Doing well by Doing Good? Green Office Buildings

This paper provides the first credible evidence on the economic value of the
certification of "green buildings" - value derived from impersonal market transactions rather than engineering estimates.

For some 10,000 subject and control buildings, we match publicly available information on the addresses of Energy Star and LEED-rated office buildings to the characteristics of these buildings, their rental rates and selling prices.

We find that buildings with a "green rating" command rental rates that are roughly three percent higher per square foot than otherwise identical buildings - controlling for the quality and the specific location of office buildings. Ceteris paribus, premiums in effective rents are even higher - above six percent. Selling prices of green buildings are higher by about 16 percent.

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