Rents for sustainability-certified office buildings in continental Europe are 21% higher, on average according to a survey by CBRE. The firm found that in Copenhagen the premium was as high as 29%.
In Barcelona the figure is 27%, with 26% in Amsterdam and 18% in Madrid and Lyon.
CBRE said the rent premium is mainly attributable to the benefits associated with sustainable buildings, such as lower operating costs, enhanced corporate reputation and the increased comfort of occupants, their well-being and productivity – benefits which the firm said can be monetised.
Conversely, CBRE’s findings demonstrated that there is also considerable potential for a ‘brown discount’ for properties with weaker sustainability performance.
The research also showed that certified buildings had lower vacancy rates and higher leasing velocity than the average for the local market as a whole. This phenomenon was common continent-wide but CBRE said the performance gap was particularly striking in France.
In Paris and Lyon, the vacancy rate on certified stock was as low as 1.5% and 0.5%, respectively (as of H1 2021), compared with 6.7% and 4.8% for the entire market. The gap in vacancy rates is expected to widen as the adoption of ESG agendas increases the preference for certified office stock.
“The report demonstrates that the benefits associated with sustainable buildings are capitalised into market value,” said CBRE head of research continental Europe Jos Tromp. “In the last five years, certified office building take-up has risen from 24% of the market to 31% in the main markets across Europe, confirming that leasing activity is increasingly linked to ESG agendas.”
Tromp added the caveat that buildings with strong environmental performance tend to be newer, state-of-the-art assets which can make pinpointing the extent of the rental premium attributed to sustainability certification challenging.
To compensate for this the firm said it was necessary to base the analysis on the largest pool possible. The sample included 26 million sq m of certified space which represented 20% of the total sample of 128 million sq m. The firm also examined 22,000 leases of which 2,000 were for certified buildings.