A landmark study conducted by the University of San Diego and CB Richard Ellis Group, Inc (CBRE) has found that tenants in green buildings experience increased productivity and fewer sick days, and that green buildings have lower vacancy and rental rates.
The report, Do Green Buildings Make Dollars and Sense?, is the product of a year- long
research effort and is the largest study of its kind to date.
The research was overseen by Dr. Norm Miller, academic director and professor at the University of San Diego’s Burnham-Moores Center for Real Estate and was conducted in collaboration with CBRE’s national director of sustainability, Dave Pogue, and Ray Wong, CBRE’s director of Americas research. The report’s preliminary findings will be made public on Friday, November 13 at the annual Greenbuild Conference in Phoenix and the full study is expected to be published later this year.
Additionally, the research found that tenants in green buildings are more productive, based on two measures: the average number of tenant sick days and the self- reported productivity change.
Respondents reported an average of 2.88 fewer sick days in their current green office versus their previous non- green office, and about 55% of respondents indicated that employee productivity had improved. Based on the average tenant salary, an office space of 250 square feet per worker and 250 workdays a year, the decrease in sick days translated into a net impact of nearly $5.00 per square foot occupied, and the increase in productivity translated into a net impact of about $20 per
square foot occupied.
The study additionally showed that green buildings have 3.5% lower vacancy rates and 13% higher rental rates than the market.
“The results of this project are beginning to demonstrate the very real and positive impact of sustainable buildings for both our owners and tenant occupants. We have been seeking ways to make an empirical case for the economic benefits of sustainable practices and the results of this study exceeded our expectations,” said Mr. Pogue.
The research effort surveyed 154 buildings under CBRE’s management, totaling more than 51.6 million square feet and housing 3,000 tenants in ten markets across the U.S. The study defined a green building as those with LEED certification at any level or those that bear the EPA ENERGY STAR ® label. All of the ENERGY STAR ® buildings in the survey group had been awarded that label since 2008. Most of the buildings included in the research had also adopted other sustainable practices like recycling, green cleaning and water conservation.
“This is an exciting time for the commercial real estate industry where great values and great investment upgrade opportunities coexist. This window won’t last forever,” said Dr. Miller. “We have now confirmed in this and other studies that green features and energy savings pays off. Tenants care about healthy energy efficient buildings. We also know that green leases and managing to a new and higher standard will soon become the norm. Commercial real estate players have no choice but to learn how to be better in a sustainable way. We know the economics of green will drive the market, not altruism or concern about global warming,”
The survey also indicated that 18% of tenants are willing to pay more for green space, and that tenants believe healthy indoor environments positively impact staff retention (61%) and client image (70%). Additionally, 71% of respondents felt that green lease provisions are increasingly important. According to the study, each additional point of ENERGY STAR ® rating saved 0.8- 1.0% in electricity and separate metering yielded a 21% energy savings, more than any other factor. These findings are generally consistent with other research on this topic, which has determined buildings with the ENERGY
STAR ® label, LEED certification or other identified sustainable programs generally perform better.
CBRE was recently ranked among Newsweek’s top 50 greenest large companies in America. The U.S. Environmental Protection Agency has named CBRE an ENERGY STAR® Partner of the Year for the past two years, the only commercial real estate services firm so recognized with that award. The U.S. Green Building Council (USGBC) has awarded CB Richard Ellis its Leadership Award for Organizational Excellence and the industry group, CoreNet, recognized CBRE with a special commendation for Sustainable Leadership and Design – Development.
About CB Richard Ellis
CB Richard Ellis Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los
Angeles, is the world’s largest commercial real estate services firm (in terms of 2008 revenue). The
Company has approximately 30,000 employees (excluding affiliates), and serves real estate owners,
investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CB Richard Ellis
offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. CB Richard Ellis has been named a BusinessWeek 50 “best in class” company for three years in a row. Please visit our Web site at www.cbre.com.sg.
About Burnham-Moores Center for Real Estate
Founded in 1993, the University of San Diego’s Burnham-Moores Center for Real Estate is committed to delivering outstanding education, industry outreach, and career and research services to advance socially responsible leadership in the real estate profession. As part of the University’s School of Business Administration, the Center offers a Master of Science in Real Estate degree, an undergraduate minor in real estate, a Certificate in Real Estate Finance, Investments and Development, a Certificate in Land Use and Sustainable Community Development and several major industry conferences throughout the year. For more information, visit www.usdrealestate.com.