Doing Well by Doing Good? Green Office Buildings

TLDR

The study presents the first credible evidence that green buildings have economic value based on market transactions. Certified green buildings command higher rents and selling prices, with premiums linked to energy‑saving features and additional value from the label itself. JEL classification: G31, M14, Q52, R33.

Abstract

This paper provides the first credible evidence on the economic value of “green buildings” derived from impersonal market transactions rather than engineering estimates. We analyze clusters of certified green and nearby buildings, establishing that “rated” buildings command substantially higher rents and selling prices than otherwise identical buildings. Variations in premiums are systematically related to energy-saving characteristics. Increased energy efficiency is associated with increased selling prices -- beyond the premiums paid for a labeled building. 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. (JEL G31,M14,Q52,R33)