Let's talk real green.
The "Doing Well by Doing Good? Green Office Buildings" paper published in April by the Institute of Business and Economic Research offers evidence that there is more money in incorporating sustainable building methods. Authored by three distinguished academicians, the study focused on 694 certified green office buildings, which were either Energy-Star or LEED-rated, and 7489 non-certified office buildings located within a quarter mile of them.
What their research revealed was that the green buildings earned an average of two-percent higher rental rates and six percent higher effective rental rates (rents adjusted for an office's occupancy levels) than the non-certified buildings in the same area. However, the more startling observation was that "at prevailing capitalization rate, conversion of the average non-green building to an equivalent green building would add more than $5 million in market value."
It’s been said that economics is the "dismal science," and it has often been remarked that the world would be a better place if it had only "one-handed” economists, which would ensure that no economist could ever say, "Well, on the other hand..."
In this case, however, I believe that evidence supporting green as a profit motive is quickly becoming irrefutable. A two-percent difference in rental rates may not seem that significant today, but you can rest assured that the percentage spread between the rents of green and non-green buildings will increase dramatically over the next few years.
For more information about this study, download the Doing Well by Doing Good? Green Office Buildings working paper.
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