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Green Noise or Green Value? Measuring the Effects of Environmental Certification on Office ValuesFranz FuerstUniversity of Cambridge - Department of Land Economy; City University of New York - Center for Urban Research Patrick M. McAllisterUniversity of Reading - Department of Real Estate and Planning August 20, 2010 Real Estate Economics, Vol. 39, 2010 Abstract: This study investigates the price effects of environmental certification on commercial real estate assets. It is argued that there are likely to be three main drivers of price differences between certified and non-certified buildings. These are additional occupier benefits, lower holding costs for investors and a lower risk premium. Drawing upon the CoStar database of US commercial real estate assets, hedonic regression analysis is used to measure the effect of certification on both rent and price. The results suggest that, compared to buildings in the same submarkets, eco-certified buildings have both a rental and sale price premium.
Keywords: green buildings, LEED, Energy Star certification, hedonic models, commercial real estate, appraisal, partial equilibrium, price premium, innovation diffusion Accepted Paper SeriesDate posted: August 23, 2010 ; Last revised: August 31, 2012Suggested CitationContact Information
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