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Green buildings fetch 3% rent premium, according to RICS study

Green buildings fetch 3% rent premium, according to RICS study


August 11, 2010

Is there a premium for “green” buildings?

That’s the decade-old question that Piet Eichholtz and Nils Kok of the University of Maastricht and John Quigley of the University of California, Berkeley, address in their newly published research study, “Doing Well by Doing Good? An analysis of the financial performance of green office buildings in the USA.”

              
       
                 

Published by the Royal Institution of Chartered Surveyors (RICS), the 48-page report analyzes systematic evidence on the economic value of certification of green buildings to the U.S. economy. In the study, Eichholtz, Kok, and Quigley compare the financial performance of a series of LEED- and Energy Star-labeled buildings against a control group made up of all commercial properties located within about 1,300 feet of the green property.

Among the report’s findings: 
• Green buildings will rent for about 3% more per square foot; the difference in effective rent is estimated to be about 6%
• Selling price is as much as 16% higher with green buildings
• Tenants and investors are willing to pay more for an energy-efficient building, but not necessarily more for a building advertised as “sustainable” in a broader sense.
• A green label appears to add more value where heating and cooling expenses are likely to be a larger part of total occupancy cost.

Download the free report. (PDF, 4 MB)

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