Green Building is a Sound Investment: Energy Efficient Buildings Deliver Higher Rents




A recent study completed by Bentall Kennedy stated that U.S. LEED-certified projects command 3.7% more in rent and have 4% higher occupancy rates than noncertified buildings, on average. The study used 10 years of data collected by the real estate company. The analysis also found that ENERGY STAR-certified buildings can collect 2.7% more in rent and 9.5% higher occupancies. Thus, supporting the idea that energy efficient buildings are make for greater tenant satisfaction.

A study by the CoStar group supported this claim and showed that green buildings outperform traditional buildings in sale prices as well as occupancy and rental rates. This study found that LEED-certified buildings get, on average, $11.24 more per square foot and have 3.8 percent higher occupancy rates.

The increased rents and higher occupancies that the study reported can provide property owners with an 8%-10% increase in asset value. These statistics certainly prove that investing in energy efficient buildings is worthwhile for property owners.

Tax credits can also impact an owner’s decision as to whether or not to invest in LEED-certification. A 2016 CIT Group survey called Commercial Real Estate Outlook found that many owners site tax incentives as reasons for investing in energy efficient buildings. The same CIT survey also showed that the industry as a whole is more interested in investigating green investment strategies.

Certain municipalities demand specific green features or a specific level of energy efficient certification for all new construction. This could explain the industry trend in moving towards green investment strategies. However, some owners voluntarily include green features as part of the building design.

Katie Craven
Katie Craven is Marketing, Communication and Brand Manager at Watchdog Real Estate Project Managers, a real-estate consulting firm that provides owner’s representation and project management services. More about Watchdog Real Estate Project Managers as well as additional blog posts can be found here.
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