Which Green Office Building Features Do Tenants Pay For? A Study of Observed Rental Effects

We use lease-level analysis to report on the effect of the presence of 15 green sustainable building features on office rents in an effort to unpack the independent impact of the bundle of attributes contained in green labels such as LEED. The results show that LEED conveys to the market the presence of attributes like superior air, efficient systems, and recycling. However, the research also demonstrates significant independent rental premiums for features such as access to natural light, efficient HVAC, water conservation, public transit, an electric car charging station, and access to services even with the presence of green labels. ENERGY STAR is found to have a premium independent of the green building attributes, but not in concert with them. We show a current market hierarchy of preferred green or sustainable building attributes. The results provide guidance for academic research, building developers, and decision makers contemplating green feature upgrades.