Spillover effect of LEED-energy star certified office buildings on market values in New York city

Abstract

Although the LEED and Energy Star certifications are designed primarily to protect the natural environment and promote the quality of life, they also produce positive economic benefits for the stakeholders of certified buildings. These economic benefits are expected to extend to some extent to their immediate neighboring buildings, thus encouraging growth in the local real estate market and partially satisfying the triple bottom line of sustainability. This study examined the impact of a LEED and/or Energy Star certified office building on the median unit market value of neighboring buildings in New York City based on five different proximity bands relative to the certified office building. Both spatial and statistical methods were utilized. LEED and/or Energy Star certified office buildings were found to exert various spillover effects on the median unit market value of buildings in each sub-neighborhood depending on the proximity of each building to the LEED and/or Energy Star certified office building. These spillover effects support the mutual growth of LEED and/or Energy Star certified office buildings and their neighborhoods from a socio-economic standpoint.