Commercial Property Development Research Articles

Managing risk in commercial property development projects during the COVID-19 pandemic: Evidence from China

The COVID-19 pandemic is the biggest global health crisis in years. China is the first market primarily affected by the COVID-19 pandemic, with unprecedented lockdown measures bringing real estate and other economic activities to a standstill. This study has two objectives: (1) to identify the risks critical to the risk management of commercial real estate (CRE) development projects based on the project life cycle stages and (2) to identify the stages most affected by the COVID-19 pandemic and the risk factors at different stages. Three rounds of the Delphi study were conducted with nine experts involved in the construction project. The findings indicate that the construction, lease and sale phases are prone to significant risks. Additionally, the analytic hierarchy process (AHP) identified ‘health and safety risk’ as the most critical risk factor during the construction phase and ‘marketing and payback risk’ as the most critical risk factor during the lease and sale phase. This study enhanced the effectiveness of risk management practices for implementing CRE development projects in China.

Exploring the use of dual-processing in commercial property development decision-making under conditions of risk and uncertainty

PurposeCommercial property development builds floor space in anticipation of potential, but unknown, future demand, making it particularly prone to risk and uncertainty. The research explores the degree to which property developer decision-making is objective and rational and the degree to which it relies on behavioural instincts and intuition. Decision-making theory, including heuristics, is considered and its prevalence in the field of commercial property development is examined.Design/methodology/approachA “dual-processing” decision-making model, comprising intuitive System 1 and objective System 2 processing, is proposed and tested. Inductive research using template analysis of interviews, with “high status” commercial property developers, explored whether the model offers an accurate representation of developers' behaviour and effective lens through which to examine decisions made under conditions of risk and uncertainty.FindingsParticipants believed they adopted objective and rational approaches to complex commercial property development decisions. Analysis of interviews reveals that System 1 heuristics and intuition play significant roles in decision-making behaviour, leading to potential bias and systematic error. The research concludes that the dual-processing model provides a useful lens through which to better understand the decision-making approach adopted by commercial property developers.Originality/valueThe research represents the rare application of behavioural theory to the realm of commercial property development and provides new and original insight as to how important investment decisions are made under conditions of risk and uncertainty, with implications for professional practice.

Achieving sustainability in South African commercial properties: the impact of innovative technologies on energy consumption

PurposeThis study aims to examine the concept of innovative technologies and identify their impacts on the environmental sustainability of commercial properties in South Africa. This slow adoption is attributed to South Africa’s energy building regulation, SANS 204, which does not promote energy-conscious commercial property development. Furthermore, it was observed that buildings waste significant amounts of energy as electrical appliances are left on when they are not in use, which can be prevented using innovative technologies.Design/methodology/approachThe researchers attempted to evaluate the impact of innovative technologies through an overarching constructivist mixed-method paradigm. The research was conducted using a multi-case study approach on green buildings which had innovative technologies installed. The data collection took the form of online, semi-structured interviews, where thematic analysis was used to identify emergent themes from the qualitative data, and descriptive statistics was used to evaluate the quantitative data.FindingsIt was found that implementing innovative technologies to reduce the energy consumption of commercial buildings could achieve energy savings of up to 23%. Moreover, a commercial building’s carbon footprint can be reduced to 152CO2/m2 and further decreased to 142CO2/m2 through the adoption of a Photovoltaics plant. The study further found that innovative technologies improved employee productivity and promoted green learning and practices.Originality/valueThis research demonstrated the positive impact innovative technologies have on energy reduction and the sustainability of commercial properties. Hence, facility managers should engage innovative technologies when planning a commercial development or refurbishment.

COMMERCIAL PROPERTY DEVELOPMENT PROGRAM OF HIGHEST AND BEST USE STUDY IN INDUSTRIAL AREA SIER SURABAYA

Part of Surabaya Industrial Estate Rungkut (SIER) Area is planned to become Central Business District (CBD) in accordance with the direction of the Surabaya City Government. The land use is changed due to the decrease of carrying capacity of the infrastructure in the environment around SIER, caused by density increase since Middle East Ring Road (MERR) was opened in 2012. In addition, some of the areas that became CBD areas are part of the PT SIER area (97.4 Ha). Aim: This study was aimed to determine alternative land functions. Methodology and results: Since CBD is generally dominated by commercial properties, this research focuses on commercial property development programs carried out within the scope of the Highest and Best Use (HBU) Study. This research was conducted through location, site, and market analysis, completed with recommendation for property type in SIER location. Conclusion, significance and impact study: Based on macro market analysis, supply of retail, hotel and apartment property is increasing, while supply of office is decreasing. The results of this study are the best and highest value proposals for the development of commercial property functions (apartments, offices, shopping areas, and hotels), so that the investment is not high risk. In addition, the result can be used as a policy orientation for all interested parties, especially PT SIER in the development of CBD in its area, related to the development stage that is adjusted to the interests and market conditions.

Fast Building: Money, Management and Risk at London’s Chelsea Harbour Development

Linking the financialization of architecture to commercial property development in the context of deregulation, this article examines the case of Chelsea Harbour, a seventeen-building mixed-use development completed in 1988 on the banks of the River Thames in West London. Ray Moxley, the architect who brought the project to fruition, was a proponent of what became known as fast building, a practice that used speed in the design and construction process as a means of holistic project control. In the 1970s, Moxley had developed what he called the Alternative Method of Management (AMM), an approach to project management that positioned the architect as the lynchpin of the construction process, directing all work on site and producing detailed construction drawings “just in time” as projects progressed. The article examines the fast-building practices Moxley instituted at Chelsea Harbour and situates them relative to larger shifts in planning and regulatory frameworks in the United Kingdom. The article argues that speed worked as a means by which the architect could negotiate these large-scale changes. In particular, the spatial innovation of Chelsea Harbour’s two centrepiece atrium buildings repositioned the architect as the manager of risk.

Approach to Prioritizing the Commercial Real Estate Development Risk

After 30 years of war in Sri Lanka, the demand for real estate has increased tremendously across the nation. Similarly, numerous real estate sub-sectors have avidly participated in the worldwide boom. However, with failures and poor functioning of many investment projects, the industry's risk management reputation has been put in jeopardy, followed by the coronavirus (COVID-19). Though it is less popular among Sri Lankan property developers, risk management strategies in development projects have become a pressing requirement. This paper's goal is to look at commercial property development risk elements from the perspective of a real estate developer in relation to Social, Economic, Environmental, Technological, Political, and Pandemic Risks. The research first evaluates risk variables using a super decision software model based on the Analytic Hierarchy Process (AHP), then prioritizes the most important risk factors, and lastly examines effective risk management measures for successful real estate developments. The data collection has been carried out using interviews through telephone conversations with the help of a structured questionnaire. Accordingly, 35 risk factors have been assessed altogether. For the three projects, the synthesized values were 1.0000, 0.510763, and 0.604037, respectively. Based on the analysis of superMatrix calculation, project A is regarded as the best alternative project in such circumstances. Pandemic Risk, Economic Risk, and Political Risk have all had a significant impact on the primary risk criteria. Therefore, COVID-19 Pandemic Risk Emergence, Workforce Availability, Duration, Delays in Council Approval/License Approval Process and Natural Disaster Impact were identified as the highest influenced sub-risk factors. Identifying the risk factors on this avenue will also help in making better investment decisions while increasing the unpredictable nature of the real estate field and future satisfaction of loan team investment goals within the country.

Building ‘Holland’s Tallest Office Block’: The Transnational Origins and Troubled History of a Speculative Office Development in Post-War Rotterdam

This article examines the remarkable surge of UK property development activity in the Netherlands which took place in the early 1970s, with a focus on Rotterdam. It explores some of the structural and commercial reasons behind this boom in transnational development activity, relating it to political and economic conditions on both sides of the North Sea. We examine the role of the property developer Town & City Properties Limited and its role in exporting UK development practices and techniques to the Netherlands, taking Rotterdam’s SOM-designed Europoint Towers as a case study. This trio of hulking, 22-storey office towers dominated Europe’s most important port. When erected, they were the tallest buildings in the Netherlands; when sold in the mid-1970s, they formed the largest property transaction the country had ever seen. The Europoint project provides an ideal lens through which to examine the growth and global transmission of new commercial architectures, along with the increasing internationalisation of commercial property development in this period. Architecture remained important to such projects, but the profession tended to become somewhat subsumed within the wider corporate structure of internationalising development companies, or else the work was contracted out to ‘starchitects’ to lend landmark building projects further prestige. This early episode of transnational urban property development provides new insights into the historical genealogy and chronology of the global commercial systems of architecture, development, and investment that dominate present-day cities.

APPRAISAL OF THE IMPLEMENTATION OF LAND-USE REGULATIONS ON COMMERCIAL PROPERTY DEVELOPMENT IN ILORIN, NIGERIA

The implementation of land use regulations on commercial property development is extremely important because of benefits abound in it for the society. Ilorin the capital of Kwara state, Nigeria is experiencing influx of many residents which gave rise to series of urban challenges. This paper appraised the implementation of land use regulations on commercial property development in Ilorin, Nigeria. The study adopted survey research design and census method was adopted for the commercial properties and Estate Surveying and Valuation firms in the study area. Questionnaires were distributed to 26 practicing Estate firms in Ilorin Kwara State, 110 and 39 selected landlords / occupiers of commercial properties in Gambari-Ipata-Emir’s road and Government Reserved Area in Ilorin, Nigeria. Out of which 24 questionnaires (92%) and 110 (100%), 36 (92 %) were returned and found useful for the study. Data collected were analysed using descriptive statistics of cross tabulation and inferential statistics of Independent Sample t – Test and test of hypothesis. The research revealed that the p-values were all greater than 0.01 which led to the acceptance of null hypothesis that the level of implementation of land use regulations on commercial property development does not vary in the study area. The study conclude that there were hindrances to effective implementations of land use regulations on commercial property development across the study areas, and if not corrected will continue to affect the welfare of the citizens, ease of commercial activities, will lead to falling in commercial property’s rental value, falling in urban aesthetic value, and an increase in externalities. The study recommended proper government intervention in providing better resources to improve the level of monitoring and enforcement of land use regulations on commercial property development.

International Real Estate Review

This paper identifies the impact of macroeconomic determinants of commercial property investment and development markets in Australia. A Hodrick-Prescott (HP) filter is used to filter the cyclical components of commercial property investment and development time series. In order to identify the long-run relationships and short-run dynamics, coupled with causality between these factors and property cycles, the investment and development property cycles are analyed with respect to the movement of nine macroeconomic factors by using time series data from 1987 to 2016. The empirical results suggest that the Australian commercial property market is often in an overdemand situation rather than oversupply, which can be explained by the different patterns of the property cycles on the demand and supply sides. Property investment cycles are shorter and more volatile than development cycles at around 8-10 years and more than 20 years, respectively, since there is a larger elasticity of the macroeconomic factors that underlie the investment market with short-term dynamics, while the development cycle is mainly affected by such factors moderately in the long run. Both the investment and development markets are intensively affected by financing related variables rather than market-sentiment and economic-cycle related variables.

An innovative social enterprise: Roles of and challenges faced by an arts hub in a World Heritage Site in Malaysia

This research examines the roles of an arts hub in George Town, Malaysia, a UNESCO World Heritage Site. Operating largely as a social enterprise, it has fostered links between the local cultural sector, international arts actors, local communities, and tourists. But this innovative approach does encounter some challenges. This research employed a structured questionnaire and in-depth interviews with key persons, to understand the adopted management strategies and innovation practices. The arts hub has converted a derelict bus depot into an arts space serving both artists and local communities. This place-making effort has gained international acclaims for its innovations and community engagement. But it is a “meanwhile” space, precarious in nature due to land development threats as it is located at the edge of the old city centre, just outside of the world heritage site regulated zone. It also faces challenges in financial sustainability; further innovation in its business model is warranted particularly in revenue model innovation and partnership-building with the public sector and the tourism industry. The organisation is the focal point of an extended international and local art community in a mini-entrepreneurial ecosystem. It survives by finding innovative ways, taking some risks to obtain resources, retain and nurture talent, and reach out to the community. The research helps to provide a greater understanding of the potential roles and challenges faced by innovative social enterprises in the cultural and creative sector worldwide. • An arts hub could play a role in place-making, re-occupying spaces for community-based creative activities. • Extended network is an enabling factor in innovation endeavours of an art based social enterprise. • Organisational innovation is required to improve access to resources and talents, and to reach out to the communities. • A ‘meanwhile’ art space is precarious due to the pressure from commercial and residential property development. • Innovation in business/revenue model is warranted to ensure long-term financial sustainability of a social enterprise.

Harnessing land value capture: Perspectives from India’s urban rail corridors

Urban public transportation remains a challenge for Indian cities. The debilitating state of current public transportation infrastructure as well as rising carbon emissions from private vehicles supports that investments be made in public transportation systems that are both efficient and mitigate environmental challenges of reducing carbon emissions. To address the problem, many Indian cities have been experimenting with metro rail systems. Metro rails are capital intensive projects. Given the budgetary constraints and limitations of external borrowing capacity, state governments in India are resorting to land based finances. Land based financing is predicated on the principle of land value capture. A popular mechanism to implement land based financing is to raise revenues through property development or real-estate cross-subsidisation. This study examined two real-estate cross subsidisation projects that were implemented to raise revenues for Bangalore metro project and Kochi metro project each. The study identified some of the key challenges to land based finances in India. In particular, the study analysed conflicts surrounding urban land management as land acquired under the rubric of ‘public purpose’ were transferred for commercial property development to generate finances for the metro projects. The study calls for evaluation of existing policies of land based financing for urban infrastructure projects.

Optimizing State-Owned Enterprises Land Assets using HBU and Value-Based Decision

Competitive business climate, lack of capital and urban land function changes have an impact on land assets that are not optimally used. State-owned land with an area of 32,495 m2 with a market value of 227,773,000,000 rupiah contained a cultural heritage building. The land is located in the east Kalimantan corridor, trade zone and service, which is the waterfront city development area of the city of Surabaya. This study aims to optimize assets and find the best development alternatives in asset utilization to become a profit center for the company. Based on surveys and interviews, found that the possible development alternatives to be carried out were Mixed Use Commercial (a1), Diesel Engine Industry (a2) and Maximize Workshop capacity (a3). Highest and Best Use (HBU) was found to be one of the techniques of decision making in the development of land and property. HBU criteria are used to build a value-based decision hierarchy. Analytical Hierarchy Process (AHP) is applied to develop decision making processes based on preferences and the best choices. The best alternative is obtained from the Satisficing Option calculation. This result is obtained by comparing functions to costs. The function is obtained from the HBU criteria and costs come from the estimated initial costs and life cycle costs (Life Cycle Cost). Based on financial analysis calculation obtained that mixed-use commercial development has the highest and best use Net Present Value (NPV) IDR 2,470,771,622,513 with an investment cost of IDR 1,367,230,380,324. Internal Rate of Return (IRR) is 20.66% with a payback period of 6.70 years. Based on AHP analysis with HBU-Value Based Decision criteria and Satisficing Option calculations it was found that the mixed-use commercial property development is a development alternative chosen by stakeholders to optimize BUMN assets

Risk assessment in commercial real estate development

PurposeThe purpose of this paper is to analyze the commercial property development risk factors from the entrepreneur’s point of view against social, economic, environmental, technological and political risk assessment criteria. After that, this study aims to assess the risk factors based on the analytical network process (ANP) model and to prioritize the key risk factors to identify which risk factor is highly affected to the commercial development process.Design/methodology/approachThe data were collected through face-to-face interviews using a structured questionnaire. The analysis of the risk factors involved the ANP model using super decision software.FindingsThe results revealed that there are five major risk factors such as environmental, social, economic, technological and political risk, and 32 sub-risk factors. According to the super matrix calculation, the synthesized values for three projects were 0.0704, 0.0532 and 0.0431, respectively. It was identified that Ward City was 0.0704, indicating that it is comparatively less risky and, hence, can be categorized as the best development and considering the sub-risk factors; the results show that the highly affected risk factors for the development are: the council approval process, climate changes and natural disaster, and the least affected risk factors are confidence to the market, lifecycle value, investment return and currency conversion factor.Practical implicationsThe paper includes implications for the development of commercial properties, risk and risk assessment criteria to make risk management strategies and policy implementation.Originality/valueThe research findings are helpful in improving risk management strategies in the country, and policy formulation should focus on the above identified three risk factors in order to mitigate the risk in every stage and to achieve sustainable project development while increasing the satisfaction of long-term investment goals.

Interrelationships between retail clusters in different hierarchies, land value and property development: A panel VAR approach

Retail clusters do not remain static, but change their size and density, influenced by factors that affect business operations. They also interact with, compete with, or complement others in different hierarchies for customer shares. This study aims to unfold the interrelationship between district- and neighborhood-level retail clusters in a catchment area by investigating how the growth (or decline) of one influences the other, and whether these two retail cluster types differ in their reactions to or impacts on certain external changes—land value and property development—occurring in the catchment areas, in the context of Seoul, South Korea, from 2000 to 2014, using Huff modeling and panel vector autoregressive modeling. Findings suggest that once a district-level retail cluster attracts more retail outlets, it not only continues to grow, but also contributes to the growth of neighborhood-level retail clusters for up to three to four years. Then excessive competition within district-level clusters leads to their own short-term decline before stabilization. The growth of neighborhood-level retail clusters also further spurs their continuing growth, whereas such shock does not influence the district-level retail clusters. Land value is influenced only by district-level retail clusters, and the converse does not hold true. An increase in neighborhood-level retail clusters is one of the stimuli of residential and commercial property developments, while that of the district-level retail clusters only encourages the commercial while discourages residential developments. Conversely, when residential property developments occur in the catchment area, neighborhood retail clusters respond positively and experience short-term growth.

Design of precast concrete floors in steel-framed buildings. Part 2: Beam design

In the UK, steel-framed buildings with precast concrete floors are a common form of multistorey building. Such structures may be used for car parking, for commercial, retail or residential property developments, and for public buildings, such as schools and hospitals. This hybrid form of construction has many benefits, including the provision of an early, secure and broad platform from which subsequent site activities can be undertaken. This article is the second in a series of three addressing aspects of designing steel-framed buildings with precast concrete floors. The article describes aspects of the design of steel or composite beams which will support precast prestressed concrete planks.

Design of precast concrete floors in steel-framed buildings. Part 1: Slab design

In the UK, steel-framed buildings with precast concrete floors are a common form of multistorey building. Such structures may be used for car parking, for commercial, retail or residential property developments, and for public buildings, such as schools and hospitals. This hybrid form of construction has many benefits, including the provision of an early, secure and broad platform from which subsequent site activities can be undertaken. This article is the first in a series of three addressing aspects of designing steel-framed buildings with precast concrete floors. The first article describes aspects of the slab design of precast prestressed concrete planks which will be installed in a steel frame.

‘Returning resources alone is not enough’: imagining urban planning after Treaty settlements in Aotearoa New Zealand

ABSTRACTIn Aotearoa New Zealand, Treaty settlements return land to Māori tribal authorities, but planning authority is retained by local and central government. I offer a narrative which describes how plans for commercial property development on land returned to Māori have led to tension between a tribal authority and a local government. This article reports findings that planning processes are influenced by discourses rooted in settler colonial logics. Opportunities to transform these discourses include recognising the exercise of ‘economic sovereignty’ by the tribal authority. Considering interviews with planners involved in developing planning regulation for urban land returned to Māori through the lens of a settler decolonisation practice, I conclude that the return of land through Treaty settlements ‘unsettles’ planning. Planners are struggling to reconcile the imperative to decolonise with their everyday work in a settler colonial planning system. Te Tiriti o Waitangi must form the basis of a new planning imagination for Aotearoa New Zealand.

Al Qatef Holding: a case of a rough landing in the Gulf-based real estate industry

Subject area Organizational behavior. Study level/applicability Upper-level undergraduate courses, introductory MBA courses. Case overview This case study unveils the story of Al Qatef Holding, a Gulf-based real estate company that was created on the vision of one ambitious businessman. The case begins in 1999 when Faisal Al Qatef decided to pursue his dream of establishing a full-fledged corporation to serve the mounting real estate needs in the Gulf region. Faisal started his company by launching a number of residential and commercial property developments in his home country, Kuwait. During its early years of operation, Al Qatef Holding witnessed an impressive success and an increasing appetite for growth. A couple of years down the road, the founder made the strategic decision to open a new branch in Doha to seize the opportunity that the Qatari real estate market presented at that time. Yet, along with the rapid expansion came the company’s incapacity to deliver on its promises, generating many customer complaints and a damaged reputation owing to poor construction quality and significant delays in project delivery. The case describes the multiple challenges experienced by Al Qatef Holding throughout its evolution and portrays the external and internal dynamics that led to its initial success and subsequent decline. Expected learning outcomes Assess the internal dynamics and challenges that are associated with the management of small firms; discuss how leadership styles and characteristics affect the organizational climate and employee performance; demonstrate understanding of how corporate culture drives human behavior in the workplace; perform an analysis of firm structure to estimate its impact on individual and organizational outcomes; apply different techniques for enhancing employee motivation in organizations; and evaluate the effectiveness of managerial decisions and provide recommendations for securing corporate survival. Supplementary Materials Teaching Notes are available for educators only. Please contact your library to gain login details or email support@emeraldinsight.com to request teaching notes. Subject code CSS 6: Human Resource Management.

Positive Influencing Factors of Commercial Property Development: Case of Lithuania

Abstract Presently the conditions for the commercial property development in Lithuania are favourable. The market indicators are demonstrating positive tendencies. Many international companies are entering the Lithuanian markets because of the supportive governmental instruments of competitive policy for these international companies. There is high demand for the commercial premises, and the respective governmental authorities are regularly improving the construction procedures. These are the factors, which are affecting the commercial property development activities in Lithuania. The aim of this paper is to highlight the factors, which are positively affecting the commercial property development in Lithuania. The key market indicators, supportive instruments for international companies and improvements of the construction procedures in Lithuania are reviewed by the authors, with prime focus on the capital of Lithuania − Vilnius. This paper is intended as guidance to the developers, who are entering the Lithuanian commercial property market.

Scaling Capitalist Class Relations: Commercial Property Development in Tampa, Florida

We test the relationship between the implied cost of capital and two agency problems, free cash flows and overinvestment. We show that free cash flows have a significant negative impact on the implied cost of capital, but overinvestment has a significantly positive impact. In addition, the pay-for-performance sensitivity has a negative effect but the sensitivity of volatility has a significantly positive effect on the implied cost of capital. After taking the incentives into account, we find that the significance of the impact from both agency problems still exists. Finally, we conclude that well-designed executive compensation should focus on reducing overinvestment and the sensitivity of volatility.