Effect of LEED Ratings and Levels on Office Property Assessed and Market Values

Abstract

This study examines the effect of Leadership in Energy and Environmental Design (LEED) ratings and certification levels on Assessed (AV) and Market Values (MV), while controlling for a property’s characteristics and its location. The overall dataset was developed by combining information from CoStar Group, U.S. Green Building Council (USGBC), and local Assessors/Treasurer. The results indicate that ENERGY STAR designation increases AV and MV substantially. The effect of LEED rating/level on both of these values (AV and MV) can be differentiated based on the level of geographic aggregation. LEED-Existing Building (EB) designation at the Gold level has a strong positive effect on AV, while LEED-EB at the Silver level has a similar effect on both AV and MV. This effect is absent among all LEED-EBs, when controlling only for MSAs. LEED-New Construction at the Gold level has a strong positive effect on MV, while LEED-Core & Shell at the Gold and Silver levels almost doubles that effect on AV, when controlling for MSAs