Where Real Estate Is MBA Cool

Kenan-Flagler's Dave Hartzell thinks real estate is a cool MBA career

Kenan-Flagler’s Dave Hartzell thinks real estate is a cool MBA career

Dave Hartzell lived the Wall Street grind, catching the 6:15 a.m. train from Maplewood, N.J., into New York and to Salomon Brothers, then one of the large bulge bracket financial players. He rarely returned home before 9 p.m., typically working six days a week and a few hours on his Saturdays off. “We buy houses just to live in the office, it’s heart-breaking if you think about it,” commented Dave during the interview.

But during his two and one-half years deep into the world of Liar’s Poker, the professor of real estate at the Kenan-Flagler Business School confesses that he learned more about finance and markets than he had during his many years in academia.

“The coolest thing I was involved in was when two of our guys came in after hours and pitched the whole idea of senior subordinated securities,” recalls Hartzell in an interview with Poets&Quants. “They ultimately became the CDOs (collateralized debt obligation that pooled such assets as mortgages, bonds and loans sold to investors). They came in and described this thing that none of us had ever heard of.”


Long before those mortgage-backed securities would be blamed for causing the subprime mortgage crisis that resulted in the Great Recession, Hartzell tired of his long commute and 80-hour work weeks to return to the academic life. He moved to North Carolina in 1988 and began teaching MBA classes, directing the student-managed real estate private equity fund, and leading the real estate concentration at Kenan-Flagler. Some 28 years later, Hartzell is pretty much synonymous with the school’s real estate program.

Few prestige business schools boast solid real estate programs. Wharton, Columbia, Kellogg, UCLA, NYU are certainly among the best. And each program offers unique or unusual elements. Columbia boasts of having 65 proprietary real estate business cases often taught by pros who managed the transactions under class discussion. Georgetown McDonough’s School of Business has a real estate clinic where students roll up their sleeves and put what they learn in the classroom into reality at a commercial building in Washington, D.C.

At Cornell University, students can major in real estate, do a concentration in the field, or actually get a degree in real estate, an option that few schools. Cornell’s Baker Program in Real Estate, which offers a specialized master’s degree in the subject, claims the largest real estate faculty in the U.S. Meantime, Kenan-Flagler has one of the very few student-run real estate investment funds where students identify and evaluate investment opportunities, then provide continued surveillance, reporting, and asset management. The first of those funds raised $2.1 million, while the second last year put together $3.6 million in funding.

Still, at most business schools, few MBA graduates venture into real estate. In fact, the numbers are often so small that most MBA employment reports don’t even report real estate as a category. Those that do, such as Northwestern’s Kellogg School and Columbia Business School, send not much more than 2% to 4% of their graduates into the field each year. Yet, at Kenan-Flagler, real estate claimed 8% of the graduating MBAs this year, just a single percentage below healthcare and far more than consumer products, manufacturing, retail or energy. The median base salary for real estate-bound MBAs at the school was $107,500, up from $94,871 two years ago and slightly down from last year’s $112,500 median.


The success of the program can be traced to Hartnell’s unbridled passion for the subject. A highly accessible professor who is as much a mentor and coach to his students as a teacher, he frequently uses the word “cool” to describe real estate. With the modest intention of becoming a researcher at the Federal Reserve Bank, Hartzell came to UNC for a PhD in finance in 1981. He worked on several research projects with Mike Miles, who started the real estate program at the school in 1976 and is now managing principal of Guggenheim Partners Real Estate. Miles, he says, got him hooked. Instead of heading to the FED after graduating in 1985, he did a short stint teaching at the University of Texas’ McCombs School of Business and then rushed straight to Wall Street, joining the institutional real estate finance and investments group at Salomon Brothers Inc. in New York.

It was a heady time and Hartzell was in a heady place. He worked with the legendary Lew Ranieri, a former bond trader who rose to vice chairman of Salomon. Acclaimed as one of Wall Street’s greatest innovators, Ranieri is widely considered the father of mortgage-bcked securities—something that later earned him criticism for his role in the subprime mortgage crisis of 2007-2009. Even though they’re blamed for the market crash and recession, I believe securitization is a great thing for the markets because done right they match risk levels to knowledgeable investor desires for risk.”

Still, he had enough, leaving six months before Solomon paid out its big annual bonuses. “For two and one-half years,” says Hartzell, “I never saw my kids.” He returned to UNC Kenan-Flagler as a professor in 1988, hoping to gain the life-work balance that would allow him to spent more time with his wife Randee, and their children, Jamie and David. By then, Miles had left UNC, making Hartzell the only faculty member in real estate.

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