Doing Well by Doing Good? Green Office Buildings

Posted: 29 Sep 2009  

Piet M. A. Eichholtz

University of Maastricht - Limburg Institute of Financial Economics (LIFE)

Nils Kok

University of Maastricht - Limburg Institute of Financial Economics (LIFE)

John M. Quigley

University of California, Berkeley, College of Letters & Science, Department of Economics (Deceased); University of California, Berkeley, Haas School of Business, Real Estate Group (Deceased)

Date Written: August 1, 2009

Abstract

This paper provides the first credible evidence on the economic value of the certification of “green buildings” - derived from impersonal market transactions rather than engineering estimates. Our analysis of clusters of certified green buildings and nearby comparables establishes that buildings with “green ratings” command substantially higher rents and selling prices than otherwise identical buildings.

Moreover, variations in the premium for green office buildings are systematically related to their energy-saving characteristics. An increase in the energy efficiency of a green building is associated with a substantial increase in selling price - over and above the premium for a labeled building. Further evidence suggests that the intangible effects of the label itself may also play a role in determining the values of green buildings in the marketplace.

Keywords: environmental sustainability, energy efficiency, green labels, real estate

JEL Classification: G51, M14, D92

Suggested Citation

Eichholtz, Piet M. A. and Kok, Nils and Quigley, John M., Doing Well by Doing Good? Green Office Buildings (August 1, 2009). American Economic Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1480215

Piet M. A. Eichholtz

University of Maastricht - Limburg Institute of Financial Economics (LIFE) ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands
+31 43 3883648 (Phone)
+31 43 3258530 (Fax)

Nils Kok

University of Maastricht - Limburg Institute of Financial Economics (LIFE) ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

John M. Quigley (Contact Author)

University of California, Berkeley, College of Letters & Science, Department of Economics (Deceased) ( email )

Berkeley, CA 94720-3880
United States
510-643-7411 (Phone)
510-643-7357 (Fax)

University of California, Berkeley, Haas School of Business, Real Estate Group (Deceased) ( email )

Berkeley, CA 94720-1900
United States

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