A 2011 study on the political economy of “green” industrial warehouses found that local political ideology plays a role in rent and occupancy levels. The research was funded by NAIOP and looked at 20,000 industrial warehouse properties across the nation. The study authors found that the effect of environmental certification (such as LEED or Energy Star) on rents and occupancy for industrial warehouses was contingent upon local politics. “Green” certified warehouses in politically liberal areas received rent and occupancy premiums, renting for 10% more than their counterparts. However, environmentally certified warehouses in conservative-leaning areas rented for 20% lower and had 25% higher vacancy than non-certified competing properties in the same area.
The results suggest that environmental amenities in real estate are not valued solely for monetary factors, such as their impact on energy bills. Instead, green features in industrial warehouses appear to be valued (or not) just as much for political purposes, marketing, or other factors. The study also highlights the importance of knowing your market. The authors note that the pattern they found may not hold true in other real estate sectors, and that results might change over time as environmental certification programs grow in popularity.
Click here to view the study article in its entirety.
Everyone is increasingly feeling the pressure of rising energy costs, especially those who own and manage property. The second annual Minnesota Real Estate Journal Commercial Building Energy Summit offered insights into how property owners and managers can take easy steps to decrease energy expenses, regaining control of their buildings and their bottom line.
Many buildings can achieve a 15% reduction in consumption without any capital investment. According to Priscilla Koeckeritz of Energy Print, Inc., a St. Paul based company that provides energy management software and services, energy expenses are rising faster than any other building operating expense, at a rate of 6-8% annually. The 5 million existing commercial buildings in the US spend $200 billion annually to power their facilities. Participation in energy-reduction programs like EPA’s Energy Star can easily result in energy savings of 30%, reducing total energy costs from an average of $2.33 per square foot to $1.63 per square foot.
Conference attendees indicated that they have spent more time tracking energy data in the past year than ever before. Koeckeritz explains that “energy cannot be managed, if energy information is not measured.” Energy Print provides a tool for owners and asset managers that automatically collects consumption data from utilities and normalizes it based on weather conditions. Energy usage can then be compared historically for a property or amongst an entire portfolio, so that investors can target capital expenditures towards their worst performing assets. The “3 C’s of cost, consumption, and carbon” for an entire portfolio can be tracked and reduced from a user-friendly website. Koeckeritz cites that in addition to reducing expenses, building owners who market their efforts properly can see additional return in the form of increased occupancy rates, typically around 4.1% higher for LEED certified buildings and 3.6% for Energy Star rated buildings.