Modeling and Simulation of Consumer Preference Decision for Commercial Complex Location Based on System Dynamics

The influencing factors of consumer shopping behavior play a key role in the later performance of commercial real estate enterprises. On the basis of analyzing the influence factors of customer patronage and the influence factors of commercial complex site selection decision and their relationship, a causal relationship graph and a system dynamic model are established, which can describe the influence of customer preference on commercial complex site selection decision. And introducing customer subjective factors optimize the original pure objective factors site selection decision model. The model is implemented by using the system dynamics modeling tool Vensim. At the same time, the model is verified by using the data of the first-hand investigation. The results show that the calculated data of the model is in good agreement with the actual data. The results show that the system dynamics method can effectively simulate the influence of various factors on the decision-making of the commercial complex. As the forecast of the model, the key indexes of the decision-making of the city commercial complex are discussed, and the measures to be taken are put forward, which can provide reference for the decision-making of the location.

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.

Including Shareholders to Your Private Practice in Oral Surgery and Dentistry: Ukrainian Laws

Dental clinic/office launch and development is non-easy task, which require not only a lot of efforts but also some level of the investments, especially for the commercial real estate and expensive equipment. And very often the amount of finances which one person or family is bringing to business may not be sufficient. Including of shareholders can help to reach that goal. Including the partners (ie, cofounders or shareholders) to your private clinic/ office in a legal form of Limited Liability Company (LLC) are possible upon two stages: (1) upon the business launch and (2) upon the business existence. The second variant is more complicated and has to be analyzed.

Determining the main criteria for selecting appropriate methods for repair and maintenance of commercial real estate in Iran

Purpose The average lifetime of a building in Iran is only one-quarter of the reported global average lifespan. A major reason why buildings in Iran have shorter service life is attributed to the inappropriate selection of the facility repair and maintenance (R&M) methods. Hence, selecting the appropriate R&M methods is critical in upholding or even extending the lifespan of the building. The purpose of this paper is to determine the main criteria for selecting the suitable R&M methods of commercial real estate (CRE) in Iran as a major challenge encountered by the Iranian construction industry. Design/methodology/approach The total number of identified criteria (related to the selection of the suitable R&M methods) is 16, which is divided into five clusters (referred as main criteria in this study): human resources; flexibility and technical capability; safety and risk; cost of maintenance; and facilities and technology. To analyze the identified criteria, the expert opinions were collected through both face-to-face interviews and distribution of Delphi survey questionnaires. A total of 12 industrial experts in the construction industry were invited to participate in a Delphi survey to solicit their perceptions and opinions on the identified criteria in this research. Findings The findings indicated that, among the five main criteria, the cost of maintenance is the most important criteria for selecting appropriate R&M methods of CRE in Iran. In addition, the criterion of facilities and technology was recognized as the least important among the main criteria. Originality/value The research, significantly, justified the configuration of non-compliance with the practice and its deliverables and developed a diagnostic study on the grounds of failure in the Iranian construction industry regarding the issues which are threatening the expected and desirable outcomes. The research achievements and suggested effective recommendations can serve as a useful policy and consultative instrument for the relevant stakeholders in the construction industry engaged in building R&M work.

Commercial real estate finance and the lending cap rate

PurposeThe aim of this study is to report on a simple derivation that results in what the authors refer to as the lending cap rate. The lending cap rate is a unique cap rate resulting in a property valuation that perfectly aligns the maximum loan amount for the financing of commercial real estate.Design/methodology/approachThe derivation is the result of simple algebra relating the two most common underwriting ratios: debt service coverage and loan-to-value with the formula for the present value of an annuity. Numerical examples are presented to demonstrate the calculation of the lending cap rate, property valuation and maximum loan amount. The authors also present comparative statics results.FindingsThe main finding of this research is that once a lender knows the debt service coverage ratio, loan-to-value ratio and lending terms for a specific property financing request, a simple calculation reveals the lending cap rate and the property valuation that aligns the maximum loan amount implied by the two underwriting ratios.Practical implicationsOne practical implication of the research is that a simple calculation reveals the lending cap rate which facilitates timely property evaluations for lending purposes. The methods demonstrated also offer real estate finance educators a practical means of connecting the loan underwriting process with property appraisal thereby facilitating conceptual understanding.Originality/valueThe key finding is original, and the importance of the finding is that the determination of the lending cap rate is simple and has the ability to make commercial real estate lending faster and cheaper, especially in lending situations where an evaluation rather than an appraisal is appropriate.

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

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.

Recourse as Shadow Equity: Evidence from Commercial Real Estate Loans

We study the role that recourse plays in the commercial real estate loan contracts of the largest U.S. banks. We find that recourse is valued by lenders and is treated as a substitute for conventional equity. At origination, recourse loans have rate spreads that are at least 20 basis points lower and loan-to-value ratios that are around 3 percentage points higher than non-recourse loans. Dynamically, recourse affects loan modification negotiations by providing additional bargaining power to the lender. Recourse loans were half as likely to receive accommodation during the COVID-19 pandemic, and the modifications that did occur entailed a relatively smaller reduction in payments.