CoStar Study Finds Higher Demand, Rent Prices for Green Buildings

CoStar Study Finds Higher Demand, Rent Prices for Green Buildings

Green buildings that have earned LEED certification or the Energy Star label have higher occupancy rates as well as higher rents and sale prices than non-green facilities, according to a study by CoStar Group.

LEED-certified buildings have a 3.8 percent higher occupancy rate and Energy Star buildings have a 3.6 percent higher occupancy rate that non-LEED and non-Energy Star buildings, respectively, according to the study.

The study also found LEED buildings have rent premiums of $11.24 per square foot and sell for an average of $171 per square foot more than non-LEED locations. Energy Star buildings also command higher rates, although less than LEED buildings. Energy Star buildings were found to have a $2.38 per square foot premium over comparable non-Energy Star buildings and sell for an average of $61 per square foot more than the other buildings.

The study was conducted by Jay Spivey, CoStar's director of analytics, and Dr. Norm Miller of the Burnham-Moores Center for Real Estate at the University of San Diego. They looked at more than 1,300 LEED and Energy Star buildings that represent about 351 million square feet of the 44 billion square feet of commercial property in CoStar's database. The study compared the green buildings with non-green peers based on size, location, class, tenancy and year-built characteristics.

Part of the reason green buildings command higher rates and sale prices is their scarcity. Although the number of LEED and Energy Star buildings is growing, it is not in line with demand, which is much higher, the study found. The energy efficiency of green buildings is also a factor in increasing property value, according to the study.