From an environmental and carbon perspective, green buildings are a must, but builders and landlords want to know how these investments will affect their bottom line. I see a lot of headlines proclaiming that this or that LEED structure will recoup the extra costs of earth-friendlier materials and technologies through energy and water thriftiness. For example, the newly-opened Water Centre in Calgary, Alberta promises to pay for its $43 million price tag in 15 years with 95% daylight illumination and other LEED Gold amenities. Now, a new working paper out of Berkeley's Haas School of Business does some real number-crunching to find that sustainabuildings also bring in more rent.

In the paper, titled, "Doing Well by Doing Good? Green Office Buildings," (pdf) the authors compared 694 LEED or Energy Star certified buildings with nearby un-green buildings. Their results show green buildings earning 6% more in effective rents than their climate-ignorant brethren and raking in more than $300,000 more a year total. The upshot is that green buildings are worth $5 million more on average.

However, this line in the paper deserves note: "The results suggest that the LEED rating has no effect upon commercial rents, but the Energy Star rating is associated with rents higher by 2.8 percent." So why is LEED rating seemingly unrelated to higher rents? I would venture to say that it is because the Energy Star certification is so directly related to energy use, whereas LEED requirements have a host of other benefits, including carbon reduction, which may not be captured in the analysis (or rent decisions).

By the way, the map on pg. 25 of the study showing the geographical distribution of green buildings in the U.S. is worth a look.

This is good news for sustainable buildings and landlords everywhere, some of whom must be stroking their evil mustaches and whispering, "Excellent."