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Why Companies Rent Green: CSR and The Role of Real Estate

Author

Listed:
  • Nils Kok
  • Piet Eichholtz
  • John M. Quigley

Abstract

We conduct a quantitative study to explain why firms lease commercial office space in buildings with a green label ñ as this implies paying a rental premium. Based on a literature review, we construct a theoretical framework of drivers underlying corporate social responsibility. We formulate five propositions that explain why specific industries may be more willing to lease green. Then, we test these propositions using a sample of 11,000 unique tenants in approximately 5,000 office buildings, of which 1,100 buildings have a green label. We find that corporations in the oil and banking industry, as well as government-related organization, are among the most prominent green tenants. The empirical analysis shows that tenants in these industry groups are significantly more likely to rent green office space.

Suggested Citation

  • Nils Kok & Piet Eichholtz & John M. Quigley, 2009. "Why Companies Rent Green: CSR and The Role of Real Estate," ERES eres2009_176, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2009_176
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    File URL: https://eres.architexturez.net/doc/oai-eres-id-eres2009-176
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    Cited by:

    1. Glaeser, Edward L., 2014. "Understanding housing: The intellectual legacy of John Quigley," Regional Science and Urban Economics, Elsevier, vol. 47(C), pages 3-12.
    2. Annika Feige & Patrick Mcallister & Holger Wallbaum, 2013. "Rental price and sustainability ratings: which sustainability criteria are really paying back?," Construction Management and Economics, Taylor & Francis Journals, vol. 31(4), pages 322-334, April.
    3. Patrick Bergmann & Endre Kamarás & Werner Gleißner & Edeltraud Guenther, 2020. "Enhanced Cash Flow Valuation in Real Estate Management by Integrating Innovative Materials and Risk Assessment," Sustainability, MDPI, vol. 12(6), pages 1-26, March.
    4. Benedetto Manganelli & Pierluigi Morano & Francesco Tajani & Francesca Salvo, 2019. "Affordability Assessment of Energy-Efficient Building Construction in Italy," Sustainability, MDPI, vol. 11(1), pages 1-17, January.
    5. Yung Yau & Huiying (Cynthia) Hou & Ka Chi Yip & Queena Kun Qian, 2021. "Transaction Cost and Agency Perspectives on Eco-Certification of Existing Buildings: A Study of Hong Kong," Energies, MDPI, vol. 14(19), pages 1-20, October.
    6. Eichholtz, Piet & Holtermans, Rogier & Kok, Nils & Yönder, Erkan, 2019. "Environmental performance and the cost of debt: Evidence from commercial mortgages and REIT bonds," Journal of Banking & Finance, Elsevier, vol. 102(C), pages 19-32.
    7. Bienert, Sven & Geiger, Peter & Spanner, Maximilian, . "Naturgefahren und Immobilienwerte in Deutschland : Studie," Beiträge zur Immobilienwirtschaft, University of Regensburg, Department of Economics, number 25, August.
    8. Suzanne M. Leland & Dustin C. Read & Michael Wittry, 2015. "Analyzing the Perceived Benefits of LEED-Certified and Energy Star–Certified Buildings in the Realm of Local Economic Development," Economic Development Quarterly, , vol. 29(4), pages 363-375, November.

    More about this item

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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