Jumping from a value of $65.7 million to $72.3 million: Bentall Kennedy commissions ground-breaking research that links sustainable building operations to higher rent premiums, lower rent concessions, and higher occupancy rates.

Two persistent myths shrouding sustainable building operations include the tension between building occupants, service levels, and energy efficient operations and the link between sustainable best practices and net asset value. A deep-dive analysis of 10 years of financial performance data–by Dr. Nils Kok of Maastricht University and Dr. Avis Devine of the University of Guelph–across a Bentall Kennedy-managed office portfolio provides bankable evidence that occupants are happier in green buildings and that green buildings are more valuable.

higher NOI and NAV

Green Certification and Building Performance: Implications for Tangibles and Intangibles

Data from the Bureau of Labor Statistics reveals that 82% of U.S. GDP originates in work being done inside buildings. Buildings account for 39% of U.S. green house gas emissions: the work building operators do to bring their buildings into the 21st century is crucial work indeed. We just experienced the hottest April in 137 years, capping off 12 months in a row of new record highs. For this study, 300 office buildings totaling nearly 60 million square feet across Canada and the United States were analyzed. Data included financial metrics such as lease renewal rates, rents, and rent concessions, and building metrics including tenant satisfaction scores, occupancy rates, energy and water consumption, and green building certifications.

“Investors want evidence to support the economic merits of investing in sustainable buildings, and this new academic research provides exactly that.” – Giselle Gagnon, Senior Vice President, Bentall Kennedy.

Bentall Kennedy points out–in an illustrative case–that for a green certified building benefiting from the tailwinds identified in the study, net asset value jumps from $65.7 million to $72.3 million. These sustainability-derived tailwinds include a 3.7% increase in rate premiums, a 4.0% decrease in rent concessions, and a 4.0% increase in occupancy rates. Furthermore, it was shown that building occupant satisfaction scores are 7% higher and energy consumption is 14% lower in green certified buildings.

About Millen Paschich

Millen began his career at Cambridge Associates, trained in finance at SMU, and has an MBA from UCLA. Talk to him about bicycling, business, and green chile burritos.

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