Berkeley Program on Housing and Urban Policy UC Berkeley
Title: Doing Well by Doing Good? Green Office Buildings Author: Eichholtz, Piet, Kok, Nils, Quigley, John M. Publication Date: 05-01-2009 Series: Working Papers Publication Info: UC Berkeley, Working Papers, Berkeley Program on Housing and Urban Policy, Institute of Business and Economic Research Permalink: http://escholarship.org/uc/item/507394s4 Citation: Eichholtz, Piet, Kok, Nils, & Quigley, John M.(2009). Doing Well by Doing Good? Green Office Buildings. UC Berkeley: Berkeley Program on Housing and Urban Policy. Retrieved from: http:// escholarship.org/uc/item/507394s4 Abstract: This paper provides the first credible evidence on the economic value of the certification of "green buildings" -- value derived from impersonal market transactions rather than engineering estimates. For some 10,000 subject and control buildings, we match publicly available information on the addresses of Energy Star and LEED-rated office buildings to the characteristics of these buildings, their rental rates and selling prices. We find that buildings with a "green rating" command rental rates that are roughly three percent higher per square foot than otherwise identical buildings - controlling for the quality and the specific location of office buildings. Ceteris paribus, premiums in effective rents are even higher - above six percent. Selling prices of green buildings are higher by about 16 percent. For the Energy-Star-certified buildings in this sample, we subsequently obtained detailed estimates of site and source energy usage from the U.S. Environmental Protection Agency. Our analysis establishes that variations in the premium for green office buildings are systematically related to their energy-saving characteristics. For example, an increase of ten percent in the site energy utilization efficiency of a green building is associated with a two percent increase in selling price - over and above the 16 percent premium for a labeled building. Further calculations suggest that a one dollar saving in energy costs from increased thermal efficiency yields roughly eighteen dollars in the increased valuation of an Energy-Star certified building.
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Institute of Business and Economic Research
Fisher Center for Real Estate and Urban Economics
PROGRAM ON HOUSING AND URBAN POLICY WORKING PAPER SERIES
WORKING PAPER NO. W08-001 DOING WELL BY DOING GOOD? GREEN OFFICE BUILDINGS
By Piet Eichholtz Nils Kok John M. Quigley May 2009
These papers are preliminary in nature: their purpose is to stimulate discussion and comment. Therefore, they are not to be cited or quoted in any publication without the express permission of the author.
UNIVERSITY OF CALIFORNIA, BERKELEY
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