|Abstract: ||With issues such as energy crises, climate change and environmental degradation becoming evermore prevalent on national and international levels, industrialized societies are beginning to take heed of the impact they are having on the natural environment and we are beginning to see movements towards socially and environmentally responsible decision-making. With the impact that buildings have on the environment, it is important to understand what barriers are preventing or slowing investment in socially and environmentally responsible property.
The present study was conducted to determine whether LEED certification has a significant impact on the market value of office buildings in Toronto, Ontario – value determined by the average net asking rent for each building. For some 68 subject and control buildings, we matched information on the net asking rent for 16 LEED certified (subject) buildings to 52 otherwise comparable properties (control buildings). Using ordinary least squares (OLS) analysis, we looked to find what relationship exists between net asking rent and the LEED label. Controlling for other variables historically shown to have an impact on property value, we expected the results of this study to determine whether there is a business case for LEED certification in the downtown Toronto office market.
The results of the study have shown that LEED certification has had no impact on the market value of the sample of office buildings in Toronto. This is a surprising result, given the growth in the number of LEED buildings in Canada, but interviews with three senior executives in the industry have helped to provide insight into this trend. It seems that with time LEED will likely have an impact in this market, but it hasn‘t arrived yet.|