Much research has been completed on income and valuation premiums to
owners and operators of sustainable and energy efficient (SEE) real estate.
However, little work examines the financial benefit to the space users,
outside of decreased operations costs in office space. As the retail industry
begins to adopt SEE certification, the implications for the space users are of
utmost interest, as retailers may be unwilling to pay a rental rate premium
for SEE certified space if there is not a user benefit. Since location-specific
business income data is difficult to obtain, this research examines the
question utilizing a novel proxy: retail bank branch deposits. Through an
examination of deposit growth, it is determined that LEED certified branches
have not only an increased probability of above-market-rate deposit growth,
but also experience notably higher year-over-year deposit growth. Energy
Star certification is also analyzed and found to offer little income-increasing
benefit to the space user. These results are tested in an event study which
validates the findings, and further indicates that the benefits of LEED extend
years past initial certification, indicating the lasting income-related benefits
of LEED certification for retail space users.
Devine, Avis, and Qingqing Chang. "Does a Green-Certified Storefront Mean More Income? Estimating Financial Benefits of Certification for Space Users." In 23rd Annual European Real Estate Society Conference. ERES: Conference. Regensburg, Germany, 2016.
Section: Sustainable Real Estate