The Journal of Real Estate Finance and Economics

, Volume 43, Issue 3, pp 321–335 | Cite as

Development Value: A Real Options Approach Using Empirical Data

  • Robert A. Grovenstein
  • James B. Kau
  • Henry J. Munneke


This paper combines an empirical methodology and a theoretical options approach to determine the real option values of development and delay for vacant parcels of land in the City of Chicago. A theoretical options model provides an option price that incorporates future uncertainty. The data allow for disaggregation down to specific land use categories and results show option values vary across zoning categories and within zoning categories for specific land uses.


Real options Land value Development 


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Copyright information

© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  • Robert A. Grovenstein
    • 1
  • James B. Kau
    • 2
  • Henry J. Munneke
    • 2
  1. 1.Fairfield Residential LLCGrand PrairieUSA
  2. 2.University of Georgia, Terry College of BusinessAthensUSA

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