A new study of U.S. commercial properties has revealed a clear link between buildings that are energy efficient and high rental premiums. The study, commissioned by the Royal Institution of Chartered Surveyors (RICS) and carried out by researchers from Maastricht University in the Netherlands and the University of California, Berkeley, is thought to be the first to confirm the case for landlords making their properties more energy efficient.

The survey of almost 900 buildings found that buildings with an Energy Star certificate attracted rental premiums of 3 percent per square foot compared with “non-green buildings” of the same size, location and function. In addition, green buildings were even more attractive to buyers, securing a premium of around 16 percent when sold.

The study says, “it has become increasingly clear that the design and operation of the built environment is both a problem and opportunity – a problem to the extent that it is a major source of greenhouse gases, but an opportunity, in that we know that we can take realistic and practical steps to reduce those emissions.” Awareness of this is growing. The increasing emphasis on “green rating” systems for buildings, initiated by both government and industry, underscores this point.

The researchers looked at the two major rating systems for ‘green buildings’ in the U.S., Energy Star, which is jointly sponsored by the EPA and the Dept. of Energy; and LEED, the U.S. Green Building Council’s Leadership in Energy and Environmental Design greenbuilding rating system, which goes further in encouragin the “adoption of sustainable green building and developmental practices.”

Simon Rubinsohn, chief economist at the RICS, said that the research should help strengthen the case for green building upgrades. “Previously with only anecdotal evidence available, it is understandable that the uptake of some measures has been frustratingly slow,” he said. “With more comprehensive evidence-based research, the economic argument for having an energy efficient building will be strong.”

While it is believed that LEED buildings enjoy lower operating costs and increased asset value with healthier and safer environments for occupants, the requirements for LEED certification are substantially more complex than for the Energy Star, with points awarded for such factors as site selection, bicycle storage and changing rooms, as well as energy efficiency. It is also noted that the award of a LEED designation “demonstrates an owner’s commitment to environmental stewardship and social responsibility.”

Perhaps not surprisingly, the study found that not all property owners are able to take on the cost and burden of meeting the sustainability requirements of LEED certification, instead placing a premium on energy efficiency. Still more than 1700 buildings have been certified by LEED.

Tangibles and geographic location play an important role, too, in establishing value. The study found a label adds more value when heating and cooling expenses are likely to be a larger part of total occupacy cost. The researchers conclude that energy savings are most important. This is not surprising, but is encouraging for occupants and owners alike.

 Thanks and good luck.