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Who captures the "green value" in the US office market?

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  • Nikodem Szumilo
  • Franz Fuerst

Abstract

This research examines the effects of energy efficiency certification levels on office rental rates and lease structures to determine whether any cost benefits of green buildings are captured by landlords or remain, at least partially, with the tenant. To this aim, our analysis applies the largest and most detailed data set to date, a panel of 14,283 US office properties. Using fixed-effects and dynamic Arellano-Bond frameworks allows us to estimate the differential rental price impact of Energy Star certification both across and within buildings. The general results indicate that buildings with higher levels of energy efficiency achieve higher gross rents allowing landlords to benefit from the premium. However, improved energy efficiency over time is also linked to a slower growth of rental prices as some of the benefit is passed onto tenants. Interestingly, the cost-saving benefit of energy efficiency appears to have the strongest impact on rental rates.

Suggested Citation

  • Nikodem Szumilo & Franz Fuerst, 2015. "Who captures the "green value" in the US office market?," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 5(1-2), pages 65-84, April.
    • Handle: RePEc:taf:jsustf:v:5:y:2015:i:1-2:p:65-84
    DOI: 10.1080/20430795.2015.1054336
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    Cited by:

    1. Niina Leskinen & Jussi Vimpari & Seppo Junnila, 2020. "A Review of the Impact of Green Building Certification on the Cash Flows and Values of Commercial Properties," Sustainability, MDPI, vol. 12(7), pages 1-22, March.
    2. Yana Akhtyrska & Franz Fuerst, 2021. "People or Systems: Does Productivity Enhancement Matter More than Energy Management in LEED Certified Buildings?," Sustainability, MDPI, vol. 13(24), pages 1-35, December.
    3. Maria Carolina Rezende de Carvalho Ferreira & Vinicius Amorim Sobreiro & Herbert Kimura & Flavio Luiz de Moraes Barboza, 2016. "A systematic review of literature about finance and sustainability," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 6(2), pages 112-147, April.
    4. Franz Fuerst & Ben Dalton, 2019. "Gibt es einen wissenschaftlichen Konsens zur Wirtschaftlichkeit nachhaltiger Immobilien? [Is there a scientific consensus on the economic viability of sustainable buildings?]," Zeitschrift für Immobilienökonomie (German Journal of Real Estate Research), Springer;Gesellschaft für Immobilienwirtschaftliche Forschung e. V., vol. 5(1), pages 173-191, November.

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