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1. Introduction
Innovation is a common term used in everyday speech, also in the real estate sector (i.e. the sector of the economy dealing with buildings, land with building permission and renewal of areas). However, to find a valid and useful definition for what innovation exactly is, and to agree on the criteria for identifying innovation in real estate, is, however, a less clear-cut task. According to Thompson (2015, p. 437), “fresh thinking that creates value” has a certain appeal for a service-oriented field such as real estate, and this flexible definition would also include transplant of existing ideas between industries. This would furthermore imply that mere rediscovery of old ideas is not necessary innovative. This would seem a sensible starting point to pinning down innovation in any specific discussion in this field.
In recent years, the sustainability imperative has moved the discussion on real estate innovation further. Given the industry-driven nature of the discipline, real estate professionals have begun looking at the possible benefits of green building and also aspects such as the retention or revitalization of the community (e.g. Lorenz et al., 2008; Lützkendorf et al., 2011; Warren-Myers, 2011, 2012; Warren-Myers and Reed, 2010; Wilkinson et al., 2013; Thompson, 2015). In principle, this development is primarily driven from the demand side: when consumers do not accept outmoded product profiles, producers need to re-evaluate their business models. And eventually, the production of various types of real estate will have to be altered too.
In most basic terms, sustainable development comprises three basic dimensions: the environmental-ecologic (“green” building/development); the social-cultural and the economic-financial. The most common and theorized dimension is the “green” building aspect; the other two categories are considerably less developed in terms of analytical frameworks. The social issues involved are to some extent delivered via community retention and neighbourhood revitalisation. The economic aspect of sustainability involves a believable view of different incentives, when we aim at either minimizing the occupancy costs (McMillen, 2005), reinvesting the profits made wisely with longer term in mind (Bryson and Lombardi, 2009), or a combination of both strategies.
The problem is that often investors perceive the costs associated with green or sustainable buildings to be too high in relation to perceived returns. Therefore, the problem...