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Eco-Labeling, Rents, Sales Prices and Occupancy Rates: Do LEED and Energy Star Labeled Offices Obtain Multiple Premiums?

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Author Info

  • Franz Fuerst

    (School of Real Estate & Planning, Henley Business School, University of Reading)

  • Pat McAllister

    ()
    (School of Real Estate & Planning, Henley Business School, University of Reading)

  • Karen Smith

    (School of Real Estate & Planning, Henley Business School, University of Reading)

Abstract

Drawing upon an updated and expanded dataset of Energy Star and LEED labeled commercial offices, this paper investigates the effect of eco-labeling on rental rates, sale prices and occupancy rates. Using OLS and robust regression procedures, hedonic modeling is used to test whether the presence of an eco-label has a significant positive effect on rental rates, sale prices and occupancy rates. The study suggests that estimated coefficients can be sensitive to outlier treatment. For sale prices and occupancy rates, there are notable differences between estimated coefficients for OLS and robust regressions. The results suggest that both Energy Star and LEED offices obtain rental premiums of approximately 3%. A 17% sale price premium is estimated for Energy Star labeled offices but no significant sale price premium is estimated for LEED labeled offices. Surprisingly, no significant occupancy premium is estimated for Energy Star labeled offices and a negative occupancy premium is estimated for LEED labeled offices.

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Bibliographic Info

Paper provided by Henley Business School, Reading University in its series Real Estate & Planning Working Papers with number rep-wp2010-01.

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Length: 24 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:rdg:repxwp:rep-wp2010-01

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  1. Cesare Dosi & Michele Moretto, 2001. "Is Ecolabelling a Reliable Environmental Policy Measure?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 18(1), pages 113-127, January.
  2. Mattoo, Aaditya & Singh, Harsha V, 1994. "Eco-labelling: Policy Considerations," Kyklos, Wiley Blackwell, vol. 47(1), pages 53-65.
  3. Vincenzo Verardi & Christophe Croux, 2009. "Robust regression in Stata," Stata Journal, StataCorp LP, vol. 9(3), pages 439-453, September.
  4. Franz Fuerst & Patrick McAllister, 2009. "An Investigation of the Effect of Eco-Labeling on Office Occupancy Rates," Real Estate & Planning Working Papers rep-wp2009-08, Henley Business School, Reading University.
  5. Piet Eichholtz & Nils Kok & John M. Quigley, 2010. "Doing Well by Doing Good? Green Office Buildings," American Economic Review, American Economic Association, vol. 100(5), pages 2492-2509, December.
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Cited by:
  1. Timothy Simcoe & Michael W. Toffel, 2012. "Government Green Procurement Spillovers: Evidence from Municipal Building Policies in California," Harvard Business School Working Papers 13-030, Harvard Business School, revised May 2014.
  2. Timothy Simcoe & Michael W. Toffel, 2012. "Public Procurement and the Private Supply of Green Buildings," NBER Working Papers 18385, National Bureau of Economic Research, Inc.

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