Sure, it's great to have the U.S. Green Building Council's LEED certification. And the U.S. Department of Energy's Energy Star moniker definitely indicates your building has achieved certain thresholds in green building design and construction. At the least, such designations offer a marketable standard that can cut through the green chatter. But there has been little evidence that certifies the advantages of green buildings in terms of portfolio performance—until now.
A study released in March by CoStar Group, a Bethesda, Md.-based commercial real estate research firm, found that LEED and Energy Star buildings have higher occupancy rates, command higher rents, and boast a higher resale value. The study compared 1,300 buildings representing 351 million square feet against 45size, location, class, and age characteristics and found that LEED-certified buildings commanded rent premiums of $11.33 per square foot and had 3.8 percent higher occupancy rates. Energy Star-certified buildings saw a $2.38-per-square-foot rental premium and 3.6 percent higher occupancy rates. When it came to resale value, Energy Star-certified buildings realized a $61-per-square-foot premium, while LEED-certified buildings garnered a whopping $171 more per square foot than their nongreen peers.
While the study covered only office properties, CoStar researchers see no reason the higher premiums for green buildings would not correspond in the residential sector.
“We don't think there is anything inherently different in office space for the same patterns regarding occupancy, rent, and resale value not to be seen in multifamily,” says Co-Star director of communications Tim Trainor, who explained that a dearth of multifamily properties certified by LEED and Energy Star prevented a statistically valid comparative study. “We think the results will hold true across all property types, though, and we intend to attempt a similar study of multifamily as more [certified assets] come online.”