CHAPTER 2

LITERATURE REVIEW ON PURPOSE-BUILT OFFICE (PBO) MARKET IN

MALAYSIA, SUSTAINABLE LOCATION CHARACTERISTICS OF A PBO
AND MEASUREMENT OF STAKEHOLDERS PERCEPTION

2.1 Chapter Overview

Chapter 2 aims to review the relevant literatures regarding the sustainability of

PBOs location for a business. It begins with an introduction to the concept of office
buildings in more details that will define the meaning of office building and explored
the history of office buildings, especially on PBO. Besides, it follows by a discussion
on PBO market in Malaysia, especially in Kuala Lumpur by reviewing the market
trend of PBOs in Malaysia. It also emphasizes the sustainable business location
characteristics of PBO in both global and local contexts. The elements of sustainable
business location for a PBO are discussed. Apart from that, every locational
characteristics of PBO will be delved further into physical and non-physical aspects
to provide a deeper understanding on the locational characteristics of PBO. For
achieving the aim and objectives of this research, measurement of stakeholders
perception will be chosen in this chapter. All the relevant literatures are reviewed in a
critical manner, hence, a conclusion will be summarised based on the results and
outcomes of previous studies that have discussed in this chapter.

2.2 The Concept of Office Buildings

An office is a fundamental and vital part of every organization no matter it is a

government institution, non-governmental organization (NGO) or business firm. It is
built to perform basic administrative and clerical tasks of an organization properly in
 11

managing a business economically and efficiently. Every organization has own

preferences and needs towards the office environment and design since their business
activities and tasks are in diverse ways. Whether it is a trading company, an
educational institution or a hospital, an office is important for its functions.
Nowadays, every modern office has similar basic functions, for example,
receiving, collecting, recording, arranging and processing relevant information. A
well-organized office enables the management of organization to plan and execute its
business activities efficiently and systematically [ CITATION Lef50 \l 1033 ]. The
office controls and coordinates all the office activities of the business. In other
words, business activities cannot be performed effectively without a well-organized
office. Nowadays, business activities are getting more complex and challenging. The
nature of each office is reflected the purpose for the existence of an office. Different
functions of offices have different profile and orientation. Although each office has
its own personality, offices are commonly performed its basic functions such as
handling records, typing, mailing and filing in all the types of organizations.
The development of office buildings has been concerned since the
1880s[CITATION Hys97 \t \l 1033 ]. The office buildings experienced tremendous
growth in its quantity and size at the same time a significant change in its location.
Hence, according to the earlier researches on the office building development, many
researchers have studied the number, size and location of these buildings. However,
owing to the rapid development of the technology today, the development of office
buildings has undergone a significant evolution with the new advanced technology
techniques and equipment [CITATION DrR08 \l 1033 ]. It led to the continuous
studies regarding the development of office buildings. According to these continuous
studies, researchers have explored and discussed the other areas of interest, such as
physical and non-physical factors of office buildings. The previous studies provide a
better understanding of office building concept, specifically on PBO.

2.2.1 Definition of Office Building

In simplest term, office is a place where general office activities of a business are
performed [ CITATION Den74 \l 1033 ]. Those business activities carried out in an
office comprised of planning, organising, coordinating and maintaining all types of
 12

paperwork, for example, minutes of meetings, letters received and records. In

common parlance, the place where such all clerical operations are performed to
control and coordinate the business of the whole organisation is known as
office[CITATION DrR08 \l 1033 ]. The process of collecting, processing, storing,
coordinating and distributing information is the routine function of an office.
Littlefield, Rachel, & Caruth (1970) have defined office as a place where all the
documents are prepared, organised and kept as a record to ensure an efficient and
effective management of the organisation. For a business, the office is the
administrative centre of each organisation for the provision of communication and
record services[ CITATION Mil90 \l 2052 ].
Office building is a commercial buildings where spaces are designed and
built to be used primarily for offices. It also known as an office block or business
centre where basic management of an organisation is conducted. The fundamental
functions of management are the acts of planning, organising, storing and controlling
(George R. Terry & Stephen G. Franklin, 1994; John C. Wood & Michael C. Wood,
2002). This process involves clerical and administrative services in a business.
Consequently, office building provides a workplace for administrative and
managerial employees of the organisation. An overview of office concept is shown as
the following figure.
 13

Figure 2.1: The Differences between an Office and an Office Building

In general, an office building will be divided into units for accommodating

single or multiple companies to carry out their own business activities under the
same roof. Usually, large companies or government institution dominate all the office
spaces that offered in the whole office building. It is called as single-tenant office
building which serves as the headquarters of the corporation. But, it is rare to found
single-tenant office building. Normally, those large organisations will buy the whole
building and thus, owner-occupancy office building created.
Typically, every sections of the office building have own work spaces such as
reception area, meeting room, open office, private offices as well as washrooms to
perform conventional office activities of the firms [ CITATION Bir96 \l 2052 ]. At
present, many companies will provide facilities for the convenient of their workers.
For instance, pantry or break area for those staffs who can take a break or have lunch.
These basic facilities help to increase the productivity and efficiency of staffs in the
office building. The evolutionary development of office will be further discussed in
next section.

2.2.2 Evolution of Office Building

In olden days, people started their small businesses. Since business has small volume
of paperwork, the proprietor of the business would sit in a small congested room to
supervise few clerks who handled the office work manually and without the aid of
technological devices. Besides, the proprietor would personally deal with their
clients or customer in the small room. These small congested rooms considered as
office during that period. The condition of office were poorly lighted and ill-
ventilated where it situated in the inconspicuous part of the building[ CITATION
DrR08 \l 1033 ].
The traditional office buildings have developed during the era of the Ancient
Rome, the Middle-Ages and the Renaissance. Generally, the design of a traditional
office is given the priority to privacy in order to improve the working efficiency of
the office staffs in performing their office activities [CITATION Bre02 \l 2052 ].
Thus, a typical conventional office building is supplied with the basic equipment for
 14

routine work in an office space. The examples of basic setting for a traditional office
are desks, chairs and cabinets. Due to the lack of demand for office space and of the
advanced technology, the earlier development of office building was limited to
construct a long stories.
In modern economy, a business is getting increase in its size and complexity.
This expansion of a business has contribute to the growth of workload. In other
words, it means the office work of a business increase as the organization expands in
its size.
The demand for large amount of office space began to increase five times although
the population of the nation has doubled between 1870 and 1920 [ CITATION Urb82
\l 1033 ]. To cope with the increasing workload of a business, innovation and
technological developments began to provide over the past 150 years [ CITATION
DrR08 \l 2052 ]. As a result, modern office building was established in the office
building industry in the 19th century.
The evolution of modern office is the result of technological developments.
The modern office building with the development of the fireproofed steel frame and
the elevator constructed in Chicago and New York around 1880 (Kohn & Katz, 2002;
Green Building Council of Australia (GBCA), 2013). Today, the modern office is
equipped with various modern facilities, for instance, telephone, computers, fax
machines, high speed internet and wireless printers [ CITATION DrR08 \l 2052 ]. All
these facilities aid to improve the effectiveness of business activities. Hence, the
modern office building provides a more spacious office space to use these modern
facilities optimally compared to the limited space in a traditional office.
Basically, a modern office building has provided an open office space. The
researchers, Brennan, Chugh, & Kline (2002) stated that the flexible office space
allows tenants or occupiers to design their office space based on their business types
and office activities. On the other hand, Zahn (1991) figured out that the
communication level and efficiency of the office workers can be enhanced by
optimizing the usage of an open office space. It can be clearly seen from the
introduction of modern communication, for example, first Samuel Morses telegraph
in the 1860s and followed by the Alexander Graham Bells telephone in the late
1870s to increase the productivity between office workers[ CITATION Hys97 \l 2052
].
 15

The modern office practice is applicable throughout the world in the office
building industry in order to attract the property market participants such as investors
and tenants to carry out their business activities in a modern office. Therefore, most
of the investors start to determine the investment in these modern office building.
This modern office building concept has boost up the demand for a modern office.
Yet, in order to fulfil the requirements and needs of investors and tenants, the modern
office buildings are developed in a more comprehensive way. Apart from the design
of office space, the developer of the office building also focused on the
implementation of advanced facilities and services in the surrounding of these
buildings. Various modern facilities and services provided for the office buildings
comprised of post office, clinics, restaurants and shopping complexes. To perform
their works at a minimum cost and maximum satisfaction, office building is
transformed to provide variety of facilities and services in the building. Oxford
Business Group (2010) recorded the establishment of new office building concept
which called purpose-built office concept in their published report The Report:
Malaysia 2010.
In the 18th century, the term of purpose-built office space was practically
unknown in office building concept and did not come into common use until the 90s
era. Nevertheless, the first purpose-built office building was constructed in 1726 and
named the Old Admiralty (Ripley Building). In the 1770s, the first purpose-built
office block was built which consolidated smaller offices for the Royal Navy into
Somerset House [CITATION Ham11 \l 2052 ]. Since the 1900s, the term of
purpose-built office has been widely used in developed countries such as United
Kingdom, New Zealand and Australia [CITATION Moh09 \t \l 2052 ].
Although the development of office buildings began to mature, the research
on purpose-built office concept and its definition is limited. The term of purpose-
built office was only officially used in the Malaysias property reports during the
early 2000s[CITATION Moh15 \t \l 2052 ].There are positive development of PBO
in Malaysia. Still, the PBO concept adopted is unclear. Started from the 1980s, the
earlier development of PBO in Malaysia, especially in the city of Kuala Lumpur has
comprised of three types of office building which are traditional, transitional and
modern office buildings [ CITATION Yus01 \l 2052 ].
The property market report (PMR) issued by the Department of Valuation and
Property Services (JPPH) has explained the PBO concept that the initial function is
 16

changed for a new function when about 75% of the initial design is made for office
application (NAPIC, 2007). This interpretation has revealed that PBO concept is
introduced through the evolution of traditional office building concept. In general,
purpose-built office (PBO) is an office building that is designed and constructed with
the main functions of traditional office use and equipment of modern facilities and
services to meet the international standards[CITATION Oxf10 \t \l 1033 ].
Therefore, PBO concept provides an ideal working environment for various
developing and developed companies in order to optimize the office space usage and
enhance the performance of a companys business activities. Figure 2.2 shows an
overview of the PBO concept.

Figure 2.2: The Differences between an Office Building and a Purpose-Built Office
[CITATION Moh15 \t \l 2052 ]

Based on the earlier studies related to the evolution of office building, PBO
concept that has been practiced can be clearly shown that the PBO provides various
modern facilities and services to the tenants of a PBO building. Consequently, in
evaluating the PBO, the variety of these facilities and services provided can be
considered as one of the important characteristics for a PBO[CITATION Moh15 \t \l
2052 ]. The PBO market is not only dependent upon facilities and services provided,
but also its location and space provided in a PBO building. Despite the fact that PBO
 17

building has similarity in its characteristics, there are still differences between each
PBO space.
Each PBO space has its own uniqueness since there are numerous tenants
with different types of business and background in the same building. The
requirements of tenants can be reached due to this unique PBO concept. Therefore,
PBO concept has attracted more investors to invest in PBO market. The next section
will provide an overview on PBO market in Malaysia, particularly in Kuala Lumpur.
It is important to observe and analyse the PBO market trend in order to promote the
PBOs by looking into various characteristics of PBO, for instance, building and
locational characteristics of a PBO.

2.3 Overview on Purpose-Built Office (PBO) Market in Malaysia

Basically, commercial real estate market is determined by its supply and demand. In
Malaysia, economic performance and government policies have impacted the
development of purpose-built office (PBO) market. Strong economic growth has
brought the effect on the demand of PBO market. Based on The Report: Malaysia
2014 published by Oxford Business Group (2014), as businesses continue to expand,
it requires larger office space where their clerical and managerial works such as
planning, organising, directing and controlling can be well-performed. This may
attract many local and foreign investors to set up their business in Malaysia.
Malaysia has encountered major rises and falls on the demand of PBO from
the 1980s until present. Even though there are uncertainties surrounding the PBO
market demand, the development of purpose-built office (PBO) market in Malaysia
has enjoyed positive trend since the 90s era as shown in Table 2.1. The development
of PBO market has been focused around the industrial and economic centres in
Malaysia, especially Kuala Lumpur, Penang and Johore (Oxford Business Group,
2014).

Table 2.1: Existing Purpose-Built Office: Total and Occupied Space in Malaysia
1992-2015

Year Total Space (s.m) Total Space Occupied (s.m) Occupancy Rate (%)
1992 4,493,796 4,283,245 95.3
1993 4,823,122 4,441,792 92.1
 18

1994 5,169,452 4,852,726 93.9

1995 5,618,368 5,330,786 94.9
1996 6,514,426 6,032,972 92.6
1997 10,606,081 10,127,866 95.5
1998 8,866,939 7,098,106 80.1
1999 9,173,260 7,485,184 81.6
2000 12,325,332 9,773,664 79.3
2001 12,801,207 10,022,090 78.3
2002 13,185,405 10,331,061 78.4
2003 13,306,111 10,735,272 80.7
2004 14,221,165 11,551,388 81.2
Table 2.1: Existing Purpose-Built Office: Total and Occupied Space in Malaysia
1992-2015 (continued)

Year Total Space (s.m) Total Space Occupied (s.m) Occupancy Rate (%)
2005 14,863,253 12,362,795 83.2
2006 15,099,984 12,595,417 83.4
2007 14,975,062 12,739,489 85.1
2008 15,528,217 13,223,780 85.2
2009 16,102,929 13,670,347 84.9
2010 16,783,367 14,148,844 84.3
2011 17,381,570 14,405,636 82.9
2012 18,153,192 14,934,390 82.3
2013 18,988,130 15,710,570 82.7
2014 19,553,129 16,677,274 85.3
2015 20,131,812 16,843,970 83.7
Source: (NAPIC, 2016a)

Based on Table 2.1 above, the development of purpose-built office (PBO)

market in Malaysia has been boosted within the period from 1992 to 2015. The stock
of PBO space had increased gradually while the PBO space occupied had also
increased for the first six years from 1992 until 1997. The market had shown that
more than 90% of PBO space were occupied. Yet, the global financial crisis had
affected the total PBO space occupied during 1997-1998 [CITATION Abd06 \t \l
1033 ]. Hence, there is a significant decreasing trend of occupancy rate for PBOs in
the commercial property market. This negative trend continued in the coming years
and ended in 2001. Figure 2.3 demonstrates the vacancy rate of PBOs during the year
of 1992 to 2015.
 19

25.0

20.0

Vacancy Rate (%) 15.0

10.0

5.0

-
92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15
19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20

Year

Figure 2.3: Vacancy Rate of PBOs in Malaysia 1992-2015 (NAPIC, 2016a)

Figure 2.3 shows that the PBO spaces occupancy rate is slightly increased.
The PBOs vacancy rate is clearly shown a continuous decreasing for the period of
year 2002 to 2008. However, the performance of the international and Malaysian real
estate market, particularly the PBO market have influenced by international global
financial crisis in 2008 [ CITATION Yus11 \l 1033 ]. Hence, rates of vacant PBOs
have shown a steady growth during the economic crisis period from 2008 until 2012
(Adnan et. al, 2012). From 2012 to 2014, there is a drastic drop of vacancy rate in
PBO market. In 2015, the vacancy rate of PBO space has increased 1.6% compared
to 14.7% in 2014. This above discussion can be summarised that the economic
situation of a country is one of the dependent variable which alters the PBO market.
 20

2.3.1 Existing Stock Trend of PBO in Kuala Lumpur 2011-2015

9,500,000

8,500,000

7,500,000

6,500,000

5,500,000

4,500,000

3,500,000

2,500,000

1,500,000

500,000
2011 2012 2013 2014 2015
Total Space (s.m)

Figure 2.4: Existing Stock of Purpose-Built Offices in Kuala Lumpur 2011-2015

(NAPIC, 2016b)

Although the development of PBO market in Malaysia experienced ups and

downs, Kuala Lumpur, as the capital city of Malaysia, shows that the potential of
PBO market in local context. Based on the NAPIC data from 2011 to 2015, it can be
concluded that there is a continuous increase in overall existing stock for purpose-
built offices in Kuala Lumpur. The total space of PBOs in Figure 2.4 is clearly shown
that there is a positive trend over the past five years. The total space of PBOs has
increased 84.1% for the year of 2011-2015.
The total space of PBOs in Kuala Lumpur and the total space of PBOs
provided in the Malaysian PBO market have increased gradually within this five
years which is from 2011 until 2015. The slow increment can be clearly seen as
shown in the following figure. Figure 2.5 illustrates an overview of PBO supply in
Malaysia. For this last five years, there are small changes in the total space of PBOs
in Kuala Lumpur compared to PBO stocks provided in Malaysia. The development
of PBOs in Kuala Lumpur is stable even though there is still positive change in
overall PBO supply market.
 21

22,000,000 100

17,000,000 80

12,000,000 60

7,000,000 40

2,000,000 20

2011 2012 2013 2014 2015

-3,000,000 0

Total Space in Kuala Lumpur (s.m) Total Space in Malaysia (s.m)

%

Figure 2.5: Total Space in Kuala Lumpur, Total Space in Malaysia and Proportion of
Total Space of PBOs in Kuala Lumpur over the Total Space of PBOs in Malaysia
2011-2015 (NAPIC, 2016b)

2.3.2 Occupancy Rates of PBO in Kuala Lumpur 2011-2015

Figure 2.6 shows that comparison between overall PBOs space and PBOs space
occupied in Kuala Lumpur. It is clearly shown that the overall PBOs space is always
above the overall PBOs space occupied in the market supply of Kuala Lumpur. Both
segments have slowly increased for the 5 years period. The PBO stock tends to
accelerated development in order to fulfil the driven demand in the PBO market. For
the year of 2011-2014, both segments are likely increasing in a parallel line. In 2015,
total PBOs space occupied is slightly decreased, at the same time, total space of
PBOs is continued the previous increasing trend. This drop is defined that the
demand of PBOs is slightly reduced but the development of PBOs is carried out
continuously as scheduled. Yet, it also reveals that the occupancy of PBOs is
managed to obtain the healthy rates of above 70%.
 22

8,500,000

7,500,000

6,500,000

5,500,000

4,500,000

3,500,000

2,500,000

1,500,000

500,000
2011 2012 2013 2014 2015

Existing PBOs Space (s.m) PBOs Space Occupied (s.m)

Figure 2.6: Existing Supply and Occupancy of Purpose-Built Office in Kuala

Lumpur 2011-2015 (NAPIC, 2016b)

2.3.3 Future Market Trend of PBO in Kuala Lumpur

Through the above discussion, it can be summarised that there is a rapid growth in
PBO market in Malaysia, especially Kuala Lumpur. With the increasing PBO market
supply, this reflects the driven demand for PBO space. Every year, new PBO
buildings are entering the supply market due to the driven demands of PBOs (Yusof,
Eves & Mohd Nasir, 2011). Despite increasing number of new PBOs in the office
market, vacancy rates of PBO space have fluctuated over the past five years.
However, rate of vacancy of PBO buildings has rose at the end of 2015 as the weak
economic climate in Malaysia dilutes the office market.
Nevertheless, demand of new PBO stock remained strong although
occupancy is declining in Kuala Lumpur PBO market. This has impacted the demand
and occupancy of PBO space, particularly older and outdated PBO buildings which
have been built up more than twenty years[CITATION Oxf14 \t \l 1033 ]. Due to the
integrated new standard features for PBO developments, new PBO buildings are
constructed with high quality dual compliant which are the Multimedia Super
Corridor (MSC) and Green Building Index (GBI)[CITATION Oxf14 \t \l 1033 ].
Competing with increasing new incoming stock of PBOs, those old buildings have
 23

been upgraded and equipped with modern facilities and services to attract not only
local investors but foreign investors as well.
In coming years, PBO market becomes challenging and competitive since
new PBO supply has increased substantially. The Press Release Malaysian Property
Market 2015 by JPPH has concluded that the existing stock, incoming supply and
planned supply of PBO buildings are dominated by Kuala Lumpur. The incoming
PBO buildings have an area of 1.67 million square metre which is distributed into 62
buildings whereas another 0.41 million square metre of the planned supply is
constructed up 17 buildings (JPPH, 2016).

Figure 2.7: New Purpose-Built Office Supply in Kuala Lumpur, End 2014-2018
(Savills, 2014)

The new purpose-built office supply in Kuala Lumpur can be clearly seen in
Figure 2.7. The completion of major purpose-built office developments in Kuala
Lumpur, for example, KL Eco City, Tun Razak Exchange (TRX), Bukit Bintang
Commercial Centre, Bandar Malaysia and Warisan Merdeka KL has resulted the
supply of PBO buildings continued to increase (Savills, 2014). But, supply of PBO
market will overtake the take-up rate of PBO once those ongoing projects are going
to be completed soon and proposed developments are carried out as scheduled.
Therefore, PBO market will face the accelerated oversupply situation, especially in
 24

Kuala Lumpur due to the significant incoming supply of those major development
projects[ CITATION Eco15 \l 1033 ].
To overcome the oversupply in the purpose-built office market, stakeholders
perception is an important guideline in reviewing the preferences and needs of office
market participants. This research has provided a chance to study the opinions and
views of stakeholders towards sustainable location characteristics of purpose-built
office thoroughly since there is lack of empirical studies on that particular aspects in
Malaysian PBO market. Hence, sustainable location characteristics of PBO in a
global and local context will be further explained in the next section.

2.4 Sustainable Locational Characteristics of Purpose-Built Office (PBO) in

a Global and Local Contexts

Over the past century, sustainable development concept has emerged to reach
equilibrium between physical, economic and social aspects in urban design and
planning (Abolfazl, Prof. Dr. Sebnem & Nina, 2014). A client focused approach on
sustainable development done by the RPS Group has stated that the location is one of
the key factors to achieve the goal of sustainable development. Based on the
Guideline for Sustainable Building published by Federal Ministry for the
Environment, Nature Conservation, Building and Nuclear Safety (BMUB), location
aspects of a building has impacted the sustainability and quality of building through
the evaluation of locational characteristics.
The findings of summary report on Demand for Sustainable Offices in the
UK by researchers, Tim Dixon, Gina, Claire & Sally (2009) have ranked location of
an office as an essential influence on the decision of selecting suitable office. The
locational characteristics of an office building can be used as a consideration for
selection of an office which can influence the overall performance of employees and
the organization. Therefore, location of office space is used as principle for
classifying the office buildings (Adnan & Daud, 2010).
The good accessibility of a location provides comparative advantage of real
estate in order to boost the demand at that location [ CITATION Ayo09 \l 1033 ].The
quietness of location, availability of alternative transports, distance to city centre and
distance to public facilities such as hospitals and post offices are highlighted in the
 25

classification of an office space (Bender et al., 2000). Various office assessments

have been developed to evaluate the sustainability of different buildings since
1990s[CITATION MFK07 \l 1033 ]. A review on the office building assessments in
the international and local context will be discussed in details to provide a better
understanding of importance of locational criteria of an office in a comprehensive
way.

2.4.1 Location Theory

In real estate market, each property has its heterogeneous characteristics such as
durability and immobility. Some of these characteristics are unique, for example,
distance to main roads, accessibility to facilities and amenities as well as availability
of alternative transports. These unique features of a building is spatially-related
where its location is fixed. In urban land economics, the location of subject property
is one of the most significant factors that influencing viability and feasibility of a
property project [CITATION Mar12 \t \l 1033 ]. Other than that, location is also one
of the most essential element in business.
Pearson (1991) introduced the concept of location! location! location! which
is applicable in any property market study. According to Pearson (1991), the
hierarchy examines the location of a specific unit within a specific building, the
location of the building within its neighbourhood and the location of neighbourhood
within a wider physical setting. Hence, the importance of location is widely applied
to the evaluation of property and business.
Usually, geographic location has impacted the marketability, highest-and-best
use and value of a building. The attributes of a location such as distance to city
centres, highway, commercial area and traffic flow should be taken into
consideration in location assessment. Besides, the availability of services such as
public transport, police station, post office, hospital and school should also be
assessed [ CITATION Kot86 \l 1033 ]. These location attributes can be categorized
into accessibility and amenities or facilities.
Location Theory depends on the relationship between land use and economic
activities at a particular location over a given period. Von Thunen Theory is one of
the location theory that used to explain the urban land use and the best location to
 26

start a business. The accessibility and proximity to other facilities or services reflects
on the property value at a given location [ CITATION Fuj12 \l 1033 ]. It can be
translated into the the property value increases as distance from the property
decreases (Venables & Limao, 2002; Jordaan, Drost, & Makgata, 2004). This model
involves the distance travelled, time and transport cost which should be considered as
the factors in office assessment.
Furthermore, Isard (1956) focused the time and space as considerations in
general theory of location economics. The location of all the economic activities
becomes a factor with the geographic variations in costs and prices. However,
William (1971) emphasises the accessibility to other places as a factor in making
urban location decisions. At a given location, the more accessible to other locations,
the higher the property value [ CITATION Bla95 \l 1033 ]. He concluded that the
accessibility to one another and the property value are interdependent and
interrelated.
Summarising the above interpretation of location theory, the accessibility of a
location to another location is the key factor that need to be considered in evaluation
of property. Nowadays, urban planners and developers acknowledge that the
pontential of a location is based on its accessibility. Hence, the more accessible a
location, the greater its profit gained [ CITATION Jor04 \l 1033 ]. The characteristics
of a sustainable location for PBO will be described in the global and local contexts in
coming sections.

2.4.2 International Practices

Every purpose-built office has its own specific functions which reveals the
characteristics of PBO. To differentiate the characteristics of each PBO, many office
assessment tools have been introduced and developed in global context. The
application of basic characteristics of PBOs which are building and locational
characteristics have been adopted in the office classification models by other
countries, for instance, United States, Australia, Singapore, Poland, London, Hong
Kong and Japan.
In United States, the Building Owners and Managers Association (BOMA)
has done a research on identification of office building characteristics of PBO. The
 27

characteristics were identified and distributed into six main elements including
building finishes, systems standards and efficiency, rents, market perception,
building amenities and location or accessibilty. A PBO rating system has used as a
tool to show the competitive ability of PBOs in order to attract similar tenants (Daud
et al., 2010).
In Australia, a framework for rating the characteristics of PBO has
constructed by the Property Council of Australia (PCA) in 1998. The office grading
model has categorised into Premium, A, B, C and D. The Guide to Office Building
Quality has released by the PCA and used as a guide for classifying the quality of
office buildings (PCA, 2012). The chosen criteria in the Guide consist of building
size, location, environment performance, mechanical and electrical provisions as
well as building services and amenities. Similar to rating system in United States,
office building characteristics in Australia Central Business District (CBD) have
investigated and categorised into six specific group[ CITATION HoD05 \l 1033 ].
The presentation, management, functionality, services, access and circulation as well
as amenties are the main factors to be taken into account in determining the quality
of office building.
There is no any specific standards for office classification model in other
countries as metioned in the research. Private real estate consultancies have put their
efforts in developing a suitable classification model. In Singapore, the location,
amenities, building specifications, age and total area of building were employed for
classifying Class A buildings [ CITATION Col071 \l 1033 ]. Moreover, in Poland, a
guide to best practice in the design and specification for offices, known as modern
office standards produced by Rolfe Judd & CB Richard Ellis (2011) comprised of
quality and location criteria as the important factors.
In London, a research on Sydney CBD Office Market Overview done by
Knight Frank [CITATION Kni071 \n \t \l 1033 ] has also chosen two common
criteria which are location and building facilities for classifying the office buildings.
However, other real estate consulting companies have been included other criteria
such as accessibility, transportation link and market demand.
In Hong Kong, the combinations of physical building features, management
and availability of parking facilities have been used to develop a simple grading
matrix [CITATION Leu10 \l 1033 ]. However, location is not a decisive factor in the
basic matrix developed by the Hong Kong Rating & Valuation Department. Based on
 28

the surveys done by the Knight Frank and Colliers International Hong Kong in 2007,
location, age and rental have been considered as key factors in the assessment.
In Japan, a simple matrix for office building classification have been
measured by real estate consultants. These real estate consultants including CB
Richard Ellis, DTZ Debenham Tie Leung, KK and Jones Lang La Salle have
identified the common criteria to classify the office buildings (Adnan et al., 2009).
The common criteria are location and floor area and other criteria chosen by other
companies are age, building features, accessibilty and building image.
Table 2.2 shows the main characteristics of PBO which are identified and
considered in the office assessment in the selected countries. It can be clearly showed
that the identification of main characteristics of PBO buildings in developed
countries based on the above discussion. From the table below, it can be concluded
that location is the common criteria for classifying the office buildings which
revealed by real estate organizations in United States, Australia, Singapore, Poland,
Hong Kong and Japan.

Table 2.2: Main Characteristics of Purpose-Built Office

United
United Australi Singapor Hong
Criteria Kingdo Poland Japan
States a e Kong
m
Location

Accessibility
Building

Specification
Building Age - - -

Total Floor Area -

Floor Plate -

Amenities - - - - -

Green Factors - - - -

Parking Facilities - - - -
Source: Adapted from Adnan et al. (2009)

Location of a PBO is an essential factor that will impact upon the economic,
environmental and social sustainability of a business. Sustainable location for a
business can be determined by the accessibility of a PBO to public transport
 29

networks and nodes, and to services and facilities. Hence, selecting sustainable
location of a PBO for the business may need to be accessible for employees of
organisations, to clients or customers and to a variety range of facilities and
amenities[ CITATION Dal08 \l 1033 ]. In addition, safety levels and image of
location can be addressed as the criteria of location selection. Figure 2.8 shows the
location criteria ranking based on the research titled Mapping the Sustainability of
Small Business Locations.

Figure 2.8: Location factor ranking in Bristol city region [CITATION Dal08 \t \l
1033 ]

The good location of an office building has brought advantages of cost saving, time
saving and good accessibility to other facilities and services. Normally, investors in
foreign countries have looked into the importance of location of a property. Thus,
while selecting an office buildings for investment or business, they do make
evaluation of property in order to find a strategic location and meet their
requirements within the best available option [CITATION Mar02 \t \l 1033 ]. Next
topic will review the locational characteristics adopted in the local context.
 30

2.4.3 Existing Local Practices

The international practices have been investigated the building and locational
characteristics of purpose-built office through the previous studies done by Colliers
International Hong Kong and Knight Frank Hong Kong in Hong Kong, Building
Owners and Managers Associations (BOMA) in United States, Colliers International
in Singapore and Knight Frank in London as well as CB Richard Ellis, DTZ
Debenham Tie Leung, KK and Jones Lang La Salle in Japan. However, there is no
empirical studies focused on the adoption of locational characteristics of PBO in
classification of PBOs in Malaysia. The development of structured framework for
PBO on locational characteristics is still in progress.
In 1990, a guideline for the office classification has introduced. The City Hall
of Kuala Lumpur has classified the office buildings into three main categories
according to the ratings of 5-star, 4-star and 3-star. The developed office rating
system comprised of two assessment criteria which are location of office buildings
and facilities provided. The star rating of office buildings are determined by the
assigned grades. This guideline is the earliest study that used to classify the office
buildings based on the identified building criteria. In addition, a research in Klang
Valley Office Market conducted by Rahim & Co. (1994) has adopted the similar
rating system introduced by the City Hall of Kuala Lumpur. The star rating of 5-star,
4-star and 3-star are employed the location and facilities as the common criteria for
classification of office buildings.
Besides, another approach has used scorings to differentiate the office
buildings into Super Prime, Prime A, Prime B, Secondary A, Secondary B and
Secondary B[ CITATION Jon01 \l 1033 ]. He proposed a formatted scoring system to
determine the criteria of an office, including location, accessibility, physical features
and building services. Meanwhile, Malaysian real estate company, Henry Butcher
(2001) has investigated the ways how to grade the office buildings. Eventually, a
model of similar weighted scoring concept with Jones Lang Wootton has introduced.
However, the scoring model only focused on the main office features.
On the 19 July 2012, rental index for PBO (PBO-RI) was officially launched,
whereby there are seven characteristics of PBO which are age of building, grade of
building, let table area, number of floors, average floor area, location and level
[CITATION Moh15 \t \l 1033 ]. These characteristics of PBO have been applied in
 31

the hedonic model. Therefore, location of PBO is one of the selected criteria for
classifying PBOs in Malaysia.
A research by Cheah et al. (2014) identified locational characteristics such as
access to market, branding or image of location, proximity to client, access to public
transport and terminal as well as access to amenities. From the results obtained in the
research, Figure 2.9 shows the location factor ranking in Golden Triangle Kuala
Lumpur.

Figure 2.9: Location factor ranking in Golden Triangle Kuala Lumpur

(Cheah et al., 2014)

Based on the previous discussions, it can be concluded that location is one of

the key criteria in selecting a sustainable PBO for a business, both broadly and
locally. To strengthen the aim of this research, the locational characteristics of a PBO
will be identified and finalised in this research. By merging the location theory and
current practices, next section will list the locational characteristics of PBO to be
used as the variables in this research. Each characteristic will be look into detail and
classified into physical and non-physical attributes.
 32

2.4.4 Relation between Location Theory and Current Practices

Through an insight from the investigation into the office classification models
practices in global and local contexts as well as the location theory, location of an
office building is an important factor in office classification models. By comparing
the location theory and current practices, it is clearly seen that the sub-factors of
choosing location for a purpose-built office comply with the location theory
mentioned previously.
As to what has discussed in the previous section, there are sub-characteristics
of access to public transport, access to amenities, image or branding of location, level
of crime and vehicle flow that need to be considered in office selection [CITATION
Adn \t \l 1033 ]. Besides, Mohd Safian & Nawawi (2013) selected location of
commercial features, availability of transport options, transportation distance, vehicle
flow and efficiency of property market as the criteria for selecting a sustainable
location of PBO. Table 2.3 shows the location assessment elements based on the
theory and practices.

Table 2.3: Locational Characteristics of PBO

Sub-Characteristics Description Source

Place of office building that visible to public and

Location of
able to represent the identity of an organisation. Belasen (2007)
commercial feature
Examples: Petronas Twin Towers, KLCC
Public transports available for commuting from a
Availability of Department for
place to another.
transport options Transport (2008)
Examples: rail, bus and taxis

Building within maximum 500 meters walking

distance to other location.
Transportation Malgorzata &
Examples: distance to main road, residential area
distance Agnieszka (2016)
and other commercial buildings (hotels, shopping
complexes, restaurants, cafes, etc.)

The movement of traffic within the

neighbourhood.
Examples: traffic condition (average speeds), Wee, Annema, &
Vehicle flow
infrastructure conditions (road conditions) and Banister (2013)
external situational factors (weather, driving
regulation)

The best use of office building to reflect the

Efficiency of Maier & Herath
maximum benefits to property market
property market (2009)
participants such as investors and occupiers.
 33

Table 2.3: Locational Characteristics of PBO (continued)

Sub-Characteristics Description Source

Image / branding of Prestige of location that positively reflected the Kauko Viitanen
location profile and identity of a business in the market. (2004)

Maximum 500 meters walking distance from

community amenities, for example, post office
and food court, etc. Malgorzata &
Access to amenities
Less than 1,000 meters walking distance from Agnieszka (2016)
supporting facilities, for example, hospital and
bank/ATM, etc.
Dennis Challinger
Rate or index of crimes committed that are
(2008); Schneider
reported in the neighbourhood.
Level of crime Electric (2010);
Examples: assaults, robberies, vehicle theft and
Shamsuddin &
break-ins, etc. Hussin (2013)

Distance from urban and local transport terminal

Access to public
that provide easy access for staffs and clients. Khalifeh Soltani
transportation and
Examples: railway station, bus station, airport, et al. (2012)
terminal
etc.

Distance to clients, business partners and

Access to market competitors as well as surrounding businesses IFAD (2003)
complement the business of an organisation.

These factors listed in Table 2.3 have been classified into groups by
numerous researchers. Some literatures categorized these locational characteristics of
PBO mentioned in the table above into physical and non-physical attributes
(McPherson, 1995; Dilworth, 1996; Hayter, 1997; Salvesen & Renski, 2003; Aliyu et
al., 2012).
According to the research done by Aliyu et al. (2012), physical location
attributes are those factors of location that are visible in nature. These physical
factors include access to workplace, communities facilities and services, terminal or
station, vehicle flow, efficiency of property market, transportation distance and
transport options. On the other hand, non-physical attributes are those factors of
location that cannot be seen in nature (Aliyu et al., 2012).. Examples of non-physical
factors are level of crime, safety index, image/branding of lcoation and social status.
Figure 2.10 shows the physical and non-physical factors of location.
 34

Figure 2.10: The locational attributes to be considered in evaluation of PBO.

A comprehensive list of sustainable location characteristics for PBO as shown

in Table 2.3 will be used as the variables that need to be considered in location
decisions in this research. However, not each sub-factor listed is relevant for every
organization and may also will give the priority to few important sub-factor in
making location decision for each business [ CITATION Mac01 \l 2052 ]. Hence, the
decision making in sustainable business location is strongly affected by stakeholders
preferences. At different levels of decision-making, it requires a measurement of
individuals needs. The measurement of stakeholders perception will be determined
in the next topic in order to choose the sustainable location of PBO for a business.

2.5 Measurements and Application of Stakeholders Perceptions towards

Sustainable Business Location Characteristics of a PBO

The process of making decisions is continuous in order to achieve the goals of each
organization. These decisions can be done by either individual or groups. Decisions
are usually made by individual in small organisations whereas large organisations
often made the group decisions (Lu et al., 2007). There may be in conflict with each
other by various objectives and opinions to satisfy the preferences and needs for a
 35

sole decision maker as well as a group of decision makers. Therefore, the decision
making process becomes more complex because each preference and need of
individuals are important to reach the final decisions at the same time there are
alternative options available in large quantity.
In this research, location selection for a purpose-built office is an essential
and challenging decision that made by management of a business since it has long-
term effects on the business. However, this location decision are dependent upon the
preferences and needs of stakeholders. Choosing the best sustainable location of
PBO for a business involves multiple conflicting criteria and a finite set of
alternatives. Multi-criteria decision making (MCDM) methods can be effectively
solve such complicated problems.

2.5.1 Multi-Criteria Decision Making (MCDM)

MCDM is defined as the decision making that selects the best of a set of alternative
in the presence of multiple and conflicting criteria (Lu et al., 2007; Saaty, 2009).
These MCDM techniques were designed and used to analyse decision problems and
to evaluate the criteria based on preferences of decision makers. Numerous MCDM
methods have been developed and successfully applied in a wide range of application
areas over the past decades. The multiple criteria can be grouped as objectives and
attributes [ CITATION Hwa81 \l 1033 ]. Hence, the MCDM problems can be
categorised into two groups which are Multi-Objective Decision Making (MODM)
and Multi-Attribute Decision Making (MADM) (Lu et al., 2007). Table 2.4 provides
a comparison of MODM and MADM approaches.

Table 2.4: Comparison of MODM and MADM Approaches

MODM MADM
Criteria Objectives Attributes
Number of alternatives Infinite (Large number) Finite (Limited number)
Decision makers control Significant Limited
Relevant to: Design/Search Evaluation/Choice
Relevance of geographical data structure Vector-based GIS Raster-based GIS
Source: Adapted from Malczewski (1999)
 36

As the continuous type of the MCDM, MODM methods have considered the
values of decision variables that there are a large number of available alternatives, for
example, Goal Programming (GP). On the other hand, MADM methods are discrete
with limited number of predetermined alternatives [ CITATION Vya13 \l 1033 ]. The
MADM methods include Multi-Attribute Utility Theory (MAUT), Analytic
Hierarchy Process (AHP), Technique for Order Preferences by Similarity to Ideal
Solutions (TOPSIS) and Analytic Network Process (ANP). In MODM models, it can
generate the alternatives automatically by the models, whereas it is required to
generate the alternatives manually in MADM models [ CITATION Nat162 \l 1033 ].
Table 2.4 presents the examples of MODM and MADM methods.

Table 2.4: MODM and MADM methods

Method Examples

Goal Programming (GP)

MODM
Weighting method

Simple Additive Weighting (SAW)

Multi-Attribute Utility Theory (MAUT)
Simple Multi-Attribute Rating Technique (SMART)
Technique for Order Preferences by Similarity to Ideal Solutions
(TOPSIS)
MADM
Elimination and Choice Translating Reality (ELECTRE)
Preference Ranking Organisation Method for Enrichment Evaluation
(PROMETHEE)
Analytic Hierarchy Process (AHP)
Analytic Network Process (ANP)

Selecting the most appropriate MCDM method by considering the available

decision making methods is often difficult to justify. Each methods can be applied to
solve specific problems but has its own limitations. Based on the discussion above,
MADM methods are more suitable than MODM methods to investigate the physical
and non-physical location attributes from the stakeholders perception of PBOs. All
these MADM methods will be introduced thoroughly as follow.
Simple Additive Weighting (SAW) is the simplest and the widest used
MADM method[ CITATION Vya13 \l 2052 ]. It is also named the weighted sum
method. According to the sum of all the weights for each attribute, there is a ranking
for each alternative in order of importance to the decision [ CITATION Ete12 \l 1033
 37

]. It is the multiplication of the performance score and its attribute important in order
to find the attribute weights [ CITATION Kah08 \l 1033 ]. After the calculation is
done, the best alternative has the highest score[ CITATION Afs10 \l 1033 ]. Yet, this
SAW method can be used only as those attributes have measurement in identical
units [ CITATION Vya13 \l 1033 ].
Multi-Attribute Utility Theory (MAUT) is a quantitative comparison method
that use utility measures to obtain a total score for each alternative (Bredell, 2003;
Caterino et al., 2009). Utility function is represented the preferences of decision
makers [ CITATION Ish13 \l 1033 ].The importance of criteria can be determined by
the weights of criteria and alternatives. The evaluation of criteria and alternatives
involves the tangible and intangible attributes in MAUT [ CITATION Bre03 \l
1033 ].
Simple Multi-Attribute Rating Technique (SMART) is the simplest forms of
MAUT (Velasquez & Hester, 2013). The conversion of weights is done to reflect the
importance of criteria and alternatives in numeric way.
Technique for Order Preferences by Similarity to Ideal Solutions (TOPSIS)
is widely used in a variety of research areas. The selected best alternative should be
the closest to the ideal solution and at the same time farthest to the negative solution
(Hwang & Yoon, 1981; Kahraman, 2008; Amponsah, Darkwah, & Inusah, 2012).
Therefore, there is an index that makes the selection of the best attributes by
combining the closeness and remoteness of an alternative to the idea solution and to
the negative solution respectively (Macharis et al., 2004; Abu, 2009).
Elimination and Choice Translating Reality (ELECTRE) is one of the
outranking methods that is used in a wide variety of decision situations [ CITATION
Nat162 \l 1033 ]. Since ELECTRE is widely adopted and studied, it has evolved into
families such as ELECTRE I, II, III, IV and TRI [ CITATION Bal09 \l 1033 ].
ELECTRE is based on the outranking relations between alternatives by pairwise
comparisons (Lu et al., 2007; Caterino et al., 2009).
Preference Ranking Organisation Method for Enrichment Evaluation
(PROMETHEE) is also one of the outranking methods. Hence, PROMETHEE is
similar to ELECTRE. For example, PROMETHEE families include PROMETHEE I,
II, III, IV, V and VI (Behzadian et al., 2010). It can deal with the selection of a set of
qualitative and quantitative alternatives based on pairwise comparisons [ CITATION
Vya13 \l 1033 ].
 38

As one of the most popular MADM methods, Analytic Hierarchy Process

(AHP) is widely applied in group decision-making. A simple hierarchy framework
for complicated problems provides the evaluation of criteria and alternatives through
the pairwise comparison among alternatives to determine the importance of
alternatives (Fouladgar et al., 2012; Natee, Low, & Teo, 2016). This hierarchy is
designed with different levels where goal at the top of hierarchy, criteria and sub-
criteria at the intermediate level of the hierarchy as well as alternative at the lowest
level of the hierarchy in order to select the most suitable solution [ CITATION
Nat162 \l 1033 ].
Analytic Network Process (ANP) is the generalized form of AHP
[ CITATION Don11 \l 1033 ]. In ANP model, the decision matrix is no longer linear
as AHP. It need not to arrange in a hierarchy structure for the evaluation of the
criteria based on the goal and the alternatives based on the criteria. Thus, ANP deals
with dependencies [ CITATION Ish13 \l 1033 ]. If the criteria are correlated, the
elements listed are connected to one another.
There are 8 common MADM methods that have been discussed previously.
Although none of these MADM methods are perfect, the best suitable method will be
chosen by comparing the pros and cons of these methods. In order to choose the best
measurement of stakeholders perception for location decision making, the strengths
and weaknesses of these MADM methods are identified and summarised in Table
2.5.

Table 2.5: Strengths and Weaknesses of MADM methods

Method Strengths Weaknesses

Ability to compensate among
criteria Estimates revealed do not always
Intuitive to decision makers reflect the real situation
SAW
Calculation is simple does not Result obtained may not be
require complex computer logical
programs
Takes uncertainty into account. Needs a lot of input;
MAUT
Can incorporate preferences. Preferences need to be precise.
Simple
Allows for any type of weight Procedure may not be convenient
SMART
assignment technique considering the framework
Less effort by decision makers
 39

Has a simple process Its use of Euclidean Distance

Easy to use and program does not consider the correlation
TOPSIS The number of steps remains the of attributes
same regardless of the number of Difficult to weight and keep
attributes consistency of judgment

Table 2.5: Strengths and Weaknesses of MADM methods

Its process and outcome can be

difficult to explain in laymans
terms
Takes uncertainty and
ELECTRE Outranking causes the
vagueness into account
strengths and weaknesses of the
alternatives to not be directly
identified
Easy to use
Does not provide a clear method
PROMETHEE Does not require assumption that
by which to assign weights
criteria are proportionate
Problems due to interdependence
Easy to use
between criteria and alternatives
Scalable
Can lead to inconsistencies
AHP Hierarchy structure can easily
between judgment and ranking
adjust to fit many sized problems
criteria
Not data intensive
Rank reversal
Allows assessing the consistency
of the judgments
Requires filling in a lot of
ANP Facilitates the process of
questionnaires
assigning weights because splits
up the problem into smaller parts
(Source: Velasquez & Hester, 2013; Lesmes et al., 2009)

Table 2.5 shows the strengths and weaknesses of selected MADM methods.
However, gauging individuals preference and needs is a critical part at different
levels of decision making. Due to the numerous attributes of the PBOs location, this
may lead to the difficulty of selecting the most suitable PBO for their businesses. In
this research, selecting the most suitable PBO for a business is a complicated
decision making that involves multi-objectives and multi-stakeholders. In practice,
the best measurement is chosen by considering the multiple characteristics of
location for a PBO.
Previous studies have concluded that the AHP and ANP methods have
displayed the advantages over other MADM methods[ CITATION Tas06 \l 1033 ].
In terms of technique for gauging preferences, ANP is a newly developed MADM
 40

method compared to AHP. Hence, there are lack of precise studies on the ANP
approach. Although the past studies on this topic is limited, some studies have proved
that the ANP offered the advantages over the AHP [ CITATION Sar051 \l 1033 ].
The sustainability has added new dimensions to the complexity in the
evaluation of PBO, particularly on the locational characteristics. There are many
elements that need to be taken into account in the complex sustainability concept of
PBO in term of location. In this research, it involved complex multi-criteria decision
problems. ANP can solve the problems by considering all the relevant criteria,
including physical and non-physical attributes in the selection of location. These
location criteria can be demonstrated and prioritised interdependent influences of
each criteria in a network structure.
The ANP is a network that allows interrelationship within clusters of
elements and overcomes the limitation of linear hierarchic structures [ CITATION
Saa09 \l 1033 ]. In addition, this ANP model shows better reliability and greater
depth than the AHP model [ CITATION Tas06 \l 1033 ]. Therefore, the ANP method
is more applicable to the real world environment that rely on the judgements and
preferences (Taslicali & Ercan, 2006; Saaty, 2009). After the investigation
demonstrated above, the ANP model is the most suitable measurement for gauging
stakeholders preferences in this research.
The ANP method is adopted to investigate the preferences of stakeholders
towards sustainable business location characteristics of PBO. The weightage of
importance for each sustainable business location characteristics of PBO is obtained
through the perceptions of respondents which consists of a scale of 1-9. Meanwhile,
the weightage score for those characteristics of PBO is obtained. However, the ANP
method will be incorporated into Geographic Information System (GIS) software in
multi-criteria decision making analysis. It provides a comprehensive comparison on
the needs and preferences of stakeholders towards the sustainable business location
of PBO. Further details regarding GIS-based multi-criteria decision making approach
will be discussed in the following section.
 41

2.5.2 GIS-Based Multi-Criteria Decision Making Approach

Adapting to the Malaysian purpose-built office environment, ANP method, as

MCDM technique is employed to measure the weightage of importance and
weightage score for each sustainable business location characteristics of PBO. But,
there are conflicting problems coexist in multi-criteria decision making [ CITATION
Gom02 \l 1033 ]. Hence, coupling MCDM and GIS needs to be carried out based on
the stakeholders perceptions towards sustainable business location characteristics of
PBO in order to achieve the research objectives.
In general, Multi-Criteria Decision Making (MCDM) and Geographic
Information System (GIS) techniques have explicated independently[ CITATION
Dro09 \l 1033 ]. Basically, MCDM reveals the preferences and needs of decision
makers whereas GIS organises, presents and analyses a variety of data to provide
support for decision making. Therefore, multi-criteria decision analysis (MCDA) has
been merged with GIS to deal with decision problems related to geographical
location[ CITATION Cha07 \l 1033 \m Dro09]. Inevitably, GIS-based multi-criteria
decision analysis has emerged since the late 1980s [ CITATION Cha07 \l 1033 ].
GIS-based multi-criteria decision analysis can be considered as a process that
combines and transforms input (geographical data and decision makers preferences)
into an output (resultant decision) [ CITATION Mal99 \l 1033 ]. It also can be known
as spatial multi-criteria analysis. Both geographical data and decision makers
preferences are used in the process of GIS-based multi-criteria decision analysis. The
geographical data are processed to obtain relevant information regarding the
sustainable business location selection for PBO. The input-output perspective of
GIS-based multi-criteria decision analysis will be illustrated in Figure 2.11.
 42

Figure 2.11: GIS-based multi-criteria decision analysis: input-output perspective

[ CITATION Mal99 \l 1033 ]

From the input-output perspective of GIS-based multi-criteria decision

analysis, GIS functionality includes data input, data storage and management, data
manipulation and analysis, and data output [ CITATION Mal99 \l 1033 ]. In GIS,
input data comprised geographical information and information about the decision
makers preferences. These data are organised in a geographic database. In a
geographic database, there are two important components which included spatial data
that refers to geographic position and non-spatial data that refers to the properties of
spatial entities.
In common, geographical information and information about the preferences
of decision makers are utilised and organised by separate thematic maps or sets of
data, referred to as a map layer[ CITATION Mal99 \l 1033 \m Rik14]. Each map
layer is a set of data demonstrating one item of information of each location. Every
single information represents different nature of variables or locational attributes in
GIS system. In GIS database, a map layer can be either displayed and analysed
individually or combined with other map layers to produce the standardised output
map layer for GIS-based multi-criteria decision analysis.
Based on the clarification in the previous section, MCDM (ANP) is
implemented to evaluate the sustainable business location characteristics of PBO
based on the preferences and opinions of stakeholders. A proposed framework
integrates the capabilities of GIS and MCDM (ANP). For better understanding GIS
 43

approach in multi-criteria decision analysis, the proposed framework is provided as

illustrated in Figure 2.12.

1. Define
Decision decision
Problem problem
Recognition

2. Determine the spatial and non spatial

criteria of
Identification (factors/constraints)
Alternatives
GIS-Based MDCM (ANP)

3. Standardize the factors/criterion scores

4. Determine the weight of each factor

Assessment of Alternatives
5. Aggregate the criteria

6. Verify the
Validation ofresult
Resultvia sensitivity analysis

Recommendation for Decision Making

Figure 2.12: GIS-based multi-criteria decision making procedures

Figure 2.12 shows the procedures in GIS-based multi-criteria decision

making. The framework is proposed to investigate every single sustainable business
location characteristic of a PBO. The GIS-based multi-criteria decision analysis
begins with decision problem recognition. The decision problem is defined and then
followed by identification of spatial and non-spatial criteria. The factors or
constraints are determined to be used in measuring the performance of each
sustainable business location criteria based on the preferences of decision makers.
The decision makers perceptions are expressed in terms of the weightage of
importance and score assigned to each evaluation criterion. The input data will be
obtained and presented in the form of decision matrix. Then, the input data will be
organised by map layers to describe every single information of each sustainable
business location of PBO. The geographical information and information about the
preferences of decision makers are combined into one dimensional measurements of
 44

alternative decisions. The one-dimensional measurements are integrated to provide

an overall assessment of criteria with the appropriate decision rules[ CITATION
Dro09 \l 1033 ]. The decision rules define the relationship between the input maps
and an output map through ANP procedures.
An output is obtained based on the ranking of sustainable business location
characteristics of PBO. After obtaining a ranking of each sustainable business
location characteristic of PBO, the results are validated and verified through
sensitivity analysis to determine the robustness. The purpose of sensitivity analysis is
to identify the preferred sustainable business location characteristics of PBO among
decision makers or interest groups. Eventually, it ends with the recommendation for
future action.
With the visualisation techniques such as maps, GIS-based multi-criteria
decision making provides a more comprehensive comparison of each sustainable
business location characteristic for PBO. Indirectly, the standardised output map can
be used as reference for the investors to make wise decision on selecting the
sustainable business location of PBO. The GIS-based MCDM (ANP) shall be
discussed in detail in Chapter 3.

2.6 Chapter Summary

In Chapter 2, the PBO concept has reviewed thoroughly. The overview on PBO
market in Malaysia has shown that the trends of PBO market and the current issues
of PBO in Malaysia, particularly Kuala Lumpur. It is important to explore the
sustainable location characteristics of PBO for a business in order to improve the
PBO market performance in Malaysia. Besides, a comparative study on the most
suitable measurement of stakeholders perception has been done. After finalising the
advantages and disadvantages of MCDM methods, the ANP model has selected to be
the measurement of stakeholders perception for choosing the sustainable business
location of PBO in this research. With the application of ANP model, GIS-based
multi-criteria decision making approach is adopted to evaluate each sustainable
business location characteristics of every PBO. Next chapter will be discussed on the
methodology based on this research.
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Abolfazl Dehghanmongabadi, P. D. (2014). Introduction to Achieve Sustainable

Neighborhoods. International Journal of Arts and Commerce, 16-26.
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