Is Intrinsic Energy Efficiency Reflected in the Pricing of UK Office Leases?
26 Pages Posted: 24 Oct 2012 Last revised: 26 Oct 2012
Date Written: October 23, 2012
Abstract
The aim of this research is to investigate whether the intrinsic energy efficiency rating of an office building has a significant impact on its rental value. Using a sample of 817 office buildings with Energy Performance Certificate (EPCs), we investigate whether a pricing differential can be identified depending on the energy rating. While previous analyses of this topic have typically relied on appraisal-based and/or asking rent data, our dataset contains actual contract rents as well as information on lease terms. The results indicate a significant rental premium for energy efficient buildings. However, we find that this premium appears to be mainly driven by the youngest cohort of state-of-the-art energy efficient buildings. We also find that tenants of more energy efficient buildings tend to pay a lower service charge but this link appears to be rather weak and limited to newer buildings. Hence, we argue that the information contained in the EPC is still not fully taken into account in the UK commercial property market with the possible exception of both the highest and the lowest EPC ratings.
Keywords: Energy Performance Certificate, Hedonic modeling, Commercial office space, Energy efficiency, Eco-labeling
JEL Classification: C01, O52, Q4, Q58
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
An Investigation of the Effect of Eco-Labeling on Office Occupancy Rates
-
On the Economics of Energy Labels in the Housing Market
By Dirk Brounen and Nils Kok
-
Sustainable Building Certification and the Rent Premium: A Panel Data Approach
By Franz Fuerst, Nico B. Rottke, ...
-
Understanding the Solar Home Price Premium: Electricity Generation and "Green" Social Status
By Samuel R. Dastrup, Joshua Graff Zivin, ...
-
The Value of ‘Green:’ Evidence from the First Mandatory Residential Green Building Program
By Ramya R. Aroul and J. Andrew Hansz
-
The Value of 'Green’: Evidence from the First Mandatory Residential Green Building Program
By Ramya R. Aroul and J. Andrew Hansz
-
The Value of Domestic Building Energy Efficiency – Evidence from Ireland
By Marie Hyland, Ronan C. Lyons, ...