Sustainable Building Certification and the Rent Premium: A Panel Data Approach

This paper investigates whether obtaining sustainable building certification entails a rental premium for commercial office buildings and tracks its development over time. To this aim, both a difference-in-differences and a fixed-effects model approach are applied to a large panel dataset of U.S. office buildings in the period 2000-2010. The results indicate a significant rental premium for both Energy Star and LEED certified buildings. Controlling for confounding factors, this premium is shown to have increased steadily from 2006-2008, followed by a moderate decline in the subsequent periods. The results also show a significant positive relationship between Energy Star labeling and building occupancy rates.