Thursday, October 1, 2009

The Financial Benefits of LEED (Part 1)

A recent study conducted by national real estate research firm, Costar, re-examines the financial benefits of going green. By utilizing a powerhouse of national data, they are able to analyze several relationships between the real estate market and green buildings. Specifically, they look at Energy Star and LEED certified structures.

The findings are not necessarily surprising from a qualitative standpoint - most people have recognized, by now, that green buildings provide value. They do introduce some new data into this study however by quantifying several relationships.

We are going to outline some of the more interesting data most recently available in a two part post. Part 1 is below:

Occupancy Rates of Energy Star Properties vs. Energy Star peers

-2005 1q: Energy Star = 86.2% ; Peers = 85.9% (difference of 0.30%)

-2007 1q: Energy Star = 90.20%; Peers = 88.40% (difference of 1.80%)

-2009 1q: Energy Star = 89.40% ; Peers = 86.9% (difference of 2.50%)


Direct Rental Rates of Energy Star Properties vs. Energy Star peers

-2005 1q: Energy Star = $26.16 ; peers = $23.84 (difference of $2.32)

-2007 1q: Energy Star = $28.65 ; peers = $24.85 (difference of $3.80)

-2009 1q: Energy Star = $30.71 ; peers = $25.97 (difference of $4.73)


Occupancy Rates of LEED properties vs. LEED peers

-2005 1q: LEED = 94.6% ; peers = 86.41% (difference of 8.2%)

-2007 1q: LEED = 89.20% ; peers = 87.59% (difference of 1.6%)

-2009 1q: LEED = 90.03% ; peers = 84.66% (difference of 5.4%)


Direct Rental Rates of LEED properties vs. LEED peers

-2005 1q: LEED = $30.57 ; peers = $27.37 (difference of $3.21)

-2007 1q: LEED = $45.65 ; peers = $28.82 (difference of $16.84)

-2009 1q: LEED = $38.86 ; peers = $29.80 (difference of $9.06)


*Costar’s study reports have been confirmed by multiple studies with similar results.



Top 10 Metropolitan Areas for Green Buildings


1) Los Angeles (100 buildings; 26,167,038 SF; 13.3%)

2) Houston (46 buildings; 21,101,378 SF; 10.8%)

3) Washington DC (61 buildings; 19,796,646 SF; 10.1%)

4) New York City (11 buildings; 12,328,784 SF; 6.3%)

5) San Francisco (30 buildings; 11,862,367 SF; 6.0%)

6) Minneapolis/St. Paul (20 buildings; 11,381,738 SF; 5.8%)

7) Denver (34 buildings; 10,285,745 SF; 5.2%)

8) Seattle/Puget Sound (16 buildings; 7,616,710 SF; 3.9%)

9) Chicago (13 buildings; 6,326,489 SF; 3.2%)

10) Dallas/Ft Worth (20 buildings; 6,058,892 SF; 3.1%)