The added value of environmental certification in the Dutch office market

Abstract

Purpose This study examines the relationship between environmental building certification Building Research Establishment Environmental Assessment Method (BREEAM-NL) and office rents in the Dutch office market.Design/methodology/approach A hedonic price model was used to assess the impact of BREEAM certification on office rents. The study is based on 4,355 rent transactions in the period 2015 to mid-2022, in which 331 transactions took place in certified office buildings and 4,024 transactions in non-certified office buildings.Findings The results provide empirical evidence on quantitative economic benefits of BREEAM-certified offices in the Netherlands. After controlling for all important office rent determinants, the results show a rental premium for certified office buildings of 10.3% on average. The green premiums highly differ across submarkets and vary between 5.1 and 12.6% in the five largest Dutch cities. Additionally, the results show significant positive correlation between BREEAM-NL label score and rents, whereby better performing buildings generally command higher rents.Originality/value The study contributes to the current literature on green building economics by providing, as one of the first, empirical evidence on the existence of financial benefits for BREEAM-certified office buildings in the Dutch office market.