London’s greenest offices command hefty rent premium
London’s greenest office buildings will command a 12.3% premium in rents, according to a study by Knight Frank.
According to the research, which used data from 2,700 buildings to break down how rental performance is impacted by BREEAM certification, the impact is most stark among buildings rated “Outstanding”.
The rating, which is achieved by less than 1% of workplaces, commands a 12.3% premium, while the next category down, “Excellent”, receives a 4.7% bump in rents. Those rated “Very Good” can expect a lift of 3.7%.
London’s greenest office buildings will command a 12.3% premium in rents, according to a study by Knight Frank.
According to the research, which used data from 2,700 buildings to break down how rental performance is impacted by BREEAM certification, the impact is most stark among buildings rated “Outstanding”.
The rating, which is achieved by less than 1% of workplaces, commands a 12.3% premium, while the next category down, “Excellent”, receives a 4.7% bump in rents. Those rated “Very Good” can expect a lift of 3.7%.
BREEAM certification is the leading global sustainability assessment method for buildings, and is used for more than 3,000 buildings in London alone.
Kate Horton, London capital markets partner at Knight Frank, said: “These results are very compelling from a capital markets standpoint. Identifying a clear rental premium for high-end BREEAM ratings is a big factor for investors who are looking to differentiate their buildings from the rest of the market.”
She added that a clearer “green value premium” should start to emerge “as ESG continues to rise quickly up the agenda for both occupiers and investors”.
BREEAM’s head of building performance services, Shamir Ghumra, said: “This further highlights the role property investors can play in helping the UK transition to net zero. Using such schemes will be crucial as the country continues with its decarbonisation drive.”
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