GLRPPR Sector Resource: Doing Well by Doing Good? Green Office Buildings
Doing Well by Doing Good? Green Office Buildings
This paper provides the first credible evidence on the economic value of the certification of "green buildings" in the commercial sector -- value derived from impersonal market transactions rather than engineering estimates. We match publicly available information on the addresses of Energy-Star and LEED-rated office buildings to a commercial data source detailing the characteristics of U.S. office buildings and their
rental rates. We analyze the micro data on 694 certified green buildings and on 7489 other office buildings located within a quarter mile of the certified buildings. We find systematic evidence that rents for green offices are about two percent higher than rents
for comparable buildings located nearby. Effective rents, i.e., rents adjusted for the occupancy levels in office buildings, are about six percent higher in green buildings than in comparable office buildings nearby. At prevailing capitalization rates, conversion of the average non-green building to an equivalent green building would add more than $5 million in market value. These results are robust to the statistical models employed.
UC- Berkeley Inst. of Business & Economic Res.
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