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Improved property performance is strongly correlated to green building certification, a study finds.
The study, which was published in the Journal of Portfolio Management, analyzes 10 years of financial performance data across a Bentall Kennedy-managed office portfolio totaling 58 million square feet.
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Highlights of the findings include:
- net effective rents, including the cost of tenant incentives, average 3.7% higher in LEED certified properties in the U.S. than in similar non-certified buildings;
- rent concessions, for LEED and BOMA BESt buildings in Canada are on average 4% lower than in similar non-certified buildings;
- occupancy rates during the period were 18.7% higher in Canadian buildings having both LEED and BOMA BESt certification, and 9.5% higher in U.S. buildings with ENERGY STAR certification, than in buildings without certifications;
- tenant renewal rates were 5.6% higher in Canadian buildings with BOMA BESt Level 3 certification than in buildings with no BOMA BESt certification;
- tenant satisfaction scores were 7% higher in Canadian buildings with BOMA BESt level 3 and 4 certification than in non-certified buildings; and
- energy consumption per square foot was 14% lower in U.S. LEED certified properties than in buildings without certification.
“Previous studies have suggested similar correlations but none of these looked at in-depth, diverse metrics across a large portfolio for as long as 10 years,” says Giselle Gagnon, senior vice-president, strategic resources group at Bentall Kennedy. “Investors want evidence to support the economic merits of investing in sustainable buildings, and this new academic research provides exactly that.”
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