Road to net zero: Greenness of Leadership in Energy and Environmental Design and California Green Building Standards Code in the multifamily sector

Jamie Chung, Michael Cusumano, Dongshin Kim and Abraham Park

Real Estate Economics, 2025, vol. 53, issue 1, 164-203

Abstract: This study evaluates the effectiveness of Leadership in Energy and Environmental Design (LEED) and California Green Building Standards Code (CALGreen) sustainability programs in reducing greenhouse gas (GHG) emissions in multifamily buildings. We find that CALGreen effectively reduces GHG emissions by 7.2%–11.6%. However, among properties completed during the CALGreen period (on or after 2015), LEED‐certified properties exhibit 14.1%–20.8% higher GHG emissions compared to non‐LEED‐certified buildings. We attribute this result to the emphasis on theoretical design versus actual energy performance of those programs. Furthermore, our research reveals that LEED‐certified buildings completed before the implementation of CALGreen command a rent premium of 4.7%–5.4%. However, this LEED premium diminishes during the CALGreen period. Non‐LEED properties completed during the CALGreen period show limited evidence of rent premiums.

Date: 2025
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