Why Commercial Property is More Valuable when it’s Green

RICS (2022) | Asset Management, Risk Mitigation, Valuation

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High-profile acquisitions indicate a growing trend: investors are increasingly factoring in the value of sustainability. These deals indicate that green-certified buildings can command premiums in rental income, occupancy rates, and sales prices. While the debate around the existence and scale of the "green premium" continues, mounting anecdotal and empirical evidence is shifting industry sentiment.

Research from NAREIT in the U.S. shows that green-certified buildings can achieve sales values up to 31% higher and occupancy rates 23% better. Knight Frank's proprietary model determined that green-rated offices in major cities experienced sales premiums of 8–18%, with central London exhibiting a 13% rental uplift and a 10.5% sales premium for BREEAM-certified buildings.

Four key drivers are driving the acceleration of ESG integration: corporate occupier demand, investor competition, lending risk tied to climate-negative portfolios, a…