Green Occupancy Equals to Higher Rents and Lower Vacancy Rates

Tenants. Image Source: Premier Real Estate.

Does green occupancy really translate to higher rents and lower vacancy rates? This was a question that CBRE brokerage in San Diego looked into. CBRE investigated green buildings that have either a LEED certification or a Energy Star ratings. LEED Certification is a program certified by the US Green Building Council, where Energy Star ratings are rated by the US Energy Department.

The survey found that as of June 2012, green buildings were only 11.7% vacant. On the other hand, non-green buildings had an overall vacancy of 15.7%. The lease rates were also higher for green buildings, with an average of $2.42 US per square foot per month. Non-green buildings had an average of $2.04 US per square foot rate.

According to CBRE, “Green buildings continue to outperform non-green buildings in the San Diego market.” Majority if not all green buildings are also classified as Class and B—which are buildings that charge higher rent and are known to have the best amenities and are found in the best locations.

For Class A and B non-green buildings, there was only an 18-cent gap in the charges. That is a very small amount, considering the benefits that occupants stand to gain by renting in a Class A and B green building that is only 18 cents more expensive. Occupants of green buildings also enjoy their buildings more, as these buildings are more energy-efficient and have better amenities such as gyms and cafes.

Green buildings in San Diego are also gaining traction, as 18.3 million square feet out of 67.1 million square feet are considered green. Landlords have made it a point to upgrade their buildings with energy-efficient systems not just to provide comfort to tenants but also to lower operating costs in the long run.

More importantly, tenants are starting to demand green buildings. Norsteel understands just how valuable being part of the green movement is to both tenants and landlords.

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