Costs and profitability

Sustainable Building Alliance. Sustainability thresholds generating Value. 2015.

Assessing the value of a building may involve the analysis of benefits associated with sustainable real estate, and the impact of sustainable performance on rents, lease term, profitability … The study analyzes these mechanisms and makes recommendations for assessors and certification bodies.

World Green Building Council. Health, Wellbeing & Productivity in Offices The next chapter for green building. September 2014.

Health, welfare and productivity of occupants of office buildings are closely linked and that link is now proven. The report uses nearly 80 scientific references that demonstrate this link, much more strategic for “green” buildings that energy savings.

UNEP Finance Initiative Property Group. Unlocking the energy efficiency retrofit investment opportunity. 2014.

According to the authors, initial five steps will ensure asset owners and managers have the right information and incentives to significantly increase the number of energy efficiency retrofits: Ensure executive awareness of the business case, Measure and benchmark building energy performance, Set portfolio energy efficiency targets, Link asset manager compensation to energy performance, Align lease clauses to enable retrofits (green leases). The last two steps will increase an investment manager’s chances of getting energy efficiency retrofits approved and financed: Include impact on asset value in investment analysis, Take a portfolio approach to determine next steps

Department of Energy and Climate Change.An investigation of the effect of EPC ratings on house prices. 2013.

The authors investigated the relationship between the energy performance ratings, as measured in Energy Performance Certificates (EPCs), and the sale prices of residential properties in England. As expected, the price difference increases as EPC performance improves. They estimated that, compared to dwellings rated EPC G, dwellings rated EPC F and E sold for approximately 6%, dwellings rated D sold for 8% more and dwellings rated EPC band C for 10% and A/ B sold for 14% more.

 Association HQE. HQE Performance First trends for new buildings. 2012

Initiative of the French Haute Qualité Environnementale Association: the analysis of 74 buildings with on one hand, energy grey consumption within materials and equipments and on the other hand measurement of quality of indoor air. A first worldwide initiative according to the authors. French text with English translation.


Kok N. Matthiew E K. The value of green labels in the California housing market. Universities of Maastricht and California. 2012.

In California, according to the authors, the difference in selling prices, during the 2008-2012 period, is about 9% between Energy Star and LEED certified homes and non-certified comparable homes.


Reichardt et alii. Sustainable Building Certification and the Rent Premium: a Panel Data Approach. Universities of Wiesbaden and Cambridge. 2012.

This team of German and British researchers analyzed the evolution over time of the difference in rent between American Energy Star and LEED certified office buildings and non-certified buildings. After rising to 7% in 2008, the difference in rent decreased down to 4% in late 2009.


Fuerst F. Mc Allister P. Green Noise or Green Value? Measuring the Effects of Environmental Certification on Office Values. Real Estate Economics. 2011.

Frank Fuerst and Patrick McAllister estimated a 4-5% difference in rent in 2008 between American certified Energy Star and LEED office buildings relative to comparable non-certified buildings. The difference in resale prices over the 1999-2008 period, is more surprising: about 25%.


Chegut A, Eichholtz P, Kok N. The Value of Green Buildings New Evidence from the United Kingdom. Maastricht University. July 2011.

After their analysis of American and Dutch office markets, the Maastricht research team monitored by Nils Kok studied the British market. Premium of BREEAM certified offices, compared to non certified comparable buildings is high: 21% for rents and 26% for sales transacton prices.


Lorenz D. Property Valuation and Sustainability. RICS Valuation Conference. Stockholm. February 2011.

Very interesting presentation by David Lorenz (Karlsruhe Institute of Technology) about valuation of sustainable property and the role of valuation professionals, based on a well documented literature overview.


Kok N., Maarten J.. The value of Energy Labels in the European Office Market. Maastricht University, RSM Erasmus. May 2011.

The authors analyzed the link between level of energy performance certificate (EPC) and level of rent on the office market in the Netherlands. The study examined 1,100 transactions during the period 2005-2010. The level of rent for buildings with an EPC rated from D to G is on average 6,5 % less than the one of buildings marked A to C of comparable characteristics (location, size, age). Another interesting fact for sustainable real estate: the rent is reduced by 13% per kilometer of distance from a transit station.


Brunnen D. Kok N. On The Economics of Energy Labels in the Housing Market. Erasmus University, Maastricht University. November 2009

This study analyzed the link between the energy performance of existing homes and their selling price. From the study of 194 000 transactions in 2008 and 2009 on the housing market of the Netherlands, the authors found a average difference of 2.5% of the sale price between homes with an energy certificate rated A, B or C and the units marked D, E or F of comparable characteristics.


Eichholtz Piet, Koks Nils and Quingley John M. The Economics of Green Buildings. Berkeley Program on Housing and Urban Policy. September 2010.

Interesting analysis following Doing Well by Doing Good made in March 2009 reproduced in the list below. During the 2008-2009 crisis, the U.S. green office buildings continued to enjoy a premium in terms of rent and resale prices, but it is weaker than in the 2004-2007 period.


Bullier A. et alli. Assessing Green Value: A Key to Investment in Sustainable Buildings. ECEEE Summer Study. Giens. France. June 2011.

Our informal group dedicated to Green Value in Use presented this paper at European Council for an Energy Efficient Economy Summer Study, in Giens (French Riviera) in June 2011. We specified a multricriteria approach to assess the environmental impact on the value of offices and dwellings. We highlighted the importance of an effective guarantee of green value, depending on actual environmental performance coming from new relationship between owner, user and operator.


Miller Norm, Pogue Dave, Dough Quiana, Davis Susan. Green Buildings and Productivity. The Journal of Sustainable Real Estate. Vol 1, n°1. 2009.

Interesting list of researches dealing with the link between productivity and health, temperature, indoor air quality, moving, innovative work places, color, lightning… With a survey over 500 tenants in Energy Star and LEED buildings, managed by CBRE.


Muldavin Scott. Value Beyond Cost Savings. Green Building Finance Consortium. 2010

Scott Muldavin put on line his book dedicated to “Green Value”. It is an interesting methodological approach of financial and risk analysis of sustainable properties.


Newsham, G.R.; Mancini, S.; Birt, B. Do LEED-certified buildings save energy? Yes, but…Institute for Research in Construction of Canada; August 2009.

On average, LEED buildings use 18-39% less energy per floor area than their conventional counterparts. However, 28-35% of LEED buildings use more energy than their conventional counterparts. Further, the measured energy performance of LEED buildings has little correlation with certification level of the building, or the number of energy credits achieved by the building at design time. This research and the one on Minergie (and the one in French on HQE) highlight that the energy and environment efficient buildings approach must deal not only with design but also with operation.


Zgraggen et alii. Case study of a low-energy (Minergie®) multifamily complex in Switzerland. First appraisal after two years of exploitation. 2006

Interesting case study of 117 dwellings near Geneva. Energy performance is higher than the one of usual real estate but less high than planned, because of drying process, indoor temperature and complexity of technical installations. Such study is in our “Costs and Profitability” item, because a lower real performance means a lower profitability of investment.


“Green Value In Use” Group. Turning the Generic Concept of Green Value into Action. Paris. November 2009.

The “Green Value In Use” Task Group made a first presentation of its work at the 2009 Annual Conference of Sustainable Building Alliance (SB Alliance).


Muldavin Scott. Quantifying Green Values: Assessing the Applicability of the CoStar Studies. June 2008.

Scott Muldavin, from the Green Building Finance Consortium, criticized the N.Miller, J.Spivey and A.Florance study on a methodological, technical and presentation point of view. But he did not repudiate the study’s conclusion: the sustainable buildings are more valuable.


Eichholtz Piet, Kok Nils, Quigley John M., Doing Well by Doing Good? An Analysis of the Financial Performance of the Green Office Buildings in the USA. March 2009.

This research team from the Universities of Maastricht and California (Berkeley) highlighted a rent and a price premium for the green offices on the American market.


Kats Gregory H. Greening America’s Schools. Costs and Benefits. October 2006.

Gregory Kats produced a costs-benefits analysis of green American schools, including a monetarization of the students increased learnings.


Pyvo Gary, Fisher Jeffrey D. Investment returns from Responsible Property Investments: Energy Efficient, Transit-oriented and Urban Regeneration Office Properties in the US from 1998-2008. March 2009.

This research by two professors from the Universities of Arizona and Indiana highlighted the most often high return on investment of “responsible” property: energy efficient, transit-oriented and urban regeneration office properties.


Kats Gregory H. Green Buildings Costs and Financial Benefits. 2003.

One of the founders of E Capital company, in his study for the Massachusetts Technology Collaborative, estimated the health and productivity benefits of “green” buildings.


Fisk William, Seppänen Olli. Providing Better Indoor Environmental Quality Brings Economic Benefits. 2007.

Two researchers from the Lawrence Berkeley National Laboratory (USA) and the Helsinki University of Technology studied the links between indoor environmental quality (temperature, ventilation, air quality…) and work (absenteism, productivity…).


Miller Norm, Spivey Jay, Florance Andy, Does Green Pay Off? 2008

This paper written by a professor from the University of San Diego and two leaders of the CoStar real estate data basis highlighted a higher price of “green” (LEED and Energy Star) office buildings on the American market.