Certified Green Buildings may have an advantage in capital markets

Research indicates that green certification lowers the cost of capital for real estate investors, according to a recent column at GlobeSt.

The reasoning is that certified buildings have a more attractive risk profile and may be more resilient during tough economic times, according to Dr. Nils Kok, associate professor at Maastricht University, the article says. Some studies have shown that commercial mortgages for green-certified buildings have significantly lower default rates.

Indeed, evidence is growing bolstering the notion that sustainability correlates with stronger financial performance in the commercial real estate sector. One recent report found that buildings certified by ENERGY STAR and/or LEED sell for about 10.1% more than non-green certified buildings. Green buildings were found to lease for rates that are 2.2% higher than average, and effective cash flows are 4.6% higher.

Additional data indicates that there is a rapidly growing market for green bonds that invest funds for new sustainable buildings and renovations of existing structures.