Is intrinsic energy efficiency reflected in the pricing of office leases?

Fuerst, Franz; Wetering, Jorn van de; Wyatt, Peter

doi:10.1080/09613218.2013.780229

Cited by 36 publications

(22 citation statements)

References 13 publications

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“…In Europe, many studies have been developed in northern countries to verify the effect of EPC on market prices. Most of the studies were carried out in the Netherlands [7,8], United Kingdom (UK) [9][10][11], Austria [12], Ireland [12], Romania [13], Finland [14], Sweden [15,16], Norway [17], and Germany [18,19]. Whereas countries located in the Mediterranean area have been little studied in the academic literature [20][21][22].…”

Section: Introductionmentioning

confidence: 99%

EPC Green Premium in Two Different European Climate Zones: A Comparative Study between Barcelona and Turin

et al. 2019

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Energy performance certificates (EPCs) are important tools aimed at improving buildings’ energy performance. They play a central role in the context of the Energy Performance of Buildings Directive (EPBD) which asks member states (MS) to take the necessary measures to establish a complete certification system. In this study, an application of the hedonic price method (HPM) assessing the effect of energy labels derived from the EPC on real estate market value is presented. The estimation methodology was applied to two European cities characterized by different climate conditions. The analysis was based on two datasets of listing prices referring to multi-family residential markets in Turin (Italy) and Barcelona (Spain). Four models for each dataset were applied to capture the marginal price of green attributes, but also to control for the spatial autocorrelation among values. The findings showed how the EPC has been applied in the two countries and how it has influenced the real estate market. Turin’s buyers pay more attention to the EPC label, while in Barcelona, they value much more single characteristics, such as air conditioning and a swimming pool, considered popular attributes among contemporary buildings in this climate zone. From the results, it is possible to deduce that the implementation of the EPC schemes is still irregular in EU countries and must be strengthened through a standardized rating model.

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Section: Introductionmentioning

confidence: 99%

EPC Green Premium in Two Different European Climate Zones: A Comparative Study between Barcelona and Turin

et al. 2019

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“…The link between energy efficiency or green certification and higher rents is, however, taken for granted in the industry and evidenced as a 'willingness to pay' for a certified 'eco-label' (Fuerst & van de Wetering, 2015). Such forms of green certification have indeed been found globally to correlate with a (small) rental price premium (Fuerst & McAllister, 2011a;Wiley, Benefield, & Johnson, 2010) used to support this model (Axon et al, 2012;Fuerst, van de Wetering, & Wyatt, 2013). This willingness to pay is potentially self-fulfilling, with the most recent meta-analysis of US data (Fuerst, Gabrieli, & McAllister, 2017) finding that 'eco-investors' pay the most for environmentally certified properties.…”

Section: Introductionmentioning

confidence: 82%

“…Investment decisions and rental deals both constitute and reflect 'the market' created through the qualculative processes described above. Tracing the 'impact' of various green certifications, assessments and regulations as 'price signals' in a classical market is an established area of literature (Chegut et al, 2013;Fuerst & McAllister, 2011;Fuerst & van de Wetering, 2015;Fuerst et al, 2013Fuerst et al, , 2017, which fails to capture fully the recursive effects of their use, along with less formal 'standards', in the creation of a market itself through calculations and deals (MacKenzie et al, 2007). Seeing decisions to invest in energy-efficient buildings as being solely incentivized by their market value premium (De Jong & Parkinson, 2013) ignores: the powerful social processes shaping energy-related decisions which tend to lead development actors to make seemingly 'irrational' choices, building and buying energy-intensive offices beyond the 'needs' of actual occupiers.…”

Section: Discussionmentioning

confidence: 99%

Energy-related standards and UK speculative office development

Cass

2017

Building Research & Information

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Non-domestic buildings have great potential for energy-related emission reductions in response to climate change. However, high-specification office buildings in the UK demonstrate that regulation, assessment and certification ('standards') have not incentivized the development of lower-energy office buildings as expected. Making use of the concepts of 'qualculation' and 'calculative agency', qualitative case studies of 10 speculatively developed office buildings in London, UK, provide new insight into why this is the case. Interview data (n = 57) are used to illustrate how 'market standards' substitute for user needs, and ratchet up the provision of building services to maximize marketability competitively. The examples of energy modelling and the market's (mis)use of British Council for Offices guidelines are used to explain how such standards perversely bolster energy-demanding levels of specification and building services, and militate against lowerenergy design, in the sector researched. The potentials for alternative, performance-based standards and new industry norms of quality are discussed. It is concluded that at least the London speculative office market by its very constitution and operation, including the reliance on standards, continues to create increasingly energy-demanding buildings.

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“…Nase, Berry, and Adair (2013) argued that interior, exterior and urban-scale design could increase real estate values. Additionally, there are many articles, such as Wiley, Benefield, and Johnson (2010) and Fuerst, Wyatt, and van de Wetering (2013), that discuss the implications of energy efficiency investments and certificates on real estate values. All these articles focus on how PACs can impact DCF parameters (e.g.…”

Section: Current Focus Of Real Estate Investment Analysismentioning

confidence: 99%

Theory of valuing building life-cycle investments

Vimpari

Junnila

2015

Building Research & Information

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The physical adaptability of buildings is very important in today's fast-changing business environment. The actors who invest in long-term adaptability are positioned better to the changes during the life cycle of a building. This conceptual paper argues that the current dominating real estate (property) investment analysis theories do not accommodate enough building design-related information (i.e. physical asset characteristics), which results in long-term loss of competitiveness and unsustainable use of built environment resources. It is demonstrated that physical asset characteristics can create valuable real options that should be acknowledged in real estate investment analysis and management. The real estate investment literature has not so far been able to produce a widely accepted financial model for justifying life-cycle investments. A theory is proposed here that can be used to value life-cycle investments in buildings. This new theory combines of real options valuation, investment analysis and building component life-cycle design. These themes are used to formulate a conceptual framework for valuing life-cycle investments. The framework is intuitive and transparent, and it can be easily added to current spreadsheet investment analysis tools.

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Is intrinsic energy efficiency reflected in the pricing of office leases?

Cited by 36 publications

References 13 publications

EPC Green Premium in Two Different European Climate Zones: A Comparative Study between Barcelona and Turin

EPC Green Premium in Two Different European Climate Zones: A Comparative Study between Barcelona and Turin

Energy-related standards and UK speculative office development

Theory of valuing building life-cycle investments

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