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The Operating Expense Puzzle of U.S. Green Office Buildings

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  • Nikodem Szumilo
  • Franz Fuerst

Abstract

Cost savings from efficiency gains are at the core of the green building business case. Significantly lower energy bills are said to be a major factor in the green rent premium observed in earlier studies. Our study tests this relationship by inferring energy costs from operating expenses for a large dataset of U.S. office buildings and relating them to rental rates. We find that eco-certification is associated with a higher than anticipated total energy expenditure, which is the opposite of its expected effect. While our dataset does not contain a direct measure of actual energy consumption, this result puts the cost-saving argument into question. By contrast, we confirm earlier findings of a green rent premium but it might be an effect of factors unrelated to a tenant's operating expenses.

Suggested Citation

  • Nikodem Szumilo & Franz Fuerst, 2013. "The Operating Expense Puzzle of U.S. Green Office Buildings," Journal of Sustainable Real Estate, Taylor & Francis Journals, vol. 5(1), pages 86-110, January.
    • Handle: RePEc:taf:rsrexx:v:5:y:2013:i:1:p:86-110
    DOI: 10.1080/10835547.2014.12091847
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