Environmental Valuation & Cost-Benefit News

A new study by CoStar Group has found that sustainable "green" buildings outperform their non-green peer assets in key areas such as occupancy, sale price and rental rates, sometimes by wide margins.

The results indicate a broader demand by property investors and tenants for buildings that have earned either LEED® certification or the Energy Star® label....

According to the CoStar study, LEED buildings command rent premiums of $11.33 per square foot over their non-LEED peers and register 4.1 percent higher occupancy. Rental rates in Energy Star buildings represent a $2.40 per square foot premium over comparable non-Energy Star buildings and have 3.6 percent higher occupancy.

...Energy Star buildings are selling for an average of $61 per square foot more than their peers, while LEED buildings command a remarkable $171 more per square foot.

Andrew Florance, president and CEO of CoStar, conducted the study with Jay Spivey, CoStar's director of analytics, and Dr. Norm Miller of the Burnham-Moores Center for Real Estate at the University of San Diego. They analyzed more than 1,300 LEED and Energy Star buildings representing about 351 million square feet in CoStar’s commercial property database of roughly 44 billion square feet, and assessed those buildings against non-green properties with similar size, location, class, tenancy and year-built characteristics to generate the results.
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One reason for the "green" premiums would appear to be the constricted supply of green buildings, which account for less than 1 percent of space in CoStar's database.
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CoStar began tagging green buildings in its database about two years ago with the help of the U.S. Green Building Council (USGBC), the nonprofit trade group that created the LEED certification system, and the U.S. Environmental Protection Agency (EPA), which administers the government-sanctioned Energy Star label.
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LEED and Energy Star address distinct -- if not related -- goals.
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EPA's Energy Star program, an energy-benchmarking tool ...largely bypasses the bells and whistles of LEED by targeting simpler and highly cost-effective strategies for improving energy efficiency in buildings, such as installing energy efficient windows, turning off computers at night and adding motion sensors to control lighting. ... Buildings that have earned the Energy Star label use an average of almost 40 percent less energy than average buildings, and emit 35 percent less carbon.

In fact, according to EPA, as many as 500 buildings out of the 4,100 or so total commercial buildings that have earned Energy Star use a full 50 percent less energy than average buildings. And many of those efficiency practices, such as upgrading light bulbs or office equipment, pay for themselves in energy cost savings.
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Participation in Energy Star increased by more than 175 percent from 2006 to 2007. To date, almost 8 billion square feet of U.S. property has been benchmarked through Energy Star.

FOR FULL STORY GO TO:
http://www.costar.com/News/Article.aspx?id=D968F1E0DCF73712B03A099E0E99C679&ref=1&src=rss
Costar www.Costar.com
March 28, 2008
U.S. Green Building Council www.usgbc.org Press Release dated April 3, 2008
http://www.usgbc.org/Docs/News/NBI%20and%20CoStar%20Group%20Release%20040108.pdf