How ESG affects the London office market - from the perspective of occupiers and investors?

Bowen Yan

ERES from European Real Estate Society (ERES)

Abstract: Environmental, social, and corporate governance (ESG) is extensively researched in the economic sector, but there is a gap in ESG literature in the real estate sector. This paper examines how ESG factors affect the London office market from the perspectives of occupiers and investors. Using a quantitative approach, the paper analyzes the preference of tenants to lease green across different industries, the correlation between a company's ESG rating and its occupancy cost in the London office market, the impact of ESG performance on its ability to attract and retain tenants in the London office market, and the extent to which ESG considerations affect rental pricing in the London office market. Preliminary results of the study indicate that ESG ratings are positively correlated with occupancy costs, that office buildings with higher BREEAM ratings generate more rental premiums and that tenants in specific sectors are more willing to pay a green premium. The study's adoption of stakeholder theory provides a broader perspective on the role of the London office market in society and emphasizes the importance of creating value for all stakeholders. The paper provides evidence to demonstrate the significance of ESG considerations in the London office market. The findings have important implications for real estate practitioners, investors, and policymakers interested in sustainable and socially responsible real estate practices.

Keywords: CSR; Esg; London office market; Sustainable Real Estate (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2023-01-01
New Economics Papers: this item is included in nep-env and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:arz:wpaper:eres2023_169

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