NoLo Art Lab

a space where you can express yourself without censure,

a house for all the people willing to create something new,

the new artistic spot in Loreto for art making and expositions .

Students:
Mennuti Lorenzo - 967730
Group 18 Nakajima Kohei - 963271
 REUSE
The building of the drinking water was used in the first half of 20th century to pick up and di-

stribute the drinking water directly from the aquifer, but was then dismissed and abandoned some

decades ago.

It is part of a net of all similar buildings spread over the northern part of the city of Milan, being

all abandoned or refurbished. They are part of the history of the city and has a high cultural va-

lue.

Our main idea is to renovate and open this abandoned place to citi-
zens, introducing it again into the dynamic cultural life of NoLo taking
advantage of its amazing position
 LOCATION

Parco Trotter

Abandoned
water building

NoLo

via Padova
The buildings we would like to re-
AREA
novate and open to the city are two,
one is a kind of entrance building for
the public park Trotter, the other is
the drinking water building.

They are very close each other and

between them there’s a green area
that could be used for open air even-
ts or exhibitions.

The drinking water building is the

main one and it has 2 floors both of
200 sqm, but the upper one has no
windows so it could be used as sto-
rage space or a service floor anyway.

The buildings are protected by a cul-

tural constraint so to operate a bu-
ilding activity on them a particular
permit is needed from the Soprinten-
denza office.

The rentage of it will be a lower one

anyway, cause they are both aban-
doned buildings.
The decision maker is a
DECISION
public company
MAKERwhich provides sharing spaces or events spaces

in the cities of Italy . This time they want to experiment by re-using an old building in a central

zone of Milan, renovating it with the help of the municipality.

Their goal is to experiment a new kind of facility that promotes socialization and a sustai-
nable use of the city and its manufacts.

Their need is to find an activity that is fitting in the abandoned building and in the surroun-
dings, suitable for the life of the neighbourhood.

Their expectation is to create a place where people can experience the dynamic social life
of NoLo.
 BUSINESS MODELS
In order to choose the kind of activity that is most suitable for this building, we performed a

multi-criteria analysis considering 3 different alternatives.

_ Trotter Pop Up
A place where different commercial activities could be ran for a limited time period.

_NoLo Art Lab

A free space for performing, learning and exposing arts.

_Shared Kitchen
A well furnished kitchen to be shared between different chefs, with different customers.
 KEY PARTNERS KEY ACTIVITIES
TROTTER POP UP
VALUE CUSTOMER CUSTOMER
PROPOSITION RELATIONSHIP SEGMENTS
Popular brands Renting shop spaces
for a limited time pe- The Trotter Pop Up is Discount depending Brands who want to
Event creators (mu-
riod an event space in the on the duration of the sell objects or services
nicipality or brands
heart of NoLo where activity related to an event
themselves) Ordering and clea-
shops or other event
ning the space after Discount for activities Universities or other
Advertising compa- related activities can
the renting involving more citi- companies willing to
nies take place for a limi-
zens and the school promote themselves
ted time period.
or something else

KEY RESOURCES CHANNELS

Financial, to renovate Website and social
the space media profile
Workers, to clean the Specialized magazi-
space nes
Different kinds of
furniture

COST STRUCTURE REVENUE STREAMS

Renovation of the building Renting of the space to sellers
Renting of the space from the municipality Part of their income
 KEY PARTNERS KEY ACTIVITIES VALUE
NOLO ART LAB CUSTOMER CUSTOMER
PROPOSITION RELATIONSHIP SEGMENTS
Museums and art gal- Renting atelier
leries A free space where Membership fee Artists who want a
Training activities art
you can express your- working and exhibi-
Schools willing to of- related Gratis trial of 3 days
self and begin your tion space, visibility
fer lab courses
Exhibition space artistic career, a new Milano museum card for their work
Bar nearby spot for art in NoLo
Shop for art materials Discount for schools, Tourists and visitors
interested in art
students and other ca-
tegories

KEY RESOURCES CHANNELS

Intellectual, someone
able to train Website and social
media profile
Physical, art tools
furnitures and ar- Art magazines
tworks Schools
Financial, to renovate Paper advertisements
the space

COST STRUCTURE REVENUE STREAMS

Renovation of the building Renting of lab spaces
Renting of the space from the municipality Entry fee for exhibitions
Furnitures for artistic activities and expositions Training courses’ fees
 KEY PARTNERS KEY ACTIVITIES
SHARED KITCHEN
VALUE CUSTOMER CUSTOMER
PROPOSITION RELATIONSHIP SEGMENTS
Chefs Renting kitchens
A place where pas- Discounts for chefs Young chefs willing
Cooking schools Training labs for pe-
sionate chefs can find who also teaches to experiment and to
ople willing to learn
Food producers their space, where have visibility
cooking
they can experiment
Food sellers
new relations with the
customers

KEY RESOURCES CHANNELS

Physical, kitchen to- Website and social
ols and furnitures media profile
Intellectual, chefs TV shows
able to cook and teach
Paper advertisements
Financial, to renovate
the space

COST STRUCTURE REVENUE STREAMS

Renovation of the building Renting of kitchens
Renting of the space from the municipality Part of their income
Furnitures for cooking activities
 DECISION TREE

Minimize the cost required Minmize the initial cost

to start the business
Minmize the construction period

Minimize the environmental influence

Identify the most Best adaptation for
suitable and effective the building and its Maximize the compatibility with the community
use for the historical
environment
building Maximize the effective use of the outdoor space

Minimize the competitiveness

Maximize the return to the Maximize the cultural potential to the community
community
Maximize the social commitment
 CRITERIA
Criteria Sub Criteria Scale

Economic Minmize the initial cost Qualitative

Dimension
Minmize the construction period Qualitative

Minimize the environmental influence Binary

Environmental Maximize the compatibility with the community Qualitative

Dimension
Maximize the effective use of the outdoor space Qualitative

Minimize the competitiveness Ratio

Cultural Maximize the cultural potential to the community Ratio

Dimension
Maximize the social commitment Ratio
 Economic
Dimension
Initial cost

Construction period
Minmize the initial cost
SUB CRITERIA
Environmental influence Indicator: Qualitative (Cost)
Environmental
Dimension
Compatibility with the community Description: Since we already fix the location, here we evaluate the initial cost so as to start the business
Effective use of the outdoor space activity. We set the scale from 1 to 4 corresponding to which level of interventions is needed to host the
Competitiveness activities we want.
Cultural Cultural potential to the community
Dimension
Social commitment
Level 1: install external walls Level 3: install furniture
Level 2: install internal walls Level 4: install special equipment

Art LAB Pop Up Share Kitchen

4 Need to install some machine

to produce artworks
1 Need to install only external
walls for the flexibility of the
space
4 Need to install kitchen faci-
lities

Initial cost

Minmize the construction period

Economic
Dimension
Construction period

Environmental influence Indicator: Qualitative (Cost)

Environmental Compatibility with the community Description: The construction period influences the time required for the launch of the business. We
would like to minimize it to earn income as early as possible.
Dimension

Effective use of the outdoor space

Competitiveness

Cultural Cultural potential to the community

- : short period 0: normal period +: long period
Dimension
Social commitment

Art LAB Pop Up Share Kitchen

0 Some time required for the

installment of the internal
walls and other equipment
- Less period required because
of the simple construction + Long period required for the
installemnt of the kichen
equipment with water pipes
and so on.
 Economic
Dimension
Initial cost

Construction period
Environmental influence
Environmental Compatibility with the community
Dimension
Minmize the environmental influence
SUB CRITERIA
Indicator: Binary (Cost)
Description: To mitigate the impact on the surroundings, we would like to evaluate the envirnmental
aspect depending on the presence of the polluted air released.

Effective use of the outdoor space

Competitiveness

Cultural Cultural potential to the community

Yes/No: Presence of polluted air or not
Dimension
Social commitment

Art LAB Pop Up Share Kitchen

No No Yes Exhausted air from the

kitchen

Initial cost

Maximize the compatibility with the community

Economic
Dimension
Construction period

Environmental influence Indicator: Qualitative (Benefit)

Environmental Compatibility with the community Description: The compatibility with the surrounding community is an important factor when we choo-
se the program since the building is located in the very public zone. We evaluate it besed on the young
Dimension

Effective use of the outdoor space

Competitiveness population in the area

Cultural Cultural potential to the community
Dimension
Social commitment
-: low compatibility 0: normal compatibility +: high compatibility

Art LAB Pop Up Share Kitchen

+ High compatibility
with the young popula-
ted community
0 Depends on the events
we host + High compatibility
with the young popula-
ted community
 Economic
Dimension
Initial cost

Construction period
Environmental influence
Environmental Compatibility with the community
Dimension
SUB CRITERIA
Maximize the effective use of the outdoor space
Indicator: Qualitative (Benefit)
Description: Since the building is located in the public park, we would like to use the outdoor space to
enhance the public nature of the place.

Effective use of the outdoor space

Competitiveness

Cultural Cultural potential to the community

-: rarely 0: sometimes +: often
Dimension
Social commitment

Art LAB Pop Up Share Kitchen

+ Outdoor space can used

for a part of exhibitions
and workshops
- Depends on the events
we host. Less possibility
to use the outdoor space
0 Some seats can be pla-
ced in the outdoor space

for selling events

Initial cost

Minmize the competitiveness

Economic
Dimension
Construction period

Environmental influence Indicator: Ratio (Cost)

Environmental Compatibility with the community Description: The less competitors we have, the more customers we are likely to have. We count the num-
ber of them in the radius of 400m.
Dimension

Effective use of the outdoor space

Competitiveness
Art LAB Pop Up Share Kitchen
Cultural Cultural potential to the community
Dimension
Social commitment

5 0 35
400m
 Economic
Dimension
Initial cost

Construction period
SUB CRITERIA
Maximize the cultural potential to the community
Environmental influence Indicator: Ratio (Benefit)
Environmental
Dimension
Compatibility with the community Description: We evaluate the cultural potential of the project to build the place also for social activities.
Effective use of the outdoor space For each program we count the number of generations we can satisfy.
Competitiveness

Cultural Cultural potential to the community

Categories of generations: children/ young/ middle age/ elderly
Dimension
Social commitment

Art LAB Pop Up Share Kitchen

4 -children
-young
-middle age
2 -young
-middle age 3 -young
-middle age
-elderly
-elderly

Initial cost

Maximize the social commitment

Economic
Dimension
Construction period

Environmental influence Indicator: Ratio (Benefit)

Environmental
Dimension
Compatibility with the community Description: We take into consideration the social activities which we can host in the project as a positive
Effective use of the outdoor space factor to enhace the public nature of the place.
Competitiveness

Cultural Cultural potential to the community

Dimension
Social commitment
Art LAB Pop Up Share Kitchen

2 -exhibition
-art workshop 0 Consider there are no
social activities since
the events are not fixed
1 -cooking lesson
 PERFORMANCE MATRIX
PERFORMANCE MATRIX
 PERFORMANCE MATRIX
STANDARDIZED PERFORMANCE MATRIX
Values are calculated by the formulas below depending on whether a benefit or cost the sub-criteria is.

Example:

(Benefit) (Cost)
Art LAB = 4/4 = 1 Art LAB = -5/35 + 1 = 0.86
Pop-up = 2/4 = 0.5 Pop-up = -0/35 + 1 = 1
Share kitchen = 3/4 = 0.75 Share kitchen = -35/35 + 1 = 0
 WEIGHT ASSINMENTS
SUB-CRITERIA WEIGHT ASSIGNMENTS

Description: Regarding the weight assignments, we put

the most importamce on the cultural dimension since the
building is historical and it is also located in the public parts
of the area which are Parco Trotter and the schools in it. For
the same reason above, we can consider the environmental
dimensions as the second most important criteria we should
satisfy to achieve good connection with the community
around. The economic dimension is the third but still an
important factor when we consider the economic feasibility
of the business.
 RESULTS
ANALYSIS RESULT

The performance can be define as the sum of

each weight multiplied by its standardized value

From the graph, we can see the alternative of Art LAB as the most suitable one among those three programs we
considered. Art LAB shows high values for the environmental and cultural dimension which we take into consideration
more while the economic dimension value is lower than Pop Up.
 RESULTS
SENSITIVITY ANALYSIS

I n t h e s e n s i t iv i t y a n a ly s i s , t h e w e i g h t
propor tions are distributed equally. The
performance can be difined as the sum of each
weight multiplied by its standard value.

In the sensitivity analysis, we still can see the alternative of Art LAB as the most suitable one while Pop up comes the
second. The environmental and cultural dimensions are highly evaluated in Art LAB also here.
RENOVATION COST
INITIAL COST
For considering the renovation of the buildings we referred to the book Prezzi Tipologie Edilizie
(DEI, 2019). From the chapter D4 we took the average cost per sqm for works similar to the
one we are hypotizing to do with the percentage of incidence for each single work. With some
changes we obtained our final list of works and an estimation of the total cost of the renovation.

A=128 sqm

A=200 sqm
FURNITURE COST
LINKS TO THE FURNITURES
BIG TABLE: https://www.sklum.com/it/acquistare-tavolo-da-pranzo/3643-tavolo-fer.
html?id_c=8235&esl-k=google-ads|nu|c523105023065|m|k875172018188|p|t|-
dc|a122195188283|g13183779244&gclid=CjwKCAjws8yUBhA1EiwAi_tpER055mSm7c-
Vt9Hq959AbOvx7ilFQ2PmvX4c-t8GrFQfKpvkfS3DD6RoC3eEQAvD_BwE
CHAIRS: https://www.sklum.com/it/acquistare-sedie-sala-da-pranzo/2653-sedia-lix.htm-
l?id_c=4967
SMALL TABLE: https://www.sklum.com/it/acquistare-scrivanie/4783-tavolo-ulcan.htm-
l?id_c=11078
EASELS: https://www.amazon.it/Cavalletto-Regolabile-buchenholz-naturcholz-Professio-
nale/dp/B07GPTXXWK/ref=asc_df_B07GPTXXWK/?tag=googshopit-21&linkCode=-
df0&hvadid=317168385564&hvpos=&hvnetw=g&hvrand=9006425460740598544&hvpo-
ne=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=1008463&hvtargi-
d=pla-561104936790&psc=1
MACBOOK: https://www.apple.com/it/shop/buy-mac/imac/blu-24-pollici-cpu-8-core-gpu-7-
core-8gb-di-memoria-256gb
PLOTTER: https://www.hp.com/it-it/shop/product.aspx?id=5HB07A&opt=B19&-
INITIAL COST
sel=PRN&gclid=CjwKCAjws8yUBhA1EiwAi_tpEbY3XtTeWoPyjx7ejls2ubDDvJ_pL-Gd-
vizWJwfxKLZnCezr22ISoBoC_-sQAvD_BwE&gclsrc=aw.ds
3D PRINTER: https://www.3djake.it/stampanti-3d-e-ricambi-creality/ender-6?gcli-
d=CjwKCAjws8yUBhA1EiwAi_tpETBTK1t4V0jNrUfU_0cH6AIyJ-bmpFD5X-ryYjizHqTn-
fYyw20CRaxoCH_0QAvD_BwE
LASER CUTTER: https://www.amazon.it/LaserPecker-Strumenti-incisione-portatile-pro-
tettivi/dp/B08K3GSH5P/ref=asc_df_B08K3GSH5P/?tag=googshopit-21&linkCode=-
df0&hvadid=473013730996&hvpos=&hvnetw=g&hvrand=16871798069159852286&hvpo-
ne=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=1008463&hvtargi-
d=pla-1007640333764&psc=1
VERY SMALL TABLES: https://www.sklum.com/it/acquistare-tavolini-bassi-e-comodi-
ni/92025-tavolino-in-legno-docc.html?id_c=179509
SOFA: https://www.sklum.com/it/acquistare-divani-letto/65403-divano-letto-a-2-posti-in-li-
no-veka.html?id_c=130255
SNACK MACHINES: https://www.ivacaffegroup.it/ricambi-distributori-automatici-gruppi-refri-
geranti/458-1-gruppo-refrigerante-classic-plus-.html
 RENTING COST
Considering that the building is an abandoned and valuable one, we hypotized that the renting
would be decided in an agreement involving the private investor and the municipality. So we
considered a "Canone concordato" kind of agreement, which is a particular one in
which the renting fee is a bit lower compared to the market one.
To compute the renting we used the simulator available online (https://agenzia.milanoabitare.org/
calcolo-canone-concordato).
Here we found out that our renting fee will be approximately around 17'000 euro per year.
More precisely we computed it by using a given ratio: 51 euro/sqm*year.
So 51*330=
16830 euro/year
 OTHER COSTS
The managment costs are computed as a percentage over the income (13% in total).
The activity cost instead is the sum of the cost of the employees, the accountant
consulatncy and the web consultancy, the cost of products that the activity needs to go on and
taxes.
 GROSS INCOME
The gross income of the activity is then computed by
summing up all the incomes of the different services we are
providing:
-10 places on small tables to work individually
-2 places on small tables to work individually with a
Macbook and some already installed softwares
C C -16 places on big tables to work in team on more handicraft
works
A A
-10 places for painting
-an exhibition space rented on a week duration
C C
-a workshop will be held 2 times a month with the duration
B B of 1 day

D
 DISCOUNTED CASH FLOW
WAAC (Weighted Average Cost of Capital)
From the table, we take "real estate (operations & services)" as the industry which is the most similar one as our activity.

WAAC = 3.22*0.5 + 4.92*0.5 = 4.07 %

Indystry N of Firms Beta Cost of Equity E/(D+E) Std Dev in Stock Cost of Debt Tax Rate After-tax Cost of Debt D/(D+E)

Assumptions
The time scale of the activity is 12 years and
we assume the building renovation in the
first year. Thus, 100% of the renovation cost
applys only in the first year and we use WACC
as the discount rate.
 DISCOUNTED CASH FLOW
Cost and Income in DCF analysis
For the monthly cost and income, we convert them into yearly with the coefficients multiplied to each of them.

Cost activity

Employees: Staff 2800€ / month 2800€ * 12 * 1.05 = 35280€ / year

Products: Adobe software 146.98€ / month
Materials 40€ / month
Instractor 200€ / month
=386.98€ / month 386.98€ * 12 * 1.05 = 4875€ / year

Income own management

Monthly Income: 15932€ / month 15932€ * 12 * 0.95 = 181625€ / year

 DISCOUNTED CASH FLOW
Case1: Vacancy 0%
When we use 100% of the capacity of our activities. The income in the first year can be estimated to be half considering the
unavailability of the space because of the construction period.

100% of the income Divided by half only in the first year

Management cost and taxes are caluculated

based on the total income

NPV = 296000€ > 0 The project is feasible

 DISCOUNTED CASH FLOW
Case2: Vacancy 20%
When we anticipate 80% of the capacity of our activities, the total income decreases by 20%

Income per month: 181625€ * (1 - 0.2) = 145300€

Total income: 2088690€ * (1 - 0.2) = 1670950€

NPV = 65000€ > 0 The project is feasible

 DISCOUNTED CASH FLOW
Case3: Vacancy 40%: Municipality takes 30% of the building renovation cost
When we anticipate 60% of the capacity of our activities, the total income decreases by 60%. Here we also suppose the help by the
municipality in the renovation cost since the building is public and we could expect some help from it.

Renovation cost on the building: 315413€ * (1 - 0.3) = 220789€

Income per month: 181625€ * (1 - 0.4) = 108975€
Cost of the equipment: 14447€
Total income: 2088690€ * (1 - 0.4) = 1253210€
Total renovation cost: 220789€ + 14447€ = 235236€

NPV = -76000€ > 0 The project is NOT feasible

 DISCOUNTED CASH FLOW
Case4: Vacancy 40%: Municipality takes 70% of the building renovation cost

Here we anticipate the reduction of 70% of the building renovation cost with the help of the municipality.

Renovation cost on the building: 315413€ * (1 - 0.7) = 220789€

Income per month: 181625€ * (1 - 0.4) = 108975€
Cost of the equipment: 14447€
Total income: 2088690€ * (1 - 0.4) = 1253210€
Total renovation cost: 220789€ + 14447€ = 235236€

NPV = 45000€ > 0 The project is feasible

 DISCOUNTED CASH FLOW
Case5: Vacancy 40%: No rent payment
Here we anticipate no rent to the municipality since we pay all the costs on the building renovation which belongs to it.

Income per month: 181625€ * (1 - 0.4) = 108975€ Rent: 0€

Total income: 2088690€ * (1 - 0.4) = 1253210€

NPV = -10000€ > 0 The project is NOT feasible

 DISCOUNTED CASH FLOW

Summary
NPV

Case1: Vacancy 0% 296000€

Case2: Vacancy 20% 65000€

Case3: Vacancy 40% + Municipality takes 30% of the building renovation cost -76000€

Case4: Vacancy 40% + Municipality takes 70% of the building renovation cost 45000€

Case5: Vacancy 40% + No rent payment -10000€

 MARKET VALUE
Cap rate
For the suitable cap rate for the estimation of the market value of our activity, we considerd the going in cap rate during 3 years from
Agenzia Entrate. As you can see, the average cap rate is 6.6%.
Calculation of the market value based on the cap rate: Case2
MARKET VALUE
We consider the cap rate we get in the previous slide to estimate the market value of our activity. We simply divide the net operating
income by the cape rate.

Market value in the end of the second year: 44000€ / 0.066 = 667000€
Grant: 95% of the market value

Market value

Here we simulate the situation where we buy our activity from the municipality even though it's unlikely to happen since the building is public
and our object is not to gain as much profit as possible. We are going to buy the activity in the third year having the grant of the 95% of the
market value to make the business feasible. We don't consider the rent from the third year because since then the building will be our property. In

this case the final net present value is 3000€.

 CONCLUSIONS

In conclusion we can say that if we consider a vacancy around 20% the activity is feasible,
but the cost of renovation would be so high compared to the income that the gain would be very

low.

For this reason we would need the public to pay at least part of the renovation, or the

stakeholders would not have great interest in investing their money.

If we consider instead a higher vacancy of the 40% we would need the public to pay at least
the 70% of the renovation cost if not the activity would not be feasible at all.

Instead of the low expectation of the income, the business would provide more social activities

and the effective use for the community around the site.
 REFERENCES

1. Lectures from Economic Evaluation of Project, Politecnico di Milano (2022)

2. Prezzi Tipologie Edilizie, DEI (2019)

3. Canone concordato, Comune di Milano

https://www.comune.milano.it/aree-tematiche/casa/affitto-accessibile/canone-concordato

4. Damodaran Online

http://www.damodaran.com

5. Agenzia Entrate

https://www.agenziaentrate.gov.it/portale/web/guest/home