New Evidence on the Green Building Rent and Price Premium

Franz Fuerst and Patrick McAllister ()
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Patrick McAllister: School of Real Estate & Planning, University of Reading

Real Estate & Planning Working Papers from Henley Business School, University of Reading

Abstract: This paper investigates the effect of voluntary eco-certification on the rental and sale prices of US commercial office properties. Hedonic and logistic regressions are used to test whether there are rental and sale price premiums for LEED and Energy Star certified buildings. The results of the hedonic analysis suggest that there is a rental premium of approximately 6% for LEED and Energy Star certification. A sale price premium of approximately 35% was found for 127 price observations involving LEED rated buildings and 31% for 662 buildings involving Energy Star rated buildings. When compared to samples of similar buildings identified by a binomial logistic regression for LEED-certified buildings, the existence of a rent and sales price premium is confirmed albeit with differences regarding the magnitude of the premium. Overall, the results of this study confirm that LEED and Energy Star buildings exhibit higher rental rates and sales prices per square foot controlling for a large number of location- and property-specific factors.

JEL-codes: C31 C5 M2 Q2 Q4 R33 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2009
New Economics Papers: this item is included in nep-ene and nep-ure
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:rdg:repxwp:rep-wp2009-07

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