A Market-Driven Green Office Building Index

This paper reports on the development and potential implementation of a new green office building rating index intended for building owners and real estate office portfolio managers. It provides a market-driven green scoring method applicable to most US office buildings. The underlying index data draws from office tenant surveys and hedonic analysis of rent rolls. Industry leaders provided qualitative input regarding its use in practice. This paper details the development and first steps towards implementation of the scoring system. A variety of proposed models, including some that separate out LEED and non-LEED buildings, are analyzed, discussed, optimized, and tested on a captive sample of 197 US office buildings. A reasonable model shows that about forty percent of the non-LEED buildings score higher on this scoring system than the lowest scoring LEED-certified building. This indicates a market may be present for this type of measurement tool; office and portfolio managers could potentially use this index to market sustainability features in their buildings to tenants and obtain a market premium for green features in their buildings.