November 14, 2005

Study confirms link between building value and green features

A new Canadian study of green buildings confirms a clear link between the market value of real estate and its environmental friendliness. The study, titled Green Value, says green buildings cost less to operate and maintain, earn higher rents and selling prices, attract buyers and tenants more quickly, benefit occupiers and have reduced tenant turnover.

The study was co-sponsored by the Real Property Association of Canada (RealPac) in conjunction with nine government and private-sector organizations in Canada and the United Kingdom. RealPac executive director Michael Brooks commented, "We will see increased tenant demand for green buildings in Canada, both as a result of Kyoto compliance concerns, and as pedigree that buildings will increasingly need to have." Canadian governments are seen as a key early mover into green buildings, and Fortune 500 companies are also likely to be early adopters.

The case studies involved a qualitative assessment of the impact on the value of green buildings in Canada, the U.S. and the U.K. Building were selected to provide a range of locations, building types and uses. Interviews conducted with building developers, owners and occupants focused on the benefits of their green buildings compared with comparable conventional buildings, translating these benefits in terms of valuation.

The study found that green buildings can:

attract grants, subsidies and other incentives to promote environmental stewardship, increased energy efficiency and reduced greenhouse gas emissions;

improve business productivity for occupants; and

benefit occupants more than the underlying asset cost or value.

The report points out that green buildings could be even more profitable if the enhanced staff productivity resulting from green features or strategies were more widely recognized. It acknowledges, however, that the true value and potential of green buildings will be fully realized only if there are more of them.

The Green Value report, including executive summary, full report and case studies, is available on the RealPac Web site, www.realpac.ca. More information is also available from Brooks at RealPac, 416/642-2700, ext 225. RealPac is a national real property association whose members include leading Canadian real estate investment trusts, publicly traded and large private companies, banks, brokerages, crown corporations, investment dealers, life companies, and pension funds. The group works to influence public policy, educate government and the public and ensure stable and beneficial real estate capital and property markets in Canada.

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