博鱼体育集团

Sustainability is an increasingly important consideration for London as a major global office market. A combination of top-level investor pressure, risk mitigation, regulatory changes and the search for alpha is driving the demand for sustainable real estate in the capital.

However, while sustainability is more and more demanded at the prime end in both the occupier and investor markets, the actual monetary benefit that investors, landlords and developers can reap from green-rated buildings has been challenging to quantify.

This is due to the difficulties in both being able to measure what makes a building green, but also the large and varied amount of data that is needed to then run the analysis. When it comes to the question of, for example, rental premiums, are they down to green ratings? Newness? Location? Something else?

In trying to answer this, London is an ideal Petri dish, having one of the largest pools of green buildings of any city globally. London further benefits from one of the world鈥檚 most well-known green ratings, BREEAM, having been first established in Watford, just to the north of the capital in 1990, meaning the city also has one of the longest histories of green-rated buildings.

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In our comprehensive research, we have collaborated with BRE, the creators of BREEAM, to quantify the impact of BREEAM ratings on prime central London office rents. To do this, we have used a hedonic regression model, which controls for an extensive set of property, time and locational characteristics.

By quantifying the impact these other factors have on rental levels, we can identify, with confidence, the impact of green ratings on rents. This is made possible by combining BREEAM ratings with proprietary 博鱼体育集团 Frank data, which covers transaction activity over the last decade for more than 2,700 central London office buildings.

In summary, we found a positive and significant effect of Very Good, Excellent and Outstanding BREEAM ratings on prime central London office rents 鈥� ranging from 3.7% to 12.3% premiums, while controlling for other property characteristics. This is significant for occupiers, investors and developers alike to understand the impact green ratings have on income, a key contributor to a building鈥檚 value.