Dimensions of Value Creation in Real Estate Development

The traditional method of developing existing office buildings has been to make improvements through renovations and refurbishments. If the focus is merely on improving the office buildings through technological changes many cost-effective and important ways of adding value are overlooked. On the other hand, understanding what the end-user organizations and individuals value in the premises helps real estate development actors in carrying out well-targeted development projects and hence achieving improved user-satisfaction. The aim of this paper is to present the perceived value adding elements in office building environment as observed by the end-user. The basic insight into the phenomenon was acquired though a literary review, which was followed by 20 in-depth interviews in 15 organizations. After analyzing the results, a model for tenant value creation was created. The interviews revealed seven dimensions along which the end-users value their premises: location; services; technical and financial functionality; image factors; tenant mix; customer relationship factors; and space related issues. These may be further divided into second order attributes, as is done in the paper. The model will increase the understanding of real estate property owners and developers on value creation and in developing new and existing properties to suit ever better to the customer demands.