Green Certification Can Increase a Building’s Real Estate Value

You will probably notice a common factor in the finest buildings in San Francisco: a plaque at the entrance proudly declaring its green certification status. In fact, no less than 35% of San Francisco’s commercial buildings are certified either by LEED or/and Energy Star.

But what is the value of a green certification, and why should all commercial buildings follow San Francisco’s building owners?

The answer is simple: a green label can boost a building’s real estate value. An extensive study conducted by property research firm Nils Kok showed that companies are actively seeking green buildings for their employees and are willing to pay more rent than buildings that are not certified. Green buildings also have a sale rate that is 16% higher than other buildings.

But the increased real estate value of buildings does not stop at commercial buildings. Even green residential buildings also stand to benefit in terms of increased real estate value, as proven by another study conducted by Nils Kok and Matthew Kahn of the ULCA Luskin School of Public Affairs utilizes statistics from 1.6 million houses in California. From 2007 to 2012, the two studied the price implications caused by three green certifications: Energy Star, LEED for Homes, and GreenPoint Rated.

The study found that a green certification can increase the value of a home by as much as 9% compared to an identical home without a label. An average sale price of a home in California is around $400,000 and a green certification can bring that value up by as much as $34,800!

The study also revealed that green buildings are virtually a must in areas that have hotter climates, because a primary consideration of residents in those areas is energy efficiency. Also, a green label is more common in areas where residents are more environmental aware, judging by their green policies and the popularity of green vehicles.

As more families are looking to own houses and the real estate market is booming, there is every reason why you should secure a green label for both commercial buildings and residential buildings if you want to make the most out of the sale.

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