Interesting Report Showing Green Rated Buildings Rent for More

This is an interesting report that has just come out that is probably the first detailed analysis of the commercial benefits of a Green Rated building from a Developers or Owners perspective.

The report analysed 694 Green Rated buildings and compared them to around 8000 non- green rated buildings to determined the comparative difference in rental returns. The report finds that a Green Rated building on average will lease for 2% per sq.ft higher than non-green rated buildings, with the difference in effective rent being around 6% (by virtue of less incentives as well as tenants in Green Buildings paying higher outgoings).

The one issue not addressed is the difference in build cost, and therefore whether these increased rents are enough to compensate for the increased build costs.

A 2007 report by David Langdon in Australia reported that initial constructions costs on (above comparable none Green projects) was likely to be in the order of 3 – 5% for a 5 star solution, with an impact of a further 5% plus for a 6 star non iconic design solution.

So in my mind this poses the underlying problem as to why more building are not being built to the various Green Star ratings. The economics are not compelling at this time. They are however very close as we can now see and all we would need is strong shove in the right direction to make building Green buildings compelling.

Government subsidies can of course make all of the difference. Attractive tax benefits alone would make the decision to build Green buildings compelling.

This is of course only one side of the energy issue as far as it concerns construction. What we are looking at here is the level of emissions and overall sustainability of the building once constructed. The major emissions however occur in the construction stage, primarily by virtue of the material used. For example a house made from wood, involves cutting down trees, processing the timber and then the physical construction itself, all of which have a negative emissions effect.

For those interested in the amount of carbon embodied in the construction of a new building, here is a calculator that helps you arrive at a estimate:

Here is the link to the Doing Well by Doing Good paper –

Here is the link to the David Langdon report on “The cost and benefit of achieving green buildings” –




You can find the full report here –