| The purpose of this study was to increase understanding of the economic factors at work in the design, construction, and operation of tall office buildings by developing an engineering-oriented computer model for economic analysis. This model was then applied to empirical data from actual building projects. The study also critiques previous research on the economics of tall buildings and current computerized real estate investment models, which frequently compare alternatives only on the basis of internal rates of return, without mention of incremental analysis. This procedure can result in the selection of an incorrect alternative.; The computer model developed in this study includes incremental analysis: an Inwood-type, discounted cash flow model is modified to perform the engineering economic analysis. The model is designed as a template for use with an IBM-PC type microcomputer and Lotus 1-2-3 spread-sheet software. The computer template is capable of using over 70 input variables for each of two alternative capital investment projects. The alternatives are then compared using incremental analysis. Sensitivity analyses of selected variables are conducted and the results are displayed graphically. The effects of income tax regulations and inflation are included in the model.; Using this model, case studies are developed for tall office building projects in Milwaukee, Boston, and Kansas City, to provide empirical economic input data from three geographically diverse downtown areas with which to exercise the model. Areas of economic concern examined include building design considerations, effects of construction delays, absorption rates of rental space, resale considerations, and the effects of the Internal Revenue Code of 1986. |
