Application of DSM in process management of a PE commercial real estate development project

2018 ◽  
Vol 36 (1) ◽  
pp. 20-36
Author(s):  
Guofeng Ma ◽  
Tiancheng Zhu
Keyword(s):  
Real Estate ◽  
Process Model ◽  
Process Management ◽  
Development Project ◽  
Commercial Real Estate ◽  
Real Estate Development ◽  
Content Type ◽  
Design Structure ◽  
Dependency Model ◽  
Objective Basis

Purpose After the drawbacks in the process management of China PE commercial real estate development project are analyzed, it is necessary to introduce a more integrated and advanced tool to solve them. The paper aims to discuss this issue. Design/methodology/approach A standard process model was proposed first. Based on the model, a coupled activity dependency model was also built by structural tool design structure matrix (DSM), the detailed matrix involving 119 activities and 322 information dependencies. Next, two large processes coupled blocks were generated by the sequencing algorithm and tearing algorithm. Then, the general simulation framework with rework probability and rework effect was introduced to do empirical research for one of the activities blocks due to the merit of solving rework of DSM. Findings These results showed that key activities were rearranged, that information interactive scope for them was optimized and that collaborative organization interface was built. And the expected duration after simulation was 131 days at 90 percent percentile, providing the objective basis of process arrangement to some extent and decreasing the risk of prospective yields during fund period. Originality/value This paper is a qualitative and quantitative practical research for the process management of PE commercial real estate development projects in China based on a real project which has begun construction in 2014.

scholarly journals Contribution to the analysis of the Czech real-estate development market

2008 ◽  
Vol 56 (6) ◽  
pp. 113-122
Author(s):  
Martina Procházková ◽  
Jana Turčínková
Keyword(s):  
Decision Making ◽  
Real Estate ◽  
Process Model ◽  
Western Europe ◽  
Real Estate Market ◽  
Development Project ◽  
Real Estate Development ◽  
Decision Making Process ◽  
Real Property ◽  
Factors Affecting

Czech economy went through a substantial transformation in last two decades affecting business environments of all fields. This paper presents partial results of the Czech development market ana­ly­sis. It explains the characteristics of real-estate development, real-estate development market and the complexity of the real-estate development process, including market research, site selection (using feasibility analysis), due diligence, property acquisition, project design, obtaining entitlements, financing, construction, lease-up or sale or operation, if the project is retained as and asset.The significant growth in last decade of the analyzed market is slowing down due to current greater circumspection of banks when providing credits for new development projects, drop of real pro­per­ty prices in Western Europe and at the same time greater revenues from real properties in Eastern Europe. The inhibition of the investment in commercial real property (both what number of transactions concerns, and total volume of investment) is influenced by so-called mortgage crisis on the U. S. and British real estate market. In Czech market, the factors are reflected in a number of respects.The paper suggests future steps of the intended research, focus on identification of factors affecting decision-making process when preparing real-estate development project, finding interrelationships among these factors, quantification and setting weight of the factors, creation of a decision-making process model and its test on a real case. The model should contribute to decrease waste of time and money investment in these feasibility calculations by providing a tool which helps pre-select projects with higher chance of success in earlier phase.

The human factor: the “unknown unknowns” in the real estate development process

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Elaine Worzala ◽  
David Wyman
Keyword(s):  
Decision Making ◽  
Real Estate ◽  
Human Factor ◽  
Commercial Real Estate ◽  
Real Estate Development ◽  
Content Type ◽  
The Real ◽  
The Real Estate ◽  
The Future ◽  
Decision Making Framework

PurposeVolatility, Uncertainty, Complexity and Ambiguity (VUCA) are terms the military have coined to describe the environment they often operate in. This paper examines how this decision-making framework can be used to better inform real estate investment and development. In celebration of this journal's 40th anniversary, we also explore how VUCA can be related to and expand on the teachings of Dr. James A. Graaskamp who published his seminal piece on the Fundamentals of Real Estate Development (1981) the same year. In that piece, he highlights the importance of paying attention to the human factor, the consumers of real estate.Design/methodology/approachThis is a thought piece on an alternative decision-making framework that can help capture the dynamic environment that commercial real estate investors and developers are currently working in. VUCA captures the difficulty of predicting the future in a world of accelerating, unpredictable change. This is particularly important in today's rapidly changing world caused not only by the current COVID-19 pandemic but also the exponential growth of the proptech industry as well as the increasing risks and opportunities associated with climate change that continues to impact the built environment.FindingsThis is not a traditional research project with empirical findings. We are presenting an alternative framework for thinking about making investment decisions in these current volatile, uncertain, complex and ambiguous times today and in the future. In addition, the importance of multidisciplinary training and the human factor are stressed.Research limitations/implicationsThere are no limitations to this research as it is the ideas of the authors. Implications are to help real estate investors, developers and educators better understand the environment that they are working in.Practical implicationsVUCA captures better the dynamic nature of real estate investments compared to traditional analysis. It helps one better analyze the risks and returns but also to acknowledge that there is a lot you cannot predict and there are many exogenous variables that can, at times, completely change the rules of the game. Flexibility and adaptability are essential tools for working in a VUCA environment. In addition, the human factor plays an increasingly important role and real estate investors and developers that clearly understand this and focus on the consumer will likely be more successful.Originality/valueWe believe that this is the first time that VUCA has been used in the real estate academic literature.

The Changing Landscape of Asian Entrepreneurship, Minority Banks, and Community Development

2011 ◽  
Vol 9 (1-2) ◽  
pp. 78-90
Author(s):  
Tarry Hum
Keyword(s):  
New York ◽  
New York City ◽  
Data Collection ◽  
Community Development ◽  
Real Estate ◽  
York City ◽  
Commercial Real Estate ◽  
Data Sources ◽  
Real Estate Development ◽  
Public Data

This policy brief examines minority banks and their lending practices in New York City. By synthesizing various public data sources, this policy brief finds that Asian banks now make up a majority of minority banks, and their loans are concentrated in commercial real estate development. This brief underscores the need for improved data collection and access to research minority banks and the need to improve their contributions to equitable community development and sustainability.

scholarly journals PHASED MULTI‐TARGET AREAL DEVELOPMENT COMPETITIONS: ALGORITHMS FOR COMPETITOR ALLOCATION

2009 ◽  
Vol 13 (1) ◽  
pp. 1-22 ◽  
Author(s):  
Pertti Lahdenperä
Keyword(s):  
Real Estate ◽  
Planning Process ◽  
Selection Process ◽  
Development Project ◽  
Real Estate Development ◽  
Urban Structure ◽  
Public And Private ◽  
Competition Process ◽  
The Right ◽  
Private Actors

The prevailing practice in new areal real estate development is for public and private actors to perform their duties by turns. Yet, the planning process could benefit from simultaneous contributions from society and developers and their designers. That, again, requires that the municipality selects the private partner consortia prior to completion of the local detailed plan through a competition in order to find the most potential actors and the best ideas for implementation of an urban structure of high quality. Candidates will be attracted by offering them the right to implement a residential/business block as a developer. The several blocks involved in an areal development project, and the laboriousness of producing competitive solutions, require a well planned selection process. A novel multi‐target competition process was developed which is presented in this paper with special emphasis on the allocation algorithms that allow selecting the most qualified competitors for parallel follow-up competitions from among a large group of registered candidates. The approach was tested in an actual real estate development project in the municipal district of Vuores which was the original reason for launching the study. Santruka Pletojant nekilnojamaji turta naujose teritorijose, vieši ir privatūs asmenys dažniausiai savo pareigas vykdo paeiliui. Tačiau planavimo procesui būtu tik geriau, jei tuo pačiu metu prisidetu ir visuomene, ir vystytojai, ir projektuotojai. Tam velgi reikia, kad savivaldybe paskelbtu konkursa ir pasirinktu privačiu partneriu grupes prieš užbaigdama vietini detaluji plana didžiausia potenciala turintiems dalyviams aptikti ir geriausioms idejoms surinkti, kokybiškai miesto struktūrai išvystyti. Kai teritoriju pletros projektas apima kelis kvartalus, o kuriant konkurencingus sprendimus idedama daug darbo, reikia gerai suplanuoto atrankos proceso. Yra sukurtas novatoriškas daugiatikslis konkurso procesas, pristatomas šiame darbe, daugiau demesio skiriama paskirstymo algoritmams, kuriuos naudojant iš daugybes registruotu kandidatu galima atrinkti tinkamiausius tolesniems tuo pat metu vykdomiems konkursams. Toks būdas patikrintas realiame nekilnojamojo turto pletros projekte, kuris vyko Vuores savivaldybes teritorijoje, ir būtent del šios priežasties pradetas šis tyrimas.

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

2017 ◽  
Vol 35 (6) ◽  
pp. 589-618 ◽  
Author(s):  
Pernille Hoy Christensen
Keyword(s):  
Decision Making ◽  
Financial Crisis ◽  
Real Estate ◽  
Performance Indicators ◽  
Institutional Investors ◽  
Global Financial Crisis ◽  
Real Estate Market ◽  
Commercial Real Estate ◽  
Content Type ◽  
Sustainability Initiatives

Purpose The 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/approach This 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. Findings The 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 implications This 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/value Building 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.

scholarly journals What sells in a crisis? Determinants of sale probability over a cycle and through a crash

2017 ◽  
Vol 35 (6) ◽  
pp. 619-637 ◽  
Author(s):  
David Scofield ◽  
Steven Devaney
Keyword(s):  
Real Estate ◽  
Sample Selection ◽  
Sampling Technique ◽  
Real Estate Market ◽  
Commercial Real Estate ◽  
Content Type ◽  
Asset Selection ◽  
The Uk ◽  
Real Estate Cycle ◽  
Over Time

Purpose The purpose of this paper is to understand what affects the liquidity of individual commercial real estate assets over the course of the economic cycle by exploring a range of variables and a number of time periods to identify key determinants of sale probability. Design/methodology/approach Analyzing 12,000 UK commercial real estate transactions (2003 to 2013) the authors use an innovative sampling technique akin to a perpetual inventory approach to generate a sample of held assets for each 12 month interval. Next, the authors use probit models to test how market, owner and property factors affect sale probability in different market environments. Findings The types of properties that are most likely to sell changes between strong and weak markets. Office and retail assets were more likely to sell than industrial both overall and in better market conditions, but were less likely to sell than industrial properties during the downturn from mid-2007 to mid-2009. Assets located in the City of London more likely to sell in both strong and weak markets. The behavior of different groups of owners changed over time, and this indicates that the type of owner might have implications for the liquidity of individual assets over and above their physical and locational attributes. Practical implications Variation in sale probability over time and across assets has implications for real estate investment management both in terms of asset selection and the ability to rebalance portfolios over the course of the cycle. Results also suggest that sample selection may be an issue for commercial real estate price indices around the globe and imply that indices based on a limited group of owners/sellers might be susceptible to further biases when tracking market performance through time. Originality/value The study differs from the existing literature on sale probability as the authors analyzed samples of transactions drawn from all investor types, a significant advantage over studies based on data restricted to samples of domestic institutional investors. As well, information on country of origin for buyers and sellers allows us to explore the influence of foreign ownership on the probability of sale. Finally, the authors not only analyze all transactions together, but the authors also look at transactions in five distinct periods that correspond with different phases of the UK commercial real estate cycle. This paper considers the UK real estate market, but it is likely that many of the findings hold for other major commercial real estate markets.

scholarly journals Cap rates and risk: a spatial analysis of commercial real estate

2018 ◽  
Vol 35 (1) ◽  
pp. 25-43
Author(s):  
Florian Unbehaun ◽  
Franz Fuerst
Keyword(s):  
Real Estate ◽  
Risk Perceptions ◽  
Large Scale ◽  
Risk Premia ◽  
Real Estate Market ◽  
Commercial Real Estate ◽  
Data Series ◽  
Large Set ◽  
Content Type ◽  
The Impact

Purpose This study aims to assess the impact of location on capitalization rates and risk premia. Design/methodology/approach Using a transaction-based data series for the five largest office markets in Germany from 2005 to 2015, regression analysis is performed to account for a large set of asset-level drivers such as location, age and size and time-varying macro-level drivers. Findings Location is found to be a key determinant of cap rates and risk premia. CBD locations are found to attract lower cap rates and lower risk premia in three of the five largest markets in Germany. Interestingly, this effect is not found in the non-CBD locations of these markets, suggesting that the lower perceived risk associated with these large markets is restricted to a relatively small area within these markets that are reputed to be safe investments. Research limitations/implications The findings imply that investors view properties in peripheral urban locations as imperfect substitutes for CBD properties. Further analysis also shows that these risk premia are not uniformly applied across real estate asset types. The CBD risk effect is particularly pronounced for office and retail assets, apparently considered “prime” investments within the central locations. Originality/value This is one of the first empirical studies of the risk implications of peripheral commercial real estate locations. It is also one of the first large-scale cap rate analyses of the German commercial real estate market. The results demonstrate that risk perceptions of investors have a distinct spatial dimension.

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