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Beyond building certification: The impact of environmental interventions on commercial real estate operations

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  • Clayton, Jim
  • Devine, Avis
  • Holtermans, Rogier

Abstract

We extend the commonly-studied definition of investment in sustainable and energy efficient real estate beyond environmental building certification to include three additional types of environmentally-focused building interventions: environmentally-focused capital expenditure (capex); monitoring; and, tenant engagement. Appealing to behavioral economics and finance theory, we test for a connection between changes in tenant and property management behavior and electricity consumption. Through a partnership with a global institutional investment manager, this study examines ten years of asset-level operating statement and electricity consumption data in Canadian and U.S. office buildings, measuring both the initial impact of such interventions as well as any adjustments observed over time. Analysis of the proprietary intervention data allows us to better understand the impact of varied environmental interventions on the electricity consumption of commercial real estate. We find that all four intervention categories, including building certification, are associated with decreased electricity consumption, with tenant engagement providing an immediate decrease that is maintained over time. Environmentally-focused capex is also associated with decreased electricity consumption in both Canada and the U.S. Taken together the results indicate that utility consumption and its associated costs are only minimized when multiple environmental interventions are implemented.

Suggested Citation

  • Clayton, Jim & Devine, Avis & Holtermans, Rogier, 2021. "Beyond building certification: The impact of environmental interventions on commercial real estate operations," Energy Economics, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:eneeco:v:93:y:2021:i:c:s0140988320303790
    DOI: 10.1016/j.eneco.2020.105039
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    References listed on IDEAS

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    Cited by:

    1. Yana Akhtyrska & Franz Fuerst, 2021. "People or Systems: Does Productivity Enhancement Matter More than Energy Management in LEED Certified Buildings?," Sustainability, MDPI, vol. 13(24), pages 1-35, December.
    2. Avis Devine & Andrew Sanderford & Chongyu Wang, 2024. "Sustainability and Private Equity Real Estate Returns," The Journal of Real Estate Finance and Economics, Springer, vol. 68(2), pages 161-187, February.
    3. Avis Devine & Erkan Yönder, 2023. "Impact of Environmental Investments on Corporate Financial Performance: Decomposing Valuation and Cash Flow Effects," The Journal of Real Estate Finance and Economics, Springer, vol. 66(4), pages 778-805, May.
    4. Lingke Wu & Dehong Liu & Tiantian Lin, 2023. "The Impact of Climate Change on Financial Stability," Sustainability, MDPI, vol. 15(15), pages 1-18, July.
    5. Hongjie Bao & Ling Shan & Yufei Wang & Yuehua Jiang & Cheonjae Lee & Xufeng Cui, 2021. "How Does Local Real Estate Investment Influence Neighborhood PM 2.5 Concentrations? A Spatial Econometric Analysis," Land, MDPI, vol. 10(5), pages 1-21, May.
    6. Gui, Xuechen & Gou, Zhonghua, 2021. "Understanding green building energy performance in the context of commercial estates: A multi-year and cross-region analysis using the Australian commercial building disclosure database," Energy, Elsevier, vol. 222(C).

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