Structural vacancy revisited
– are user demands changing?
Hilde Remøy and Philip Koppels
13-4-2015
Delft
University of
Technology
Challenge the future
Overview
•
•
•
•
Increased vacancy risk
Quality and obsolescence
Quantitative study of supply
Qualitative study of demand
Structural Vacancy Revisited
2
Research objective
7 million m2 vacant in the Dutch office market
X 1000 m2 lettable floor area
Total supply
7 500
6 500
5 500
4 500
3 500
2 500
Total absorption
1 500
500
Net absorption
2011
2009
2007
2005
2003
2001
1999
1997
1995
1993
1991
-1 500
1989
- 500
Structural Vacancy Revisited
3
Research objective
Vacancy risk becomes a threat to value
• structural vacancy: vacancy of the same space for 3 years
or more
• Office user preferences important: push, pull and keep
factors
• Physical characteristics of vacant offices represent ‘veto
criteria’ for office users
• Are user preferences changing?
Structural Vacancy Revisited
4
Data and method
Characteristics of vacant
offices / user preferences
Leegstand in
Amsterdam
• Logistic regressions: 30%
vacancy, studying 200 office
buildings in Amsterdam in the
period 2005-2010
• In depth interviews with 15
office organisations
Structural Vacancy Revisited
5
Data and method
Selection of characteristics
• Literature study of characteristics that influence user preferences:
Baum 1991, 1997, Bottom et. al. 1998, Korteweg 2002, Louw 1996
• Delphi study, interviewing office accommodation advisors: Remøy
and Koppels 2007, showing the importance of functional and image
characteristics of location and building
• Extensive list of location and building characteristics
• Uni-variate analyses
• Testing of several models
Structural Vacancy Revisited
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Characteristics of vacancy
Logistic regression model
•
•
•
•
•
•
•
•
•
Year of construction
Facade material
Facade quality
Entrance spatiality
Structural grid
Facade grid
Quality of public space
Green within 50 metres
Workers amenities within 500 metres
Structural Vacancy Revisited
7
Structural vacancy in 2005 - Variables in the Equation
95% C.I.for EXP(B)
B
Year of construction 1950-1964
1965-1979
1980-1994
Concrete composite
Facade material
reference: natural Metal
stone
Bricks
Glass
Facade quality
Poor quality
reference: high
Sufficient quality
quality
High quality street furniture
Entrance spatiality Entrance spatiality <8
reference: >15
Entrance spatiality 8-15
Y.o.c reference
year: 1995-
Grid reference:
>7.2m
Facade grid
reference: >3.6 m
Green within 50 m
Amenities within 500 m
Structural grid <5.6 m
Structural grid 5.6-7.2 m
Facade grid <1.2 m
Facade grid 1.2-3.6 m
Constant
Exp(B)
.542
-.538
.339
1.095
-.245
-.368
-.051
-.867
.329
-.454
-.833
1.720
.584
1.404
2.990
.783
.692
.950
.420
1.389
.635
.435
-.027
-.928
-2.798**
Lower
Upper
.061
.250
.049
.334
.433
.139
.105
.135
.068
.333
.189
.092
.005
11.826
6.928
5.896
20.659
4.401
4.554
6.672
2.586
5.793
2.139
2.045
.974
.395
.869
.114
1.091
1.377
.696
1.980**
7.245
1.143
45.926
1.022
2.780
.555
13.915
.175
1.479
3.406**
30.135
-.677
.508
-1.513
.220
1.803 503.717
p<.1.* p<.05.** p<.01.***
Structural Vacancy Revisited
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Structural vacancy in 2006 - Variables in the Equation
B
Year of construction 1950-1964
1965-1979
1980-1994
Concrete composite
Facade material
reference: natural Metal
stone
Bricks
Glass
Y.o.c reference
year: 1995-
Facade quality
reference: high
quality
Entrance spatiality
reference: >15
Poor quality
Sufficient quality
High quality street furniture
Entrance spatiality <8
Entrance spatiality 8-15
Green within 50 m
Amenities within 500 m
Grid reference:
Structural grid <5.6 m
>7.2m
Structural grid 5.6-7.2 m
Facade grid
Facade grid <1.2 m
reference: >3.6 m Facade grid 1.2-3.6 m
Constant
-1.460
-.833
-.587
.063
.163
-.940
-.064
Exp(B)
.232
.435
.556
1.065
1.177
.391
.938
.602
-.376
-.816
1.825
.687
.442
1.529**
1.029
20.698
.305
.465
.242
.106
.097
7.169
1.949
1.851
.031
-.411
1.158*
-.025
.675
-.458
1.031
.663
3.185
.975
1.964
.632
.956
.250
.861
.346
.165
.257
1.112
1.754
11.782
2.746
23.356
1.559
-.847
.429
-1.188**
4.614
95% C.I.for EXP(B)
Lower
Upper
.033
1.635
.084
2.258
.175
1.765
.180
6.285
.242
5.722
.068
2.260
.153
5.766
Structural Vacancy Revisited
.961
9
Structural vacancy in 2007 - Variables in the Equation
95% C.I.for EXP(B)
B
Facade material
reference: natural
stone
Year of construction 1950-1964
1965-1979
1980-1994
Concrete composite
Metal
Bricks
Facade quality
reference: high
quality
Poor quality
Sufficient quality
Y.o.c reference
year: 1995-
Entrance spatiality
reference: >15
Grid reference:
>7.2m
Facade grid
reference: >3.6 m
Glass
High quality street furniture
Entrance spatiality <8
Entrance spatiality 8-15
Green within 50 m
Amenities within 500 m
Structural grid <5.6 m
Structural grid 5.6-7.2 m
Facade grid <1.2 m
Facade grid 1.2-3.6m
Constant
Exp(B)
Lower
Upper
-.606
-.367
-.043
-.986
-.365
-1.588*
.545
.693
.957
.373
.694
.204
.108
.152
.316
.066
.149
.036
2.757
3.149
2.899
2.111
3.231
1.169
-.416
.660
.113
3.862
2.278***
2.097***
9.759
8.143
1.944
1.939
49.003
34.199
-.594
-.452
.552
.637
.204
.184
1.498
2.198
-1.021*
.360
.127
1.021
.072**
1.075
1.003
1.152
-.011
.934
.256
.161
-.816*
.989
2.545
1.292
1.174
.442
.393
.704
.494
.093
.183
2.492
9.200
3.379
14.880
1.065
-1.470
.230
p<.1.* p<.05.** p<.01.***
Structural Vacancy Revisited
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Structural vacancy in 2008 - Variables in the Equation
B
Y.o.c reference
1995Facade material
reference: natural
stone
-1.443
Exp(B)
.236
1965-1979
.511
1.668
.456
6.103
1980-1994
-.095
.910
.313
2.647
-2.086**
.124
.024
.650
-.989
.372
.088
1.567
-2.825***
.059
.011
.320
-.735
.479
.101
2.273
2.586***
1.999***
13.274
7.380
2.863
1.963
61.531
27.739
.559
1.749
.660
4.639
.151
1.163
.371
3.647
-1.025**
.359
.133
.970
-.022
.978
.910
1.051
Amenities within 500 m
.144
1.155
.466
2.865
Structural grid <5.6 m
-.205
.814
.218
3.042
Structural grid 5.6-7.2 m
-.039
.962
.408
2.270
-.396
.673
.057
7.973
-.068
.934
.414
2.109
Year of construction 1950-1964
Concrete composite
Metal
Bricks
Glass
Facade quality
reference: high
quality
Poor quality
Sufficient quality
High quality street furniture
Entrance spatiality Entrance spatiality <8
reference: low
Entrance spatiality
8-15
Green within 50 m
Grid reference:
>7.2m
95% C.I.for EXP(B)
Lower
Upper
.042
1.326
Facade grid
Facade grid <1.2 m
reference: >3.6 m
Facade grid 1.2-3.6m
Constant
-1.264
.282
p<.1.* p<.05.** p<.01.***
Structural Vacancy Revisited
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Structural vacancy in 2009 - Variables in the Equation
95% C.I.for EXP(B)
B
Exp(B)
Lower
Upper
Y.o.c reference
1995Facade material
reference: natural
stone
Facade quality
reference: high
quality
Entrance spatiality
reference: low
Grid reference:
>7.2m
Year of construction 1950-1964
1965-1979
1980-1994
Concrete
Metal
Bricks
Glass
Poor quality
Sufficient quality
High quality street furniture
Entrance spatiality <8
Entrance spatiality 8-15
Green within 50 m
Amenities within 500 m
Structural grid <5.6 m
Structural grid 5.6-7.2 m
Facade grid <1.2 m
Facade grid
reference: >3.6 m Facade grid 1.2-3.6 m
Constant
-1.092
.433
-.115
.336
1.542
.891
.065
.425
.311
1.729
5.593
2.556
-1.792**
-1.666**
-2.318**
-2.412**
1.643**
1.262**
.167
.189
.098
.090
5.170
3.532
.036
.044
.022
.016
1.293
1.017
.780
.807
.446
.511
20.664
12.263
.821
2.274
.847
6.101
-.073
.930
.297
2.915
-1.173**
.309
.117
.816
-.052
.949
.882
1.022
-1.005**
.366
.154
-.730
.482
.120
1.939
.117
1.124
.477
2.645
-.962
-.178
.382
.837
.027
.376
5.497
1.862
.281
1.325
.873
p<.1.* p<.05.** p<.01.***
Structural Vacancy Revisited
12
Structural vacancy in 2010 - Variables in the Equation
95% C.I.for EXP(B)
B
Exp(B)
Lower
Upper
Y.o.c reference
1995Facade material
reference: natural
stone
Facade quality
reference: high
quality
Year of construction 1950-1964
1965-1979
1980-1994
.298
1.773
.844
.055
.482
.288
1.611
6.524
2.475
-1.813**
-1.924**
-2.784***
-1.745**
2.127***
1.973***
.163
.146
.062
.175
8.387
7.191
.032
.031
.012
.033
1.799
1.823
.830
.685
.322
.927
39.113
28.366
.790
2.204
.808
6.010
-.339
.713
.218
2.330
-1.097**
.334
.127
.880
Green within 50 m
Amenities within 500 m
Structural grid <5.6 m
-.075*
-.685
-.596
.928
.504
.551
.858
.206
.135
1.003
1.231
2.244
Structural grid 5.6-7.2 m
-.039
.962
.407
2.272
-.064
-.163
.938
.850
.083
.379
10.561
1.905
Concrete
Metal
Bricks
Glass
Poor quality
Sufficient quality
High quality street furniture
Entrance spatiality Entrance spatiality <8
reference: low
Entrance spatiality 8-15
Grid reference:
>7.2m
-1.210
.573
-.169
Facade grid <1.2 m
Facade grid
reference: >3.6 m Facade grid 1.2-3.6 m
Constant
-.110
.896
p<.1.* p<.05.** p<.01.***
Structural Vacancy Revisited
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User preferences
Qualitative study
Interview results, most important push factors for office users 2011
•
•
•
•
•
•
•
Organisation changes
Environment/sustainability
Low technical state of the building
Extendibility
Bad accessibility by public transportation
Bad external appearance of the building
Location not prestigious
Structural Vacancy Revisited
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User preferences
Qualitative study
Interview results, most important pull factors for office users 2011
•
•
•
•
•
•
External appearance
Extendibility
Accessibility by car
Prestigious location
Low rent
Attractive housing area nearby
Additional keep factors:
• History of the organisation
Structural Vacancy Revisited
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Results
• Logistic regression shows that attributes related to structural
vacancy are changing: functional attributes less important, exterior
appearance more important
• This complies with results from the interviews: more focus on
exterior appearance, prestige of location
• Causes mentioned: high supply, possible to choose best alternative,
functionality seen as ‘veto’ – less functional buildings not even
considered
• Office organisations less positive about the future. Extendibility less
important, current accommodation ‘too large’
Structural Vacancy Revisited
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Conclusions / next steps
• Office user demand seem to change in a market of oversupply
• Buyers market: Quality and appearance of location and building
become more important, less attractive buildings and locations
rapidly become structurally vacant and obsolete
Next steps:
• Study of ‘hidden vacancy’ or ‘rented vacancy’
• Study of vacancy cause: incentives for investors and developers
• Study of governmental interference in the market
Structural Vacancy Revisited
17
Structural vacancy revisited
– are user demands changing?
h.t.remoy@tudelft.nl
13-4-2015
Delft
University of
Technology
Challenge the future