Evidence on the positive linkage between green building certification and financial performance has been steadily growing in recent years.
The new study undertaken in the United States adds weight to the argument that making buildings more sustainable is a wise investment (it pays) and that tenants care about certification.
The study led by Bentall Kennedy has worked with top global academics, sharing a deep data pool of nearly 300 office buildings in Canada and the US.The conclusions show the positive impact of green certification on commercial building performance, using tangible and intangible measures. The research team performed a sophisticated analysis of tangible and intangible measures across a portfolio totalling 58 million square feet—24 million square feet in Canada and 34 million square feet in the U.S.
The analysis confirmed that green certification does indeed make a difference. In the U.S. the LEED certified properties enjoy an average of 3.7% rent premium and a 4 % gain in occupancy over comparable non-certified properties, while ENERGY STAR certified buildings averaged 2.7 %higher rents and 9.5 % higher occupancy than non-certified buildings.
In Canada, LEED-certified properties saw 10.2 % higher rental rates and 8.5 % higher occupancy, while buildings with both LEED and Canadian BOMA BESt certification achieved 18.7% higher occupancy than the control group.
The findings and their application are powerful as they point directly to overall improved valuations for certified office assets relative to their non-certified competitors, specifically:
– 3.7 % higher rental rates,
– 4.0 % higher occupancy levels, and
– 5.6 % higher tenant renewal probabilities.
These improved metrics can translate into an 8 to 10 % increase in asset value over an identical non certified office asset.