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Tenant Preferences and Decision-Making in Green Building Selection: An ESG Perspective

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  • Bowen Yan

Abstract

Environmental, Social, and Corporate Governance (ESG) has garnered significant attention in the economic realm, yet its exploration within the real estate sector, particularly in the London office market, remains under-researched. This paper delves into the influence of ESG factors on the London office market, scrutinizing the dynamics from both occupiers' and investors' perspectives. Employing a quantitative methodology, the study meticulously examines various facets: the inclination of tenants across diverse industries to lease green buildings, the interplay between a firm's ESG rating and its occupancy costs, the impact of ESG performance on attracting and retaining tenants, and the influence of ESG considerations on rental pricing strategies.Preliminary findings suggest a positive correlation between ESG ratings and occupancy costs, highlighting that offices with superior BREEAM ratings command significant rental premiums. Additionally, the research uncovers a heightened willingness among tenants in specific sectors to pay a premium for green features. By integrating stakeholder theory, the study offers a comprehensive view of the London office market's societal role, underscoring the imperative of creating value for all stakeholders. The insights from this research augment the understanding of ESG's importance in the London office market and hold substantial implications for real estate professionals, investors, and policymakers pursuing sustainable and socially responsible real estate practices.

Suggested Citation

  • Bowen Yan, 2024. "Tenant Preferences and Decision-Making in Green Building Selection: An ESG Perspective," ERES eres2024-141, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2024-141
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    File URL: https://eres.architexturez.net/doc/oai-eres-id-eres2024-141
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    More about this item

    Keywords

    ESG in Commercial Property; Green Building Certification; Sustainable Real Estate; Tenant Preferences;
    All these keywords.

    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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