Commercial Real Estate Industry Research Articles

Climate risk and commercial mortgage delinquency

AbstractNatural disasters such as hurricanes, floods, heatwaves, and wildfires are projected to become more prevalent in the foreseeable future. Climate risk is, therefore, increasingly recognized as an important factor by policy makers, the investment community, and financial markets. Due to the immobility of assets, the commercial real estate industry is especially vulnerable to climate risk, and there is an increasing interest to understand the impact of climate risk on the value of commercial real estate. For commercial real estate lenders, changes in collateral value are only of partial importance. The ability of borrowers to meet their payment obligations is equally, if not more important. By combining historical data on two major climate‐related disasters—Hurricanes Harvey and Sandy—with longitudinal information on commercial mortgage performance, this paper identifies the impact of climate risks on mortgage delinquency rates for commercial real estate mortgages. The results show that both Harvey and Sandy led to elevated levels of commercial mortgage delinquency, with significant heterogeneity based on the extent of damage in the Census block group. Information provided through FEMA 100‐year floodplain maps partially mitigates the effects, an indication that lenders incorporate flood risk information in the underwriting process. An analysis of potential mechanisms indicates a decrease in property income during the 2‐year period following the event for Hurricane Harvey, but no evidence of income effects for Sandy.

Sustainable Ecopreneurship: Solar Energy Solutions in Commercial Real Estate

This study delves into the rapid trend of integrating solar energy into the realm of business operations, providing valuable insights into the readiness of provincial business establishments and commercial building owners to embrace solar energy as a viable alternative power resource. This study examines the landscape of factors influencing the adoption of solar energy. These pivotal variables, namely, the comfort of tenants, competitive advantage, and cost-effectiveness, are all identified as central drivers within the thriving commercial real estate industry, signifying a promising shift towards solar energy adoption in the province of Pampanga. The result from the study affirms the paramount importance of tenant comfort, a factor inextricably linked with enhanced profitability. Additionally, the study illuminates the strategic significance of maintaining a sustainable environment, serving as a formidable competitive advantage. By embracing sustainability, businesses can unlock an array of economic benefits, rendering solar energy adoption inherently cost-effective. In sum, the interplay of these independent variables signals a robust relationship poised to usher in the widespread adoption of solar energy as a sustainable alternative power resource. As a prudent and forward-looking recommendation, this study underscores the compelling case for provincial commercial real estate entities to actively embrace the integration of solar panels into their operations. By doing so, they can champion both environmental responsibility and economic viability, reaping the rewards of a progressive and eco-conscious approach.

Discussion on the Influencing Factors of Housing Prices in Shandong Province

Aiming at the influencing factors of commercial housing prices in Anhui, based on the relevant data of the 2000~2020 Shandong Statistical Yearbook, three explanatory variables of actual GDP, actual per capita disposable income of urban residents and total population were selected, and a multiple linear regression model was established by Eviews software, and econometric test methods such as multicollinearity, heteroscedasticity and autocorrelation were tested and the model was modified. The results show that the per capita disposable income and total number of urban residents have a positive impact on the price of commercial housing in Shandong Province. Based on the research conclusions, it is proposed to provide a reference for the stable development of the commercial real estate industry in Shandong Province.

The Rank-Size Rule and Challenges in Diversifying Commercial Real Estate Portfolios

The strategy of geographically diversifying a portfolio of commercial real estate assets is an intuitive approach for risk management. However, due to high concentrations of these assets in major metropolitan areas, investors may face additional constraints in the portfolio optimization process. The rank-size rule, a log-linear relationship between city rank and size, provides one of the greatest empirical regularities in regional science. As such, it serves as a possible theoretical guide to the weights given to properties by location in a commercial real estate portfolio. This paper sets forth some ideas relating to the concentration side of portfolio variance and the limiting effect that large concentrations may have on the ability to diversify risk. Two variants of the rank-size relationship – the Zipf distribution and the parabolic fractal distribution – are fitted to a variety of datasets to provide a sense of the degree of concentration in the commercial real estate industry. These empirical findings suggest the presence of limitations to geographical diversification that have varying degrees of severity across different property types or sectors of the commercial real estate market.

Smart Contract for Real Estate Using Blockchain

The commercial real estate (CRE) industry appears to take pride in keeping several aspects of its operations private, such as comparable lease rental rates, property prices, and valuations, to create a possible competitive advantage. However, secrets are hard to keep and may not even be desired in today’s hyperconnected and digitized world. In response to greater demand for ​transparency, ​technology advancements and the disintermediation by startups are gradually making some of this information public. As a result, property-related information is increasingly available in digital and paper form. However, a significant portion of the digitized information is hosted on disparate systems, which results in a lack of transparency and efficiency, and a higher incidence of inaccuracies that creates a greater potential for fraudulence. This paper aims to present the Blockchain and smart contract for a specific domain which is real estate. Currently, the real estate business online is at risk of fraudulence. The main objective of this project is to create a platform to maintain transparency in the real estate world so that no fraudulent activities can happen due to false contracts. Goal is to create tamper proof systems and to remove third party reliability for transactions. Consensus algorithms such as Proof of Work and Proof of Authority can be used to achieve consensus in the network. Blockchain uses Proof of work concept to ensure transaction denial thus helping remove denial of services. Proof of authority on the other hand ensures only authorized smart contracts pass the system.

How do women maximize the value of mentorship? Insights from mentees, mentors, and industry professionals

PurposeThe purpose of this paper is to explore the perceptions of women working in the commercial real estate industry to assess how they approach mentoring relationships and take steps to maximize the value derived therefrom.Design/methodology/approachThrough thematic analysis of 39 interviews conducted with women serving as local chapter presidents of CREW Network, the paper offers insights as to how women position themselves to receive mentorship throughout their careers and engage with mentors to address their evolving needs. In particular, three themes of commitment, reciprocity in the mentoring relationship and mentee motivation emerged.FindingsThe results suggest that this is a strategic process and one in which many women are proactively engaging to ascend to leadership positions in the corporate world. While the study is limited to those working in commercial real estate, clear implications exist for other industries.Originality/valueBy identifying and exploring these themes, the paper serves as a starting point for future research considering how women inside and outside of the commercial real estate industry can more strategically pursue mentorship and use it to attain leadership roles.

Exploring the business logic behind CSR certifications

Research shows that CSR certification motives span from being symbolic to substantive. Prior studies have mainly focused on the differences between firms that hold and do not hold CSR certificates. This study explores if the extent of CSR certification is related to different business logic amongst firms who hold CSR certificates. The study utilizes full sample data from the Swedish commercial real estate industry to analyze the variance in motives and performance among firms with CSR certificates. The results indicate that firms that have a substantive CSR commitment have a business logic that entails a holistic and long-term perspective on both financial and CSR performance. However, substantive CSR commitment comes with greater staffing costs and lower financial returns as opposed to those of firms that obtain CSR certificates based on symbolic motives.

Learning about Networking from Women in the Commercial Real Estate Industry

Drawing on concepts of network centrality, closeness, and status, this article examines the networking practices of women in the commercial real estate industry. The data were obtained through semi...

Does the commercial real estate industry need “more pussy on the block?”

PurposeIn a controversial 2018 interview, commercial real estate mogul Sam Zell insinuated that companies should promote their employees based exclusively on merit and avoid purposefully taking steps to get “more pussy on the block” in the name of gender equality. The comment was criticized not only for its crassness, but also for its failure to recognize the challenges many women working in the commercial real estate industry face in their efforts to obtain the same opportunities, compensation and status as similarly-qualified men. In an effort to overcome these disparities, the purpose of this paper is to focus on the pervasiveness of second-generation gender bias and stereotyping in the field through a qualitative analysis.Design/methodology/approachSemi-structured interviews were conducted with 39 women serving as local chapter presidents of a prominent commercial real estate trade group to explore the impact of gender on their career advancement and their experiences with second-generation gender bias.FindingsThe findings suggest unintentional discrimination often influences women’s careers by drawing their communication skills, professional credibility and commitment to the organizations for whom they work into question.Originality/valueThe research contributes to the existing literature by offering additional evidence that unintentional discrimination is common in male-dominated industries, such as commercial real estate. It also provides clear examples of social cues women perceive to heighten tension along gender lines and impinge upon their ability to ascend to leadership positions.

Outsourced property management: the regulations of the property manager

PurposeThe purpose of this paper is to identify factors on property management level for analysing incentives for an effective property management in an outsourced setting.Design/methodology/approachThis research is based on an interview study of a set of three real estate-owning companies and their contracted facility management companies’ property management teams.FindingsThe study concludes that the property manager within the facility management company is highly controlled by the contract between the real estate owner and the facility management company. However, this contract does risk the individual property manager to prioritise the wrong work tasks as she/he has to know exactly what to prioritise in each contract and consider in whose interest she/he performs each task, the real estate owner, her/him employer or the tenants.Research limitations/implicationsThe research in this paper is limited to Swedish commercial real estate sector.Practical implicationsThe insight in the paper is regarding how real estate owners create incentives for the facility management companies’ property management organisation and how that are perceived by the individual property manager.Originality/valueIt provides an insight regarding how the commercial real estate industry prioritises different work tasks and how incentives are created to enable effort.

A post-global financial crisis (GFC) framework for strategic planning, assessment and management decision making for US sustainable commercial real estate

PurposeThe purpose of this paper is to understand both the facts and the values associated with the breadth of issues, and the principles related to sustainable real estate for institutional investors. Sustainable real estate is a growing sector within the commercial real estate industry, and yet, the decision-making practices of institutional investors related to sustainability are still not well understood. In an effort to fill that gap, this research investigates the post-global financial crisis (GFC) motivations driving the implementation of sustainability initiatives, the implementation strategies used, and the predominant eco-indicators and measures used by institutional investors.Design/methodology/approachThis paper presents the results of a three-round modified Delphi study conducted in the USA in 2011-2012 investigating the nature of performance measurements and reporting requirements in sustainable commercial real estate and their impact on the real estate decision-making process used by institutional investors. Two rounds of in-depth interviews were conducted with 14 expert panelists. An e-questionnaire was used in the third round to verify qualitative findings.FindingsThe key industry drivers and performance indicators influencing institutional investor decision making were associated with risk management of assets and whether initiatives can improve competitive market advantage. Industry leaders advocate for simple key performance indicators, which is in contrast to the literature which argues for the need to adopt common criteria and metrics. Key barriers to the adoption of sustainability initiatives are discussed and a decision framework is presented.Practical implicationsThis research aims to help industry partners understand the drivers motivating institutional investors to uptake sustainability initiatives with the aim of improving decision making, assessment, and management of sustainable commercial office buildings.Originality/valueBuilding on the four generations of the sustainability framework presented by Simons et al. (2001), this research argues that the US real estate market has yet again adjusted its relationship with sustainability and revises their framework to include a new, post-GFC generation for decision making, assessment, and management of sustainable real estate.

Socially Responsible Property Investment in Cities – Between Economic Reasoning and Social Obligations

AbstractThis article focuses on socially responsible property investment (SRPI), which is an investment estimated not only to bring financial gain but also social and environmental benefits. The theoretical part of the paper draws on existing literature on responsible investment. The empirical part discussed in this article is based on original research conducted by the author. Starting with a global and regional overview, the query was narrowed down to a national level (Poland) with a case study of the capital - Warsaw. The overarching research problem was described as follows: How are SRPI principles manifested and implemented by investors in the commercial real estate market? Additionally, investigation was supported by numerous questions regarding the interest in SRPI and an understanding of its principles and benefits among investors. Research goals were pursued based on primary and secondary data sources regarding existing and planned SRPI projects within the commercial real estate industry. Results indicate that there is a disparity between declared support for SRPI and market practice. At the conceptual level, there is an understanding of responsible investment principles and will to conduct such projects. However, commercial property practice proves a different reality with primary focus on green buildings, while the social factor is missing.

The Real Estate M&A and Private Equity Review, 2nd Ed., United States Chapter

The covid-19 pandemic that began in 2020 has continued to have a profound impact on the commercial real estate industry, including REITs and real estate private equity. In general, companies with assets that service the digital economy – cell towers, logistics and industrial properties, and data centres – benefited from the pandemic’s acceleration of the digital economy. Conversely, several traditional sectors continue to confront difficult issues involving liquidity, rent collection, dividend payouts, disclosure and guidance, as well as navigating the uncertain and sometimes shifting guidance from regulatory authorities regarding the timeline of reopening. However, with the introduction and distribution of vaccines in the United States, a robust, if uneven, recovery has begun to take hold within the commercial real estate industry. As always, strategic planning and risk management have been, and still will be, critical in order to adjust to changing times, to adapt to the resulting acceleration of technological change in the real estate industry and beyond. Only time will tell with respect to how soon and to what extent people will return to their offices and resume traditional offline shopping and travel, and which of the many other changes in real estate usage will become permanent or semi-permanent.

Incentives in Swedish commercial real estate companies: the property manager function

PurposeThe purpose of this paper is to identify factors on the property management level for analysing incentives for an effective property management with a focus on organising it in-house.Design/methodology/approachThis research is based on an interview study of 11 firm representatives from the Swedish commercial real estate sector with in-house property management.FindingsThe study concludes that the property management organisation in the in-house setting is governed in an informal way, with a large portion of “freedom with responsibilities” setup instead of regulations.Research limitations/implicationsThe research in this paper is limited to the Swedish commercial real estate sector.Practical implicationsThe insights into the paper regarding how decision makers create incentives for the property management organisation can provide inspiration to design incentives for effort.Originality/valueIt provides an insight regarding how the commercial real estate industry prioritises different work tasks and how incentives are created to enable effort.

Measuring customer satisfaction: a study of the Swedish real estate industry

Purpose – The purpose of this paper is to identify the strategies of formal customer evaluations and the use of satisfied customer index in the Swedish commercial real estate industry. Design/methodology/approach – This research is based on an inventory of 24 commercial real estate companies use of formal customer evaluations and an analysis of 15 interviews with top-level managers in the Swedish commercial real estate sector. Findings – Only half of the companies included in the study conduct formal evaluations, although they are considered to work customer oriented. Two different strategies for using formal evaluations is, for improvement work and for signalling quality. One proposed explanation to why only half of the companies conduct formal evaluations is the possibility that the official Swedish Real Estate Barometer is not sufficient if the company would like to use the result for organisational development. There are instead indications that this barometer mainly is used in publicity and marketing purpose, to signal quality. Research limitations/implications – The research in this paper is limited to Swedish commercial real estate sector. But, the overall strategies for conducting formal evaluations should be applicable in general. Practical implications – The insight the paper provides regarding how the industry perceive the Swedish Real Estate Barometer gives direct implications of improvements of the barometer. Originality/value – It provides an insight regarding the use of formal customer evaluations and a proposition of how the Swedish Real Estate Barometer could be changed to better support and fulfil the aim of being a barometer for benchmarking.

Service network value co-creation: Defining the roles of the generic actor

The traditional goods dominant logic lexicon assumes pre-specified and static roles of market participants. Fixed roles such as ‘supplier’ and ‘customer’ imply that value creation occurs between two parties (the dyad) and occurs in a specified direction (i.e., from a supplier to a customer). In contrast, service dominant logic suggests that markets are comprised of generic actors engaged in bilateral actor-to-actor exchanges. However, the generic actor concept is not well developed in existing literature. We contribute to the literature by providing a typology of generic actor roles and identifying multiple types of value that may be co-created in a network. To empirically ground the concepts and generate propositions, we follow the development and deployment of a self-service technology, the Green Fingerprint, in the Swedish commercial real estate industry. Within a service network we find that generic actors assume several roles simultaneously, and may perceive multiple forms of co-created value. Theoretically, this paper offers a basis for further study of the generic actor and types of value, as well as an understanding of how network value co-creation emerges and evolves. Managerially, it offers insights into the existing value and co-creation potential of all actors, even those who are currently passive or reject a value proposition.

The Evolving Role for Transactional Attorneys Responding to Client Needs in Adapting to Climate Change

This article seeks to characterize and define the role of the transactional attorney as clients, especially commercial real estate clients, respond to adaptation to climate change. It rests on the scientific evidence that climate change is caused principally by emission of greenhouse gases and will cause serious and mostly negative impacts. The goal here is 1) to recognize the almost unquestionable conclusion that climate change exists and will have an impact on many aspects of life including the rule of law, 2) that adaptation to climate change must happen and sooner rather than later, 3) that this adaptation is expensive and likely will be financed by a variety of players, including both government and the private sector, 4) that law necessarily will change (or adapt) along side the adaptation to climate change, 5) that transactions clients and their lawyers will need to be aware of are relevant law, know how it affects the clients' business, and know how the transactions attorney can help these clients achieve their business goals.This article considers these likely changes in the law for several categories of clients. In addition to business companies, it looks at the effect of activist investors and the insurance industry, which traditionally protects clients from risks. Because of the author's familiarity with transactions and the practice in the context of the commercial real estate industry, case studies to demonstrate themes will focus on clients involved in the acquisition of real estate, the financing of acquisitions and construction, commercial leasing, ownership & management of real estate to determine what the adaptation might be, how the law might change to respond to it and how the transactional lawyer will function. Part I focuses on the distinct role of the transactional attorney as a "transaction cost engineer." Part II provides a basic introduction to the science of climate change. The difference between the mitigation of climate change and adaptation to climate change is discussed. the three fundamental responses of adaptation are considered (defend in place against the impacts of climate change; retreat from the impacts of climate change and accommodate the impacts of climate change). Part III examines proposals for the likely changes to the law and legal system to reflect adaptation to climate change. Economic costs of adaptation to ensure the resilience are huge and are being recognized by the business community. Other barriers to climate change are becoming clear as well. Adaptation is a catalyst to thinking about the emerging law regarding climate change. A review of various academic thinking on how the law will change/adapt itself is discussed.Part IV considers the role of the transactional attorney as the law adapts to climate change.Part V expects that affected businesses, investors, government disclosure requirements, rules affecting availability of insurance are drivers of focus on the changes. Part VI provides a transactional case study: development of a real estate project after Hurricane Sandy to suggest adding adaptation to climate change to the typical checklists.

Strategies in real estate management: two strategic pathways

PurposeThe purpose of this paper is to identify different strategic pathways for structuring the real estate management organization. Different strategic pathways regarding commercial real estate organizations, and the alignment of their business models with the environment are studied and outlined.Design/methodology/approachThis research is based on an analysis of 15 interviews with top‐level managers in the Swedish commercial real estate sector.FindingsWhen making strategic plans for a company, the commercial real estate industry has two strategic pathways to consider regarding real estate management. The first is to choose whether to have its own frontline personnel or to outsource this function. The second is to decide how the leasing task should be treated: Should it be treated as a real estate manager's task or should it be a function of its own in the organization? The conclusion of the study is that the organizations studied can be structured using both pathways, and the firm can still be successful. Furthermore, the argument by the top‐level managers are the same regardless of how their organization is structured. They all base their strategic plans on the view that their structure of the organization is the best way to take care of the customer. In other words, they have the same arguments but haves chosen different strategic pathways to achieve strategic fit.Research limitations/implicationsThe research in this paper is limited to the Swedish commercial real estate industry.Originality/valueThis paper outlines the strategic pathways for real estate management from a top‐level management view.

Produção arquitetônica, linguagem e construção da cidade: estudo do uso de elementos historicistas na arquitetura contemporânea de Florianópolis

This study discusses the use of historicist elements in the architecture produced in the contemporary period in the city of Florianopolis (SC, Brazil), the values involved in their use and their role in the construction of the city’s image. It takes as a case study the capital of the state of Santa Catarina based on the recognition of the massive use of this language in the city, which is a result of the accelerated process of growth and of the important role of commercial real estate industry, related to the urban-touristic development, in this process. The study, based on various theoretical and conceptual references, discusses the topic from the following aspects: the development of architectonic historicism with the weakening of the functionalist discourse of modernism, the relationship between architectonic historicism and real state speculation and the ease of capture and proximity to this language by the public. Empirically, the study was conducted using a method that analyses, classifies and groups the architecture with such features from different variables: use, scale, time of construction, proposal of urban inclusion and values expressed. This classifi cation makes it possible to reveal specific aspects of this architectonic manifestation, the values expressed and its role in the construction of the contemporary landscape that is constructed in the island of Santa Catarina. Key words: historicist architecture, architectonic language, architecture and construction of the urban space, Florianopolis.

Produção arquitetônica, linguagem e construção da cidade: estudo do uso de elementos historicistas na arquitetura contemporânea de Florianópolis

This study discusses the use of historicist elements in the architecture produced in the contemporary period in the city of Florianópolis (SC, Brazil), the values involved in their use and their role in the construction of the city’s image. It takes as a case study the capital of the state of Santa Catarina based on the recognition of the massive use of this language in the city, which is a result of the accelerated process of growth and of the important role of commercial real estate industry, related to the urban-touristic development, in this process. The study, based on various theoretical and conceptual references, discusses the topic from the following aspects: the development of architectonic historicism with the weakening ofthe functionalist discourse of modernism, the relationship between architectonic historicism and real state speculation and the ease of capture and proximity to this language by the public. Empirically, the study was conducted using a method that analyses, classifies and groups the architecture with such features from different variables: use, scale, time of construction, proposal of urban inclusion and values expressed. This classifi cation makes it possible to reveal specific aspects of this architectonic manifestation, the values expressed and its role in the construction of the contemporary landscape that is constructed in the island of Santa Catarina.Key words: historicist architecture, architectonic language, architectureand construction of the urban space, Florianópolis.