Green Value: a beginning of evidence

Up to a recent period, only ponctual case studies highlighted the potential higher profitability of green buildings compared to ordinary real estate. No statistical market studies were available. Three recent researches gave new and very interesting market data.

The three studies used the important American commercial real estate data base CoStar and compared ordinary real estate to Energy Star and LEED buildings. Even if the figures are different from an analysis to another, the results are clear: green buildings rents, occupation rates and transaction prices are higher than ordinary real estate ones.

For Piet Eichholtz, Nils Kok and John M. Quingley the average difference is 3 % for the rents, 6 % for the income, 16 % for the transaction prices. According to the Franck Fuerst and Patrick McAllister  model, the difference is 6 % for the rents, 31 to 35  % for the prices. Norm Miller, Jay Spivey and Andy Florance found a transaction price difference of 6 % for Energy Star buildings and 10 % for LEED buildings.

Scott Muldavin criticized the N.Miller, J.Spivey and A.Florance study on a methodogical, technical and presentation point of view. But he did not repudiate their main conclusion: the US green offices are more valuable.

Why such different figures from the same data base? Because each research team built an hedonic prices model trying to neutralize the other characteristics of a green label building: location, age, comfort, market conditions. Different ways to neutralize those data are available.

Those three researches are in our “Téléchargements” heading, “Costs and profitability (in English)” chapter. In that chapter, Gary Pivo and Jeffrey D. Fisher analyzed the return on investment not only of the energy efficient offices, but also the one of the transit-oriented and urban regeneration office properties.

Other researches dealt with another aspect of green buildings profitability: the influence of green labels on the productivity of the staff. It is a very difficult issue, because it is very hard to isolate the green label effect from the other working conditions.

William Fisk and Olli Seppänen studied the relationship between indoor environmental quality, health and work productivity. Gregory H. Kats monetarized the health and work productivity gains of a green building. In another study, he monetarized also the students increased learnings in American green schools.

Discussion is open, your commentaries are welcome!