Growing demand for new types of premises – where’s the supply?

Growing demand for new types of premises – where’s the supply?

Today’s workplace is where the worker is. Offices are half empty as work is done at the client’s premises, in a market cafe, or on the street. Demand for temporary premises suiting the worker’s needs of the moment is increasing – yet the supply is missing. Property owners have so far failed to take advantage of this opportunity.

The KISS work package of the Indoor Environment Program has focused on the business logics and models of the office markets. The results clearly show the demand pressure created by new work practices. – A complete rethink of the use of existing spaces and space arrangements is also needed, says Senior Advisor Anna-Liisa Sarasoja, Newsec Asset Management.

In the Helsinki Metropolitan Area an average of 27 sqm of office space is reserved per white collar worker. That is almost double that of other large European cities. If that space which lies vacant for a big portion of the day presently – the utilization factor is now only 30% during the workweek – could be reduced just to 20 sqm, 26,000 more employees could be fitted in the offices in Helsinki.

The financial benefit of a higher utilization rate is self-evident. The same is true for property management where with near-zero investments and measures that cost nothing, just by improving cooperation and logistics, huge energy savings can be achieved: according to numerous studies 15–30%. Automation and remote management are the key tools of energy use management.

Real Option Analysis – a tool for calculating changes in value

Real Option Analysis, ROA, which is widely used in the world of finance is also suitable for the real estate business according to research. In case studies it has been used to determine the value of adaptability: in connection with renovation it pays to increase flexibility of a part of the building, not the entire building.

In one case study Real Option Analysis was used to determine the value of environmental certification: in the case of the target building the value of a LEED Platinum Certified building increased 9.8% or €985,000.

However, cost planning of new construction is likely the most important application. Within five years Real Option Analysis is expected to be in wide use in the European construction and property business.

Sustainability is a competitive advantage – where are the investors?

Sustainability has become a key value throughout the Western world. The technology required to construct energy- efficient buildings exists – the added value it generates compared to traditional construction has been proven both theoretically and in practice. Yet, marketing to clients has not started.

Sarasoja and Henna Eerikäinen from Skanska are studying this dilemma as part of the KISS work package; Newsec is the driver company. Their publication ”Marketing green buildings – well-structured process or forgotten minor detail? Evidence from Finland” received a major international prize last year.

The conclusion of the article is that current construction markets are lacking in ambition. Builders and investors are not confident about their economic potential, and the green value-adding elements of buildings are not emphasized strongly enough.

– Thereby the competitive advantage is wasted, Eerikäinen and Sarasoja emphasize.