Eindhoven University of Technology MASTER Valuing the built environment the influence of the built environment on the suitability of an office-to-dwelling transformation de Koning, N.C. Award date: 2018 Link to publication Disclaimer This document contains a student thesis (bachelor's or master's), as authored by a student at Eindhoven University of Technology. Student theses are made available in the TU/e repository upon obtaining the required degree. The grade received is not published on the document as presented in the repository. The required complexity or quality of research of student theses may vary by program, and the required minimum study period may vary in duration. General rights Copyright and moral rights for the publications made accessible in the public portal are retained by the authors and/or other copyright owners and it is a condition of accessing publications that users recognise and abide by the legal requirements associated with these rights. • Users may download and print one copy of any publication from the public portal for the purpose of private study or research. • You may not further distribute the material or use it for any profit-making activity or commercial gain Valuing the built environment The influence of the built environment on the suitability of an office-to-dwelling transformation Niels de Koning 0966514 April 2018 Colophon Title The influence of the built environment on the suitability of an office-to-dwelling transformation Master thesis Author N.C. (Niels) de Koning ID-No: 0966514 [email protected] [email protected] University Eindhoven University of Technology Master Architecture, Building and Planning Department Urban Systems and Real Estate Graduation Committee Academic – Eindhoven University of Technology Prof. dr. T.A. (Theo) Arentze dr. I.V. (Ioulia) Ossokina dr. ing. P.J.H.J. (Peter) van der Waerden Visuals Transformation ING Headquarters Amsterdamse Poort, Milan Hofmans Preface This graduation research before you serves as finalization of my master’s degree in Urban Systems and Real Estate, part of the Department of the Built Environment at Eindhoven University of Technology. The report has been realized in collaboration with G&S Vastgoed (Amsterdam), whom gave me the opportunity to perform my internship within the development team during the past six months. The subject of this thesis expresses my broad interest in real estate as objects within the greater structures of the built environment, where people’s lives -sometimes unconsciously- is influenced by to greater extent than you might aspect at first instance. And, although buildings are created to influence (and improve) the built environment, the built environment on its turn also influences the composition of the buildings. Because the current challenges in terms of sustainability and the breakthrough of technology in the sector ask for a broader view on real estate than just ‘the plot’, I sincerely hope that this research contributes to the knowledge about the interplay of the different dimensions in the living environment. Having said this, I would like to take this opportunity to express my gratitude to all who supported me during this final phase of my study career. First, I would like to appraise my Graduation Committee, consisting of Theo Arentze, Peter van der Waerden and Ioulia Ossokina, for their knowledge, their patience and assistance. An essential part of this research was the collection of the housing transaction data, which was not possible without the help of the NVM, represented by Tuğba Kemal. Furthermore I would like to thank the whole team of G&S Vastgoed, especially Kasper Hesp and Mischa Moritz, for their collaboration and guidance during the creation of this research. I’m pleased to say that G&S Vastgoed gave me the confidence to start my career as junior development manager after having completed this thesis. Finally, I would like to thank my friends and family for their help and encouragement in achieving this milestone. N.C. (Niels) de Koning April, 2018 III Summary During the past years, especially in the economic recession and in the recovery phase, transformation of office buildings was a much debated topic. In addition, transformation of office buildings was considered one of the most important measures to reduce the number of vacant office buildings, something that certainly is accomplished in recent years when looking at the number of transformed office surface. And besides the reduction of office vacancy, it provided cities dealing with housing shortages with sufficient housing for starters and young urban professionals. As a welcome side effect, transformation of buildings fits perfectly in the mind-shift towards circular real estate development. However, the number of office transformations started to decline after 2015. Despite recent figures of the number of transformed office buildings are lacking, the signals from the market show that this decrease continues; definitely due to the fact that ‘low-hanging fruit’ is gradually running out. The still available (empty) offices remain untouched as they are said to be less promising, due to the current technical condition and/or because the location is less suitable/attractive for a residential purpose. Consequently, the main objective of this thesis was to examine to what extent the location and the built environment influences the suitability of office-to-dwelling transformations, providing owners of vacant office building with the necessary information in the decision-making process whether or not to transform the building into residential property. And despite the current owners, this research also provides other parties dealing with vacancy or interested in a transformation project (e.g. municipality, developer, investor, etc.) handles to assess the neighborhood and the location for the construction of housing. The relationship between the built environment and the transaction value of dwellings is determined using the Hedonic Price Method. With the model it can be estimated which part of the housing price can be attributed to (one of) the characteristics of the house and/or the living environment. Hence, every dwelling has its own value. This value, reflected by the transaction value of that dwelling, ultimately reflects the value the buyer attributes to the characteristics of the dwelling and its surroundings. In order to reach the primary objective, the research began by investigating the incentives for choosing transformation instead of the other possible interventions when dealing with long term-vacancy. In case a building or an area has become unsuitable for its function there are two options for the property: demolition or transformation. In contrast to the other function-changing measure ‘demolition’ (and new-build), transformation requires fewer materials, the building time is (on average) shorter and it could have more social benefits. However, transformation projects are often characterized by their high complexity and the current state of the building makes it difficult to comply with current laws and regulations. After all, the most important decisive factor remains the financially feasibility since a transformation will not be executed as long it is not financial feasible. Thus, the success of an office-to-dwelling transformation depends on demand by the market and finding a building that could easily be divided into dwellings on a suitable location. Then, in the next chapter, the locations where offices are present were inventoried through a literature study and categorized into five segments: ‘central locations’, ‘(formal) office locations’, ‘urban living and working locations’ and ‘rural locations’. While the ‘central locations’ and ‘urban living and working locations’ are provided with a wide range of amenities, the other two could be labeled as mono-functional since they solely rely on one market. However, after the turn of the century, also the formal office locations were developed with a multi-functional character. Still, the locations outside the urban area are mostly equipped with unilateral, semi-industrial activities. V In order to assess the suitability/attractivity of office locations for living and thus the suitability of an office-to-dwelling transformation, the characteristics influencing the value of dwellings were defined. Hence, the transaction value of a dwelling ultimately reflects the value the buyer attributes to the characteristics of the dwelling and its surroundings. The characteristics were divided into two main categories; (physical) housing characteristics and location characteristics. The housing characteristics that proved to be of influence on the transaction value are the size (sqm), the construction period/age, the number of (bed- )rooms, the number of bathrooms and the presence of a parking garage and/or garden. The category with respect to the environmental characteristics was subdivided into: physical environmental characteristics, socio-cultural and socio-economic environmental characteristics and functional environmental characteristics. Based on the characteristics of influence on the transaction value, data was obtained for the purpose of estimating the suitability of office-to-dwelling transformations in the regions ‘Greater Amsterdam’ and ‘Greater Eindhoven’. Reason for these two study areas was the fact that in the cities of Amsterdam and Eindhoven most offices were transformed into dwellings past years. Provided by the Dutch Association of Real Estate