@article{Mlote:2026:2634-4505/aeb0c6,
author = {Mlote, DS and Cardin, M-A and Cheah, L and Ortner, FP and Bigestans, D},
doi = {2634-4505/aeb0c6},
journal = {Environmental Research: Infrastructure and Sustainability},
pages = {045006--045006},
title = {Real options analysis for adaptable buildings: a cost and carbon analysis},
url = {http://dx.doi.org/10.1088/2634-4505/aeb0c6},
volume = {6},
year = {2026}
}

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TY  - JOUR
AB  - <jats:title>Abstract</jats:title>                  <jats:p>                    There is increasing interest in adaptable building design as spatial needs, market conditions, and performance expectations evolve over time. Uncertainty in future demand requires designers to assess not only the financial implications of expansion strategies, but also their associated carbon impacts from an early stage. This study applies real options analysis (ROA) to evaluate the value of incorporating adaptability into building design and to support decision-making under uncertainty and fluctuations in future demands. A case study of a commercial building in Singapore is used to compare three alternatives: Fixed (a base case retaining the existing building without expansion), demolish-and-rebuild (D&R), and Flex (embedding adaptability to permit future expansion at five-year decision intervals). Historical vacancy rate data from 2011 to 2023 were used to estimate demand trends and forecast future occupancy through year 2065. The alternatives were assessed using three metrics: cost of construction, net present value (NPV), and embodied carbon (EC). Results show positive mean NPV for all alternatives, with Flex achieving the highest mean NPV at approximately Singapore Dollars (SGD) 654 million. D&R resulted in the highest mean construction cost (SGD 78.6 million), the highest EC (8180 metric tons CO                    <jats:sub>2</jats:sub>                    e), and the lowest mean NPV (SGD 233 million). While Fixed offered the lowest immediate cost and carbon impact, it underperformed in capturing future growth. Overall, the findings highlight a clear trade-off between short-term certainty and long-term adaptability, emphasizing that embedding adaptability can improve financial performance while reducing the likelihood of future demolition and rebuilding. The study demonstrates the value of ROA methodology as a decision-support tool to nav
AU  - Mlote,DS
AU  - Cardin,M-A
AU  - Cheah,L
AU  - Ortner,FP
AU  - Bigestans,D
DO  - 2634-4505/aeb0c6
EP  - 045006
PY  - 2026///
SP  - 045006
TI  - Real options analysis for adaptable buildings: a cost and carbon analysis
T2  - Environmental Research: Infrastructure and Sustainability
UR  - http://dx.doi.org/10.1088/2634-4505/aeb0c6
UR  - https://doi.org/10.1088/2634-4505/aeb0c6
VL  - 6
ER  - 

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