Green Star rating results in rent premiums

A new study into the financial performance of green office buildings in Australia has found that Green Star-rated buildings deliver a 12% ‘green premium’ in value and a 5% premium in rent.

The Australian Property Institute and Property Funds Association’s ‘Building Better Returns’ report, authored by Graeme Newell and John MacFarlane of the University of Western Sydney and Dr Nils Kok of Maastricht University, analysed a portfolio representing 51% of the total office market floor area in Sydney and Canberra, which included 206 NABERS-rated office buildings and 23 Green Star-rated buildings.

The Green Building Council of Australia (GBCA) was represented on the ‘Building Better Returns’ Steering Committee, as was the NSW Office of Environment and Heritage, the Australian Government Department of Climate Change and Energy Efficiency and the Investor Group on Climate Change.

The report found a ‘green premium’ was evident for both Green Star-rated and NABERS Energy offices, with 5 star NABERS Energy buildings attracting a 9% premium in value.

The report also found that Green Star and NABERS Energy buildings delivered other benefits, such as reduced vacancies and outgoings.

“This research finds both Green Star and NABERS Energy buildings deliver improved gross rents and values,” says the Chief Executive of the GBCA, Romilly Madew.

“A range of international reports have confirmed that green buildings positively impact everything from operational costs to return on investment, and from reputational equity to productivity.

“However, up until now, we haven’t had enough data to demonstrate what we’ve known anecdotally for some time.

“This report provides further evidence of why Green Star has been embraced by the commercial property industry.

It’s all there in black and white: Green Star makes good business sense,” Madew concludes.

The report can be downloaded from: www.nsw.api.org.au.