Green design grows rents and occupancy rates

The team used data collected by from the CoStar Group examining class A office leasing activity in 46 markets across the USA.“The results provide evidence that green-labeled buildings achieve significantly higher rents — estimated at 7.3 to 8.6% for Energy Star properties and 15.2 to 17.3% for LEED-certified properties,” they say in the introduction to the paper. “Simultaneously estimated occupancy levels are higher by approximately 10 to 11% for Energy Star properties and 16 to 18% for LEED-certified properties.”

CoStar data

Because of the broad scope of the meaning of ‘green’ when used in connection with commercial buildings, the research team focused on data collected by the CoStar Group which included current (for 2008) leasing data on a sample of US building that either had the Energy Star label (Energy Star focuses on energy efficiency)or were LEED certified (LEED examines the efficiency and sustainability of the entire building and building processes). The data included a total of 7308 properties across the US. A second set of data focused on sales information across 25 US markets.

Green impact

It is natural, according to the authors, that green design — particularly in the area of energy efficiency — should have a positive impact on leasing and occupancy rates in commercial office buildings. “Energy use in commercial buildings…accounts for nearly half of the total US greenhouse gas emissions and energy consumption nationwide (US),” they say, adding that“Energy costs are the largest and most manageable operating expense for commercial properties.”

Their research backed up their assertions. “The results … indicate that green-labeled office buildings rent at a premium and achieve higher occupancy, relative to their competitors. Combined with associated savings in operating expenses, green buildings demonstrate superior income potential in the rental market.”

References

This article may be reproduced according to our terms of use with attribution (and link, if online) to www.tias.edu. To be cited as: “Green design grows rents and occupancy rates”, Jonathan Wiley Justin D. Benefield, Ken H. Johnson, www.tias.edu, May 29, 2012.

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