July 1, 2008: Study Says Green Buildings Earn Higher Rents, Have Higher Market Value
July 1, 2008
BERKELEY, Calif. - An analysis by the University of California, Berkeley, matching publicly available information on Energy Star and LEED-rated office buildings to a commercial data source detailing the characteristics of United States office buildings and their rental rates, found systematic evidence that rents for green offices are about 2 percent higher than rents for comparable buildings located nearby. Effective rents, i.e., rents adjusted for the occupancy levels in office buildings, are about 6 percent higher in green buildings than in comparable office buildings nearby.
The study also found that, 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.
The analysis looked at data on 694 certified green buildings throughout the U.S. and 7,489 other office buildings located within a quarter mile of the certified buildings. Each green building was compared to nearby non-green buildings. The study notes that the average effective rent for the control buildings in the sample is $23.53 per square foot. At the average size of these buildings, the estimated annual rent increment for a green building is almost $309,000.
For more information, visit http://urbanpolicy.berkeley.edu/pdf/EKQ_Green_Buildings_040808.pdf.
Publication date: 06/30/2008