Why do research on commercial property management? Somebody HAS to!

This paper identifies some significant gaps in our knowledge of the configuration and performance of the property asset management sector. It is argued that, as many leading academic property researchers have focussed on financial vehicles and modelling, in-depth analysis of property assets and their management has been neglected. In terms of potential for future in-depth research, three key broad preliminary research themes or questions are identified. First, how do the active management opportunities presented, costs of management and the key management tasks vary with market conditions, asset type and life-cycle stage? Second, how is property asset management delivered and what are the main costs and benefits of different models of procurement? Finally, what are the appropriate metrics for measuring the performance of different property managers and approaches to property management? It is concluded that the lack of published materials addressing these issues has implications for educating property students

The valuation tool user guide: monetizing Cradle to Cradle®

This User Guide outlines the object, scope and expected deliverables from the Valuation Tool component of the Cradle to Cradle ® C2C BIZZ project. It describes the compendium of subtools that have been developed comprising: i) overview of funding tools; ii) C2C investment appraisal tool; and iii) C2C value indexing tool. The underpinning methodologies, as well as their inherent strengths and limitations are also described. The C2C BIZZ project as a whole aims specifically to promote and enhance the implementation of C2C methods in business site development within North Western Europe (NWE) (PAD, p.14). It is intended to infuse C2C notions into conventional site development, restructuring and management. The primary focus of the project is on planning, building and managing of business sites with C2C credentials (PAD, p.18) using sites in Lille Metropole (La Lainiere), London (London Sustainable Industries Park) and Luxemburg (Ecoparc Windhof) as experimental fields. C2C BIZZ is not concerned with the internal operations and activities of occupiers or users of the developed site. Accordingly, the scope of the valuation tool is confined to the planning, building and management of C2C sites. The deliverable from this component is a compendium of subtools (see Figure 1 below) that may be used to analyse the financial performance of C2C credentials in business sites to aid the making of a business case for such developments and evaluating the financial incentives for particular C2C site development projects. This entire work is premised on the argument that the wider adoption of C2C principles within the built environment depends on the rate of uptake by the private sector. The private sector, being profit driven, are likely to engage in C2C site development if they are convinced of its capacity to contribute to their business goals which ultimately is a return on their investment. The tool development described in this document attempts to provide a framework for collating an evidence base that can assist in articulating the business case for C2C in business site developments

Hedging Private International Real Estate

The performance of an international real estate investment can be critically affected by currency fluctuations. While survey work suggests large international investors with multi-asset portfolios tend to hedge their overall currency exposure at portfolio level, smaller and specialist investors are more likely to hedge individual investments and face considerable specific risk. This presents particular problems in direct real estate investment due to the lengthy holding period. Prior research investigating the issue relies on ex post portfolio measure, understating the risk faced. This paper examines individual risk using a forward-looking simulation approach to model uncertain cashflow. The results suggest that a US investor can greatly reduce the downside currency risk inherent in UK real estate by using a swap structure – but at the expense of dampening upside potential.International Real Estate, Investment, Hedging, Currency Derivative Markets

Green noise or green value? Measuring the price effects of environmental certification in commercial buildings

This paper investigates the price effects of environmental certification on commercial real estate assets. It is argued that there are likely to be three main drivers of price differences between certified and non-certified buildings. First, certified buildings offer a bundle of benefits to occupiers relating to business productivity, image and occupancy costs. Second, due to these occupier benefits, certified buildings can result in higher rents and lower holding costs for investors. Third, certified buildings may require a lower risk premium. Drawing upon the CoStar database of US commercial real estate assets, hedonic regression analysis is used to measure the effect of certification on both rent and price. We first estimate the rental regression for a sample of 110 LEED and 433 Energy Star as well as several thousand benchmark buildings to compare the sample to. The results suggest that, compared to buildings in the same metropolitan region, certified buildings have a rental premium and that the more highly rated that buildings are in terms of their environmental impact, the greater the rental premium. Furthermore, based on a sample of transaction prices for 292 Energy Star and 30 LEED-certified buildings, we find price premia of 10% and 31% respectively compared to non-certified buildings in the same metropolitan are