Back to Search
Start Over
The effects of eco-certification on office properties: a cap rates-based analysis.
- Source :
- Journal of Property Research; Dec2013, Vol. 30 Issue 4, p345-365, 21p
- Publication Year :
- 2013
-
Abstract
- Though the effects of eco-certification on individual property cash flows and valuations have been addressed in previous literature, the question has remained as to the worth investors place on eco-certification, and whether there is perceived value in the capital outlays often needed in order to achieve eco-certification. This paper is the first to provide credible empirical evidence through the analysis of excess capitalisation rates that investors place on increased value on the property-specific benefits of eco-certification. Based upon a data-set of Leadership in Energy and Environmental Design (LEED) and Energy Star-labelled commercial office properties and their non-certified counterparts, this paper investigates the effects of eco-certification on the excess capitalisation rates of commercial office properties. Hedonic regression analysis is used to determine whether premiums in rent and sales price associated with eco-certified properties translate into lower excess capitalisation rates vs. their non-certified counterparts. The results suggest that overall eco-certified properties have excess capitalisation rates that are 0.364 lower than their non-certified counterparts. Additionally, those properties with only the Energy Star label also exhibit lower average excess capitalisation rates, with properties achieving the Energy Star rating post-sale having lower excess capitalisation rates than those purchased with the Energy Star rating in place. However, due to the small sample size, the results surrounding properties that are LEED-only certified or that possess both the LEED and Energy Star labels are inconclusive. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 09599916
- Volume :
- 30
- Issue :
- 4
- Database :
- Complementary Index
- Journal :
- Journal of Property Research
- Publication Type :
- Academic Journal
- Accession number :
- 91791727
- Full Text :
- https://doi.org/10.1080/09599916.2012.762034