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An Investigation of the Effect of Eco-Labeling on Office Occupancy Rates

Author

Listed:
  • Franz Fuerst

    (School of Real Estate & Planning, University of Reading Business School)

  • Patrick McAllister

    (School of Real Estate & Planning, University of Reading)

Abstract

This paper investigates the effect of eco-labeling on the occupancy rates of commercial offices in the US. The occupancy rates of LEED and Energy Star labeled offices are compared to a sample of non-labeled offices. Using OLS and quantile regression analyses, a significant positive relationship is found between occupancy rate and the eco-label. Controlling for differences in age, height, building class and quality, the results suggest that occupancy rates are approximately 8% higher in LEED labeled offices and 3% higher in Energy Star labeled offices. However, for Energy Star labeled offices effects are concentrated in certain market segments.

Suggested Citation

  • Franz Fuerst & Patrick McAllister, 2009. "An Investigation of the Effect of Eco-Labeling on Office Occupancy Rates," Real Estate & Planning Working Papers rep-wp2009-08, Henley Business School, University of Reading.
    • Handle: RePEc:rdg:repxwp:rep-wp2009-08
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    File URL: http://www.henley.reading.ac.uk/rep/fulltxt/0809.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Ingrid Nappi-Choulet & Aurélien Decamps, 2012. "The impact of energy efficiency and green performance on the value of corporate real estate portfolios," ERES eres2012_145, European Real Estate Society (ERES).
    2. Steffen Westermann & Scott Niblock & Michael Kortt, 2018. "Corporate social responsibility and the performance of Australian REITs: a rolling regression approach," Journal of Asset Management, Palgrave Macmillan, vol. 19(4), pages 222-234, July.
    3. Franz Fuerst & Pat McAllister & Karen Smith, 2010. "Eco-Labeling, Rents, Sales Prices and Occupancy Rates: Do LEED and Energy Star Labeled Offices Obtain Multiple Premiums?," Real Estate & Planning Working Papers rep-wp2010-01, Henley Business School, University of Reading.
    4. Steffen Westermann & Scott J. Niblock & Michael A. Kortt, 2018. "A Review of Corporate Social Responsibility and Real Estate Investment Trust Studies: An Australian Perspective," Economic Papers, The Economic Society of Australia, vol. 37(1), pages 92-110, March.
    5. Spenser J. Robinson & Andrew R. Sanderford, 2016. "Green Buildings: Similar to Other Premium Buildings?," The Journal of Real Estate Finance and Economics, Springer, vol. 52(2), pages 99-116, February.
    6. Isaac Doku & Sonal Agarwal, 2016. "The Perception of Investors on Real Estate Sustainability in Ghana," International Journal of Academic Research in Business and Social Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Business and Social Sciences, vol. 6(4), pages 261-273, April.
    7. Deng, Yongheng & Wu, Jing, 2014. "Economic returns to residential green building investment: The developers' perspective," Regional Science and Urban Economics, Elsevier, vol. 47(C), pages 35-44.
    8. Andrew R. Sanderford & George A. Overstreet & Peter A. Beling & Kanshukan Rajaratnam, 2015. "Energy-efficient homes and mortgage risk: crossing the chasm at last?," Environment Systems and Decisions, Springer, vol. 35(1), pages 157-168, March.
    9. Kevin C. H. Chiang & Gregory J. Wachtel & Xiyu Zhou, 2019. "Corporate Social Responsibility and Growth Opportunity: The Case of Real Estate Investment Trusts," Journal of Business Ethics, Springer, vol. 155(2), pages 463-478, March.
    10. Bienert, Sven, . "METASTUDIE :NACHHALTIGKEIT CONTRA RENDITE? Die Implikationen nachhaltigen Wirtschaftens für offene Immobilienfonds am Beispiel der Deka Immobilien Investment GmbH und der WestInvest GmbH," Beiträge zur Immobilienwirtschaft, University of Regensburg, Department of Economics, number 14, August.
    11. Luming Shang & Sofia Dermisi & Youngjun Choe & Hyun Woo Lee & Yohan Min, 2023. "Assessing Office Building Marketability before and after the Implementation of Energy Benchmarking and Disclosure Policies—Lessons Learned from Major U.S. Cities," Sustainability, MDPI, vol. 15(11), pages 1-23, May.
    12. Fuerst, Franz & McAllister, Pat, 2011. "Eco-labeling in commercial office markets: Do LEED and Energy Star offices obtain multiple premiums?," Ecological Economics, Elsevier, vol. 70(6), pages 1220-1230, April.
    13. Benedetto Manganelli & Pierluigi Morano & Francesco Tajani & Francesca Salvo, 2019. "Affordability Assessment of Energy-Efficient Building Construction in Italy," Sustainability, MDPI, vol. 11(1), pages 1-17, January.
    14. Nappi-Choulet, Ingrid & Décamps, Aurélien, 2011. "Is Sustainability Attractive for Corporate Real Estate Decisions ?," ESSEC Working Papers WP1106, ESSEC Research Center, ESSEC Business School.
    15. Shaun A. Bond & Avis Devine, 2016. "Certification Matters: Is Green Talk Cheap Talk?," The Journal of Real Estate Finance and Economics, Springer, vol. 52(2), pages 117-140, February.
    16. Teck-Hong Tan, 2014. "Satisfaction and Motivation of Homeowners Towards Green Homes," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 116(3), pages 869-885, May.
    17. Jegar Pitchforth & Elizabeth Nelson-White & Marc van den Helder & Wouter Oosting, 2020. "The work environment pilot: An experiment to determine the optimal office design for a technology company," PLOS ONE, Public Library of Science, vol. 15(5), pages 1-33, May.
    18. Niina Leskinen & Jussi Vimpari & Seppo Junnila, 2020. "A Review of the Impact of Green Building Certification on the Cash Flows and Values of Commercial Properties," Sustainability, MDPI, vol. 12(7), pages 1-22, March.
    19. Zhao, Dong-Xue & He, Bao-Jie & Johnson, Christine & Mou, Ben, 2015. "Social problems of green buildings: From the humanistic needs to social acceptance," Renewable and Sustainable Energy Reviews, Elsevier, vol. 51(C), pages 1594-1609.
    20. Fuerst, Franz & Gabrieli, Tommaso & McAllister, Patrick, 2017. "A green winner's curse? Investor behavior in the market for eco-certified office buildings," Economic Modelling, Elsevier, vol. 61(C), pages 137-146.
    21. Jagarajan, Rehmaashini & Abdullah Mohd Asmoni, Mat Naim & Mohammed, Abdul Hakim & Jaafar, Mohd Nadzri & Lee Yim Mei, Janice & Baba, Maizan, 2017. "Green retrofitting – A review of current status, implementations and challenges," Renewable and Sustainable Energy Reviews, Elsevier, vol. 67(C), pages 1360-1368.
    22. Onuoha, Iheanyichukwu Joachim & Aliagha, Godwin Uche & Rahman, Mohd Shahril Abdul, 2018. "Modelling the effects of green building incentives and green building skills on supply factors affecting green commercial property investment," Renewable and Sustainable Energy Reviews, Elsevier, vol. 90(C), pages 814-823.
    23. Suzanne M. Leland & Dustin C. Read & Michael Wittry, 2015. "Analyzing the Perceived Benefits of LEED-Certified and Energy Star–Certified Buildings in the Realm of Local Economic Development," Economic Development Quarterly, , vol. 29(4), pages 363-375, November.

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    More about this item

    JEL classification:

    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
    • R33 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Nonagricultural and Nonresidential Real Estate Markets

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