Study Shows Strong Links Between Green Buildings, ROI

A groundbreaking study of a decade’s worth of data from 300 Bentall Kennedy-managed office properties has established a conclusive link between sustainability and stronger ROI. SVP Giselle Gagnon tells us more.

Previous studies have suggested a similar correlation, but Giselle, who heads up Bentall Kennedy's Strategic Resources Group, notes that none have been this in-depth. Conducted by Maastricht University’s Dr. Nils Kok and University of Guelph’s Dr. Avis Devine, the Bentall Kennedy study looked at 10 years of financial performance data across a portfolio of 58M SF (24M SF of it in Canada, including 1140 West Pender St, below). “It was a six-month exercise simply to collect all the data needed to support the research project analysis,” Giselle says.

Investors want evidence to validate the economic merits of investing in sustainable buildings, says Giselle, and this research provides it. The study included lease data (rents, rent concessions, lease renewal rates), and building information (occupancy rates, tenant satisfaction scores, energy/water consumption, green building certifications). It found net effective rents, including tenant incentives, average 3.7% higher in US LEED-certified properties than in similar non-certified buildings. And rent concessions for LEED and BOMA BESt buildings in Canada are on average 4% lower than in similar non-certified buildings.

Occupancy rates were 18.7% higher in Canadian buildings with both LEED and BOMA BESt certification (like 200 King St W in Toronto, above), and 9.5% higher in US buildings with Energy Star certification, than in buildings without certifications, the study found. And tenant renewal rates were 5.6% higher in Canadian buildings with BOMA BESt Level 3 certification than in buildings with no BOMA BESt certification. “This provides us with the opportunity to say to our investors there are strong linkages between green buildings and higher income and value,” says Giselle.

Here’s Bentall Kennedy-managed 1900 16th St in Denver, a rare office building that boasts triple LEED certification. The study shows greening buildings is not just socially responsible, but as CEO Gary Whitelaw notes, it’s also a way to “enhance property income for our clients.” And by “opening the hood” and sharing such a deep pool of proprietary property data with the research team, Giselle adds, her firm, a longtime green leader, has taken a huge step toward making the business case for sustainability. “Now we can say with a lot more confidence, OK we’re doing the right thing, let’s continue down this path.”