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Green Premium in the Tokyo Office Rent Market

Author

Listed:
  • Junichiro Onishi

    (Xymax Real Estate Institute and Center for Spatial Information Science, The University of Tokyo, Chiba 277-8568, Japan)

  • Yongheng Deng

    (Wisconsin School of Business, University of Wisconsin-Madison, Madison, WI 53706, USA)

  • Chihiro Shimizu

    (Center for Spatial Information Science, The University of Tokyo, Chiba 277-8568, Japan)

Abstract

More than 10 years have passed since studies on green buildings gained attention in the academic and industrial literature. Many studies report the economic value of green buildings, mainly in the U.S. and European markets. An empirical clarification of the dynamics of green premiums has significant implications for future urban sustainability. This study constructed a dataset of Tokyo office rents from 2009 to 2019. We estimated the green office rental premium using a hedonic approach. Our results show that, on average, an office property with a green label gains a premium of approximately 6.5% on contract rents. The Tokyo office market is heterogeneous, and endogeneity is an issue when identifying the green premium. We addressed the endogeneity issue with propensity score clustering. As a result of our estimation, the premium was approximately +5.4% for medium-sized old buildings and +2.6% for large-sized new buildings.

Suggested Citation

  • Junichiro Onishi & Yongheng Deng & Chihiro Shimizu, 2021. "Green Premium in the Tokyo Office Rent Market," Sustainability, MDPI, vol. 13(21), pages 1-17, November.
    • Handle: RePEc:gam:jsusta:v:13:y:2021:i:21:p:12227-:d:672939
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    References listed on IDEAS

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    1. Qiang Wei & Dong Lv & Yixin Lin & Dongmei Zhu & Siyuan Liu & Yuting Liu, 2023. "Influence of Utilitarian and Hedonic Attributes on Willingness to Pay Green Product Premiums and Neural Mechanisms in China: An ERP Study," Sustainability, MDPI, vol. 15(3), pages 1-16, January.

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