The determination of occupancy costs during early project phases

Abstract

In addition to the earnings, costs determine the commercial success of real estate investments. The discussion in the German‐speaking region focuses on occupancy costs and their planning. When planning, the occupancy costs must be determined early, continually monitored, and controlled if necessary. A process for determining occupancy costs, the construction element process, is presented and tested using an actual property. The test results deviate by only approximately 8% from the occupancy costs actually incurred. The process demonstrates its suitability for the early determination of occupancy costs using only a few pieces of data on the property. However, it does require occupancy cost indicators. Also, the significant drivers of these indictors must be known in order to select the appropriate indicator. For this reason, future work on occupancy costs must not only collect additional data, but the data must also be analysed with regard to the cost drivers.