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PurposeRelying on a unique proprietary Polish office market space database, the paper attempts to quantify the impact of buildings' age on the financial performance of real estate assets.Design/methodology/approachPanel econometric modeling was utilized to disentangle the impact of buildings' functional obsolescence and technical deterioration on their long-term financial performance.FindingsIn line with casual empiricism, our findings show a negative associative link between properties' age and potential lease revenue. The concomitant stickiness of service charges presages a possible long-term deterioration of financial outcomes of real estate investments. While older buildings generally have higher occupancy rates, the absorption rates are found to be negatively affected by the properties' age. On the bright side, the elasticity of vacancy rate with respect to rental rates is found to decrease as buildings get older. Further, the rent differential is confirmed to be more pronounced in higher age properties hinting at an existing potential for price discrimination, which may at least partially compensate for stagnant rents.Originality/valueOur empirical results confirm the properties' age to be a statistically significant factor in shaping the long-term performance of real estate assets, which should be better accounted for in financial projections for real estate developments.

This paper presents an innovative model for property portfolio assessment based on the concept of a growth-share matrix. The proposed real estate portfolio matrix uses two primary qualities of properties: their potential to accrue value over the holding period and their ability to generate stable positive cash flows. The aim of the model is to utilise these two dimensions in the assessment of the qualities of individual properties and to identify their subsets to meet preferences of different groups of real estate investors. The concept was developed to provide companies with strategic advice on how to optimise the sales strategy of their non-core property assets. This method can be applied successfully to both commercial and residential properties. The concept is subsequently utilised for the purpose of post-hoc structural analysis of the Polish commercial real estate market. Transaction analysis accentuates the prevalence of core assets in terms of both transaction volume and value. Value-added assets constitute a much smaller market segment but may nevertheless present a good opportunity for portfolio diversification. Speculative assets appear to be scarce, which is characteristic of the current phase of real estate market conjuncture.