Sustainable Building Certification and the Rent Premium: A Panel Data Approach

28 Pages Posted: 28 Mar 2012

See all articles by Franz Fuerst

Franz Fuerst

University of Cambridge - Department of Land Economy; University of Melbourne; City University of New York - Center for Urban Research

Nico B. Rottke

European Business School (EBS) Wiesbaden - Department Finance, Accounting & Real Estate

Joachim Zietz

EBS University, EBS Business School

Alexander Reichardt

affiliation not provided to SSRN

Date Written: 2012

Abstract

This paper investigates whether obtaining sustainable building certification entails a rental premium for commercial office buildings and tracks its development over time. To this aim, both a difference-in-differences and a fixed-effects model approach are applied to a large panel dataset of office buildings in the United States in the 2000–2010 period. The results indicate a significant rental premium for both ENERGY STAR and LEED certified buildings. Controlling for confounding factors, this premium is shown to have increased steadily from 2006 to 2008, followed by a moderate decline in the subsequent periods. The results also show a significant positive relationship between ENERGY STAR labeling and building occupancy rates.

Keywords: sustainable, LEED, ENERGY STAR, rental premium, commercial, office

Suggested Citation

Fuerst, Franz and Rottke, Nico B. and Zietz, Joachim and Reichardt, Alexander, Sustainable Building Certification and the Rent Premium: A Panel Data Approach (2012). Journal of Real Estate Research, Vol. 34, No. 1, 2012. Available at SSRN: https://ssrn.com/abstract=2029728

Franz Fuerst (Contact Author)

University of Cambridge - Department of Land Economy ( email )

19 Silver Street
Cambridge, CB3 9EP
United Kingdom

HOME PAGE: http://www.landecon.cam.ac.uk/directory/dr-franz-fuerst

University of Melbourne ( email )

185 Pelham Street
Carlton, Victoria 3053
Australia

City University of New York - Center for Urban Research

CUNY The Graduate Center
New York, NY 10011
United States

Nico B. Rottke

European Business School (EBS) Wiesbaden - Department Finance, Accounting & Real Estate ( email )

Gustav-Stresemann-Ring 3
Wiesbaden, Hessen 65189
Germany
0611-36 018 931 (Phone)
0611-36 018 902 (Fax)

HOME PAGE: http://www.rem-institute.org

Joachim Zietz

EBS University, EBS Business School ( email )

Gustav-Stresemann-Ring 3
Wiesbaden, Hessen 65189
Germany

Alexander Reichardt

affiliation not provided to SSRN

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