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Eco-labeling in commercial office markets: Do LEED and Energy Star offices obtain multiple premiums?

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  • Fuerst, Franz
  • McAllister, Pat

Abstract

This paper investigates the effect of eco-labeling on rental rates, sale prices and occupancy rates. The consensus emerging from previous studies appears to be that investors in and occupiers of eco-labeled buildings obtain a bundle of benefits related to lower operating costs, reputation benefits and productivity higher. In this study, a hedonic model is used to test whether the presence of an eco-label has a significantly positive effect on rental rates, sale prices and occupancy rates of commercial office buildings in the US. The results suggest that office buildings with Energy Star or LEED eco-labels obtain rental premia of approximately 3-5%. Dual certification produces an additive effect with rental premia estimated at 9%. Respective sale price premia for Energy Star and LEED labeled office buildings are 18% and 25%. The sale price premium for dual certification is estimated at 28-29%. An occupancy premium could not be confirmed for LEED labeled office buildings and only a small positive occupancy premium was found for Energy Star.

Suggested Citation

  • Fuerst, Franz & McAllister, Pat, 2011. "Eco-labeling in commercial office markets: Do LEED and Energy Star offices obtain multiple premiums?," Ecological Economics, Elsevier, vol. 70(6), pages 1220-1230, April.
  • Handle: RePEc:eee:ecolec:v:70:y:2011:i:6:p:1220-1230
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    References listed on IDEAS

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