Are Green building certificates effective?

Thank you for taking time out of your busy day to read my blog. Today’s article will focus on whether or not green standards are indeed useful or not. The following points are the most salient from an article I written by a former professor of mine: Avis Devine and her collegue: Nils Kok titled “Green Certification and Building Performance: Implications for Tangibles and Intangibles. ” (source) 

A quick run-down of what is LEED (image credits: LEED.com).
  • Real Estate in North America consumes up to 81% of the energy created each year
  • Owners of and investors in Real Estate should be cognizant of the fact that their tenants and “customers” are now seeking more environmentally friendly spaces because corporate carbon footprints are measured, benchmarked and publicized via “such tools as the Carbon Disclosure Project (CDP), Dow Jones Sustainability Index (DJSI), and other measurement schemes and rankings.” 
    • Recent research has revealed that commercial office building which have marking of environmentally friendly certificates/accreditations have higher rents, occupancy rates, and sales price.
  • Although recent research  unanimously confirms that energy savings certificates (e.g. LEED) result in discernible economic benefits for owner and lender of such assets, there may be an uncontrolled variable or unknown causes at play that the current research has overlooked. In addition, there has been little work done on the intangible benefits (e.g. tenant satisfaction, service calls, and energy consumption) of energy saving certificates.
  • What makes this study special? Real data from Bentall Kennedy:
    • The final dataset includes 148 buildings in Canada and 143 buildings in the U.S., representing 24 million and 34 million square feet of office space, respectively.
    • Using complicated statistical methods, the study then found the coefficients of how each factor (e.g. energy conservation certificates and buildings age, size, etc.) influenced the price. A similar analysis was done on renewal rates.
    • Long story short: do energy conservation certificates effect the rental price and renewal rates.
  • Important findings:
    • LEED certificate only leads to a 10.2% premium (Canada)
    • Certified buildings offer rent concessions that are 4% lower than those of non-certified buildings (Canada)
    •  LEED certificates result in 8.5% higher occupancy rates compared to non-certified buildings.

There are many many other fun and interesting facts you can find by reading the article more carefully, but for me the above were the most salient. Thank you for reading my blog. Please let me know how I can improve.

Hadi is Honours civil of engineering graduate with solid project management experience in the construction industry. Solutions-focused, results-oriented with strong business acumen and entrepreneurial spirit. Currently, he is working as an assistant site-superintendant with Darcon Inc. at one of Vaughan's biggest developments, Centro Square.

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