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The political economy of green office buildings

Author

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  • David Harrison
  • Michael Seiler

Abstract

Purpose - This paper aims to examine whether rental premiums accrue to environmentally certified class “A” office buildings and, further, to what extent such premiums vary with the political ideology of the local market area. Design/methodology/approach - Using standard ordinary least squares (OLS) regression techniques, the paper models rental rates on environmentally certified structures as a function of the space market characteristics, economic environment, and political ideology within each local market area. Findings - The paper finds significant variation in environmentally certified rental premiums across jurisdiction‐specific political ideology metrics. Specifically, politically liberal locations exhibit green rental premiums of nearly 6 percent, while politically conservative locations exhibit premiums of less than 2 percent. Originality/value - This paper expands the existing literature by offering further evidence of positive rental premiums accruing to environmental certification, and by systematically exploring the fundamental determinants of these observed value differences.

Suggested Citation

  • David Harrison & Michael Seiler, 2011. "The political economy of green office buildings," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 29(4/5), pages 551-565, July.
    • Handle: RePEc:eme:jpifpp:v:29:y:2011:i:4/5:p:551-565
    DOI: 10.1108/14635781111150394
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    Citations

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    Cited by:

    1. Megat Mohd Ghaza Rahman & Maryanti Mohd Raid & Asmma' Che Kasim & Khadijah Hussin, 2015. "Impact Of Indoor Environmental Quality And Innovation Features On Residential Property Price And Rent In Malaysia: A Review," ERES eres2015_133, European Real Estate Society (ERES).
    2. Sofia F. Franco & W. Bowman Cutter, 2016. "The determinants of non-residential real estate values with special reference to local environmental goods," Nova SBE Working Paper Series wp603, Universidade Nova de Lisboa, Nova School of Business and Economics.
    3. Franco, Sofia F. & Cutter, W. Bowman, 2022. "The determinants of non-residential real estate values with special reference to environmental local amenities," Ecological Economics, Elsevier, vol. 201(C).
    4. Olubunmi, Olanipekun Ayokunle & Xia, Paul Bo & Skitmore, Martin, 2016. "Green building incentives: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 59(C), pages 1611-1621.
    5. Andrew R. Sanderford & George A. Overstreet & Peter A. Beling & Kanshukan Rajaratnam, 2015. "Energy-efficient homes and mortgage risk: crossing the chasm at last?," Environment Systems and Decisions, Springer, vol. 35(1), pages 157-168, March.
    6. Prashant Das & Jonathan A. Wiley, 2014. "Determinants of premia for energy-efficient design in the office market," Journal of Property Research, Taylor & Francis Journals, vol. 31(1), pages 64-86, March.
    7. McGrath, Karen, 2014. "Does Increased Investment in Responsible Properties Lead to Better Corporate Performance?," MPRA Paper 57767, University Library of Munich, Germany, revised 05 Aug 2014.

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