was like the United Nations. So we not only had to do commercial real estate, but also basically create a body of law and advise Russians how to be commercial real estate professionals in all areas of the industry.

“Today if you're doing office leasing or developments in Russia, things like analysis, internal rate of return, and NOI - all those things are exactly the same as in the West because of those early classes, and the way they were adopted as the standard.” 

He also notes the dramatic change from the real estate environment that the instructors encountered in 1991 Moscow. “Imagine going in just 20 years from that almost nothing to an industry like ours with leasing agents, architects, bankers, mortgage brokers, and designers, and a lot more CCIMs,” Hudson says. “I went back to teach a few times in 2005 and 2006, and even then the country was full of some of the brightest young people you ever wanted to meet, who were bilingual, smart, and wonderful - so much optimism was there 10 years ago. Hopefully, it will return.”

And Shindleman adds, “I do think it shaped CCIM as an Institute. We could be out there, and we could be advanced. There was demand for education, and the experience that we could share with people. That's what opens up diplomatic channels at the end of the day. There was no talk of politics, and it didn't matter. It was commercial real estate.

“Today, CCIM is even more capable of being there and everywhere else on earth. Our cadre has developed the skills to be incredible goodwill ambassadors for the Institute, as well as the U.S. and Canada. It adds prestige to the pin for those who have it and those who are seeking it. I'm grateful to have been involved.”

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Sarah Hoban

Sarah Hoban is a freelance writer based in the Chicago metro area.

 

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