Results from a pioneering study examining the correlation between improved property performance and green building certification were recently released.
The research was based on 10 years of financial performance data from more than 300 Bentall Kennedy office properties across North America, all totaling 58 million square feet.
An international research team concluded that there is strong evidence that buildings with sustainable certification outperform similar non-green buildings in terms of rental rates, occupancy levels, tenant satisfaction scores, and the probability of lease renewals.
“This is the most in-depth and conclusive analysis conducted to date of the link between responsible property investment practice and financial returns,” said Gary Whitelaw, chief executive officer for the Bentall Kennedy Group. “By examining a large North American portfolio with consistent data across multiple market cycles, the results validate Bentall Kennedy’s focus on energy and sustainability improvement in buildings not only as a socially responsible strategy, but also as a way to enhance property income for our clients.”
Findings from the study are in the September 2015 issue of the Journal of Portfolio Management. Here are some highlights :
- Net effective rents, including the cost of tenant incentives, average 3.7 per cent higher in LEED certified properties in the U.S. than in similar non-certified buildings.
- Rent concessions, for LEED and BOMA BEST buildings in Canada are on average 4 per cent lower than in similar non-certified buildings.
- Occupancy rates during the period were 18.7 per cent higher in Canadian buildings having both LEED and BOMA BEST certification, and 9.5 per cent higher in U.S. buildings with ENERGY STAR certification, than in buildings without certifications.
- Tenant renewal rates were 5.6 per cent higher in Canadian buildings with BOMA BESt level 3 certification than in buildings with no BOMA BESt certification.
- Tenant satisfaction scores were 7 per cent higher in Canadian buildings with BOMA BESt level 3 and 4 certification than in non-certified buildings.
- Energy consumption per square foot was 14 per cent lower in U.S. LEED certified properties than in buildings without certification.