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Uncertainties affecting health organizations inevitably influence real estate decisions since real estate is required to facilitate the primary health process. The purpose…
Uncertainties affecting health organizations inevitably influence real estate decisions since real estate is required to facilitate the primary health process. The purpose of this study is to develop a decision support tool that supports health organisations in defining what flexibility they need in order to develop a flexible real estate strategy and to adapt to future uncertainties.
The research is being conducted from a design science perspective. By addressing the needs of real estate managers in health, research relevance is reached. By applying scientific knowledge when developing the tool, rigor is achieved.
Major elements of the decision support tool developed are real options to describe flexibility and its consequences for corporate real estate management, and the backcasting scenario planning method.
The application of the tool by health organisations can increase the professionalization of real estate management and improve the match between current and future demand and supply of real estate, adding to the effectiveness and efficiency in healthcare in general.
This is the first tool developed using the real options approach that provides real estate managers in health a systematic insight into the various types of flexibility needed for the future.
The objective of this paper is to provide insights about the potential of real option thinking for corporate real estate management (CREM) from the owner-user perspective…
The objective of this paper is to provide insights about the potential of real option thinking for corporate real estate management (CREM) from the owner-user perspective. A promising approach to classifying and evaluating flexibility in real estate is the real options approach. Most literature on real options look from an investor perspective.
First, a review on real option thinking in the real estate and large engineering projects literature is provided using Flyvbjerg’s (2001) typology of knowledge systems. Next, the effects of exercising real options for various stakeholders in CREM is analysed in two case studies.
The literature review shows that little research has been done on conditions and values needed to make real options applicable in the CREM practice of the owner-user of real estate. The case studies show that real options are more valuable to one stakeholder than to another.
Based on the knowledge on conditions for and the consequences of exercising real options for various stakeholders, insight can be gained into the applicability of real options to the owner-user of real estate and how real options reasoning fits within this practice. A phronetic type of knowledge is needed that incorporates stakeholders’ interests.
Creating phronetic knowledge would allow understanding why and how real options are used, or could be used in the future, and heuristics could be developed. In this way, real estate management should become more resilient to changes.