The aim of this study is to investigate whether offices in the United Kingdom with an environmental label command price premiums when compared to non-labelled offices. The de facto standard for sustainability in the UK is the Building Research Establishment Environmental Assessment Method (BREEAM). BREEAM is a building quality indicator that investigates a range of environmental criteria, awards credits based on the degree to which these criteria are represented in a building and then awards a rating based on the total number of credits that have been achieved. This research investigates the effect of BREEAM ratings on observed contract rents in the UK and as such provides a potentially stronger empirical test of the hypothesis than previous appraisal-based studies. The market impact of BREEAM ratings is investigated, using a control sample of non-BREEAM rated office buildings throughout the UK. To achieve this, a dataset is used that contains 19,509 commercial office lease transactions that were completed from 2006 to 2010. The results indicate that a premium exists for BREEAM-certified buildings. The results also indicate that the premium shows variations during the study period and that premiums vary depending on the year of construction and certification.

There is a growing international consensus that climate change represents one of the most important structural forces and risks that long-term investors need to proactively consider in building resilient portfolios. Many institutional real estate investors have significant exposure to cities and regions that are economically important, but increasingly susceptible to climate change impacts. In this paper the authors review and synthesize existing academic research on risk exposure to acute and chronic climate related events and forces and their impacts on property asset values and lending practices. Evidence to date is dominated by studies focused on residential property, although some recent research has begun to examine the commercial real estate sector in a more rigorous way. The authors draw inferences from the residential studies for how these findings might apply to commercial real estate and highlight the more recent studies focused on commercial property. Recent research is published within both real estate and broader economics and finance journals; these papers indicate that awareness of climate risks is starting to have a more sustained impact on pricing and on investor decisionmaking, although the channels though which impact occurs are generally opaque and warrant further research. Key Takeaways▪ Historically, property prices decline after climate events but tend to eventually recover.Recent evidence suggests that climate events in geographies that previously suffered little exposure to extreme weather can lead to a long-lasting decline in prices or liquidity.▪ There is some evidence from residential markets that levels of belief in climate change and confidence in government-led mitigation of impacts may result in differing levels of price impacts where risks lie primarily in the future, such as sea level rise. In this respect the nature of the marginal investor is important.▪ Commercial owners/investors in some geographies are placing a higher risk premium on all properties in metro areas affected by climate events, regardless of whether their individual properties have been directly affected.

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Purpose -Given the centrality of data and information to the evaluation and operation of policies to reduce carbon emissions, the purpose of this paper is to investigate potential sources of data within in the UK on the commercial building stock in terms of its physical characteristics, financial performance, energy consumption and environmental performance. The research aimed to increase understanding of the potential sources of data on property attributes, financial performance and energy use or environmental performance, with a particular emphasis on evaluating their strengths and weaknesses in terms of scope, quality, availability and practicability. Design/methodology/approach -This is an explorative, qualitative study that uses semi-structured interviews conducted with 11 different data holding organisations. Findings -Whilst public sector organisations have the potential to provide the data required for large samples, there are major barriers to obtaining and linking the different databases. Data on the three key data elements (prices, attributes and environmental performance) tend to be split between different governmental agencies. There are likely to be substantial problems (and costs) of linking the databases due, in particular, to definitional differences. There is a conflict between government's public good objective of increasing knowledge of the environmental performance of buildings and its objective of maximising revenues from the commercial exploitation of data. Since the private sector organisations that hold data are commercially motivated, the samples that they have gathered are largely client driven and, consequently, tend to be partial, particular, proprietary, private and product-related. Originality/value -Since pricing studies are central to evaluating the effectiveness of eco-labelling in property markets, this paper improves one's understanding of the role of information and data barriers to improving the allocative efficiency of commercial property markets.

PurposeThe authors outline a framework that captures the channels through which physical climate risks could affect cash flows and pricing of income-producing real estate. This facilitates detailed consideration of how the future performance of real estate investments could be affected by such risks.Design/methodology/approachThis is a literature-based investigation that draws on work commissioned by UNEP-FI (Clayton et al., 2021a, b). It extends this work to consider in more detail the channels through which climate risks may impact property performance and the implications for the valuation community.FindingsRecent empirical studies have identified more instances where pricing is reflecting both current and anticipated climate risks. Market valuations cannot properly incorporate climate risk without clear evidence that it is priced by market participants, but valuers can advise clients on the potential for future impacts.Research limitations/implicationsWhile inferences can be made from studies of residential real estate, more research on commercial real estate pricing and climate risk is required to assist valuers and their clients, as well as other stakeholders in the real estate market.Practical implicationsDifferences between a Market Value and an Investment Value context are considered, and how valuers could and should account for climate risk in each setting is discussed with reference to existing professional standards and guidance.Originality/valueThe article synthesises a wide range of literature to produce a framework for the channels by which real estate values could be influenced by climate risk.