Sustainable buildings pay in terms of rent and occupancy

August 11, 2016

energy_efficiency.jpg

A new study draws a direct correlation between green building certification and increased financial benefits to property owners.

A number of studies published within the last 5 years have consistently found a strong link between financial performance and green building certification but skepticism is still prevalent amongst property owners and managers due to the perception that results were skewed by newer buildings and better management.

However, results of a 10-year study of 300 U.S. and Canadian office buildings by one of the largest commercial building owners/managers in the U.S., Bentall Kennedy, compared buildings with and without certification and supported findings of previous studies. With extended datasets that covered tangible metrics on energy and financial performance, including rent and occupancy, Bentall Kennedy’s study also included data on a range of other measures that included lease renewal rates and tenant satisfaction. 

Bentall Kennedy’s VP of Sustainability, James Gray-Donald, asserted “the findings of this study validate the financial case for prioritizing strategies that lead to green building certifications.”1 Key findings were that:

  1. Investment in making buildings more sustainable pays for itself with higher rents, higher occupancy, and more lease renewals; and
  2. Sustainability certification matters to tenants.

The study of commercial space (24m ft2 in Canada and 34m ft2 in the US) measured impacts of certification. Canadian results were particularly positive with 10.2% higher rental values and 8.5% higher occupancy rates in LEED-certified buildings. Those with a BOMA BEST certification scored even better with 18.7% higher occupancy.

Combining US and Canadian results, certified properties commanded a rental premium of 3.7%, occupancy levels were 4% higher and probability of tenant renewals was 5.6% higher.

Find the full text of the Bentall Kennedy research here.

Correlation between energy efficient housing and reduced social landlord costs

Bentall Kennedy’s research comes as no surprise to us here at Sustainable Homes.

Local authorities and social landlords manage almost 20% of the total housing stock in the UK. With rent arrears a big problem for the social housing sector, we set out to investigate whether energy efficiency improvements that resulted in reduced bills to tenants would result in financial benefits to landlords.

In consultation with 25 social landlords throughout England and Wales, our study of over 200,000 homes examined data on energy performance, rent arrears and voids. We have just published our report of the results, ‘Touching the Voids’, and have found substantial cost benefits to landlords as well as for residents and the environment.  For instance, our analysis showed that total void days in properties with E and F SAP ratings were 31% greater than those rated B.  You can download the full report for free here.

Considering sustainability certification?

Why not become SHIFT certified?  Sustainable Homes’ SHIFT is the sustainability standard for the housing sector. SHIFT accreditation demonstrates delivery against challenging environmental targets, provides a route-map for improvement and allows organisations to compare performance against their peers.  It’s not just for social housing either – we partner with landlords in the private sector and can also help reduce the energy costs and carbon emissions in your offices.

 

Sustainable Homes

Sustainable Homes