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An investment decision tool for adaptive building re-use

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  • Brano Glumac

Abstract

The purpose of this paper is to support a better decision in choosing the most suitable vacant office(building) to house new tenants. In order to achieve that a decision support tool (DSS) based on three methods is proposed. First, a discrete choice model (DCM) can estimate the future tenants' rent willingness to pay (WTP) based on the data generated with an online experiment. Second, a multiple-criteria decision analysis (MCDA) used a pair-wise comparison of building experts to establish the weight of criteria for a building transformation potential. Afterwards, an MCDA “multiplied” with the officially published cost approximation for five different levels of transformation. Lastly, rent WTP from DCM and transformation costs from MCDA are included in a discounted cash flow (DCF). With this DCF we can rank many buildings that are available on the market and make their preselection. The possibilities of this tool have been tested in a case study. Although applying decision tools for the building transformation projects has been studied, this paper suggests a specific tool that supports the transition from office space to housing for young people.

Suggested Citation

  • Brano Glumac, 2022. "An investment decision tool for adaptive building re-use," ERES 2022_258, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:2022_258
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    File URL: https://eres.architexturez.net/doc/eres-id-eres2022-258
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    More about this item

    Keywords

    DCF; discrete choice model; pairwise comparison; Real Options;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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