Optimising Juridical-financial Flexibility of Corporate Real Estate:.
Societal developments are timeless and occur at an ever increasing pace that affects demand for Corporate Real Estate (CRE). Real estate flexibility, as part of a CRE strategy, enables anticipation on those uncertain societal developments. Many studies refer to real estate flexibility, which could be grouped into physical, technical, organizational, and juridical-financial flexibility (De Jonge & Den Heijer, 2004). The focus in this article is on the latter.
Juridical-financial flexibility is the management’s ability to quickly decrease real estate expenses or to
quickly increase real estate benefits if the quantitative demand for space changes (De Jonge & Den Heijer, 2004). The inclusion of juridical-financial flexibility can assure that the risk of redundancy or shortage of space is minimized through short-term reconsiderations of real estate commitments. However, short-term
real estate commitments are accompanied with additional costs which makes maximal flexibility unprofitable. Hence, the question is which level of juridical-financial flexibility is optimal in a specific
An operational model technique is developed to determine the optimal level of juridical-financial flexibility in CRE portfolios, an operational step that is missing in the field of CRE management. The operational model is a linear programming model that formulates a strategic recommendation to CRE management
by defining the portfolio compilation with an optimal juridical-financial flexibility level. At this level, the financial investment
in juridical-financial flexibility weighs up against the financial implications of mismatches in supply and demand, both in the present and in the future.
In literature, several models have been developed that could be used to differentiate CRE assets into peripheries, based on their envisioned future strategic role (Mather, 2006 in Bruins, 2010; Gibson & Lizieri, 1999; Mather, 2007; Weatherhead, 1997). With these existing models, four peripheries are composed with the objective to link CRE assets to an appropriate juridical format. These peripheries are: the core ownership periphery, the core leased periphery, the 1st periphery, and the 2nd periphery.
Next to the quantitative demand for space, also the qualitative demand is an important asset level aspect, at present and in the future. Therefore, the peripheral approach is applied per user profile to combine the two dimensions (Van Ussel, 2010).
The future demand for corporate space has an uncertain value, which is tackled with the peripheral approach. To determine the periphery proportions in the peripheral approach, three scenarios are developed that use the current demand as a starting point (based on Arkesteijn, 2005 in Volkers, 2006).
To transform a current into a future desired CRE portfolio, the following main real estate strategies are available (Den Heijer & Vijverberg, 2004): disposal strategies, retaining strategies, and acquiring strategies. Next to the main strategy that is determined by the current juridical format, the operational…
Advisors/Committee Members: Arkesteijn, M.H., Binnekamp, R..
to Zotero / EndNote / Reference
APA (6th Edition):
Verhoeff, T. J. (2014). Optimising Juridical-financial Flexibility of Corporate Real Estate:. (Masters Thesis). Delft University of Technology. Retrieved from http://resolver.tudelft.nl/uuid:e5f742a2-1df5-4fcb-b177-85e8b615ce04
Chicago Manual of Style (16th Edition):
Verhoeff, T J. “Optimising Juridical-financial Flexibility of Corporate Real Estate:.” 2014. Masters Thesis, Delft University of Technology. Accessed December 16, 2019.
MLA Handbook (7th Edition):
Verhoeff, T J. “Optimising Juridical-financial Flexibility of Corporate Real Estate:.” 2014. Web. 16 Dec 2019.
Verhoeff TJ. Optimising Juridical-financial Flexibility of Corporate Real Estate:. [Internet] [Masters thesis]. Delft University of Technology; 2014. [cited 2019 Dec 16].
Available from: http://resolver.tudelft.nl/uuid:e5f742a2-1df5-4fcb-b177-85e8b615ce04.
Council of Science Editors:
Verhoeff TJ. Optimising Juridical-financial Flexibility of Corporate Real Estate:. [Masters Thesis]. Delft University of Technology; 2014. Available from: http://resolver.tudelft.nl/uuid:e5f742a2-1df5-4fcb-b177-85e8b615ce04