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The Journal of Sustainable Real Estate

The Journal of Sustainable Real Estate The Journal of Sustainable Real Estate Volume 1 Number 1 Editorial Board Edit o r Norm an Mil le r Univ ers it y o f S a n Di e g o Ass o ciate Edi t o r Danie l Ko hlhep p Gra nit e Road , LLC Mic hel Bo udria s Hele n N e ill Univ ers it y o f S a n Di e g o Univ ers it y o f N evada – L a s Ve g a s Ti m Dix on Andrew J . Nels o n Oxfo rd Bro ok es Un iv ers i t y RREEF Real Est at e Fra nk Fu ers t Gary Piv o Univ ers it y o f Read ing Univ ers it y o f A r i zona Rebecca Hen n Robert Si mo ns Univ ers it y o f M i chig an Clev ela nd St ate Un iv ers i t y Jerr y J a ckso n Gra nt Thra ll Te xas A& M Univ ers i t y Univ ers it y o f F l ori d a John Ki lp atri c k Ron Thro upe Gre en fiel d A d viso rs LL C Univ ers it y o f D e nv e r Dan Ko hlhep p Bing Wang Gra nit e Road , LLC Harvar d U n iv e r s i t y Stev e Lap osa Elain e Worz al a Pri c e Wa t erh ouse Coopers Clems on Un iv er si t y Richard Lo ope Angela Gu ggemos Ari zo na St ate Un iv ers i t y Colora do St at e U n iv ers i t y Isa ac Me gbolugbe Nil s Kok Johns Ho pkins Univ ers it y Maas tr i cht Univ ers i t y Norm Mi l ler Gra nt Aust in Univ ers it y o f S a n Di e g o Inst i tute of Gre e n Pr o fes si onal s Contents Preface Acknowledgements Introduction 1 International Comparison of Sustainable Rating Tools Richard Reed, Anita Bilos, Sara Wilkinson, and Karl-Werner Schulte 23 Effect of LEED Ratings and Levels on Office Property Assessed and Market Values Sofia V. Dermisi 49 An Investigation of the Effect of Eco-Labeling on Office Occupancy Rates Franz Fuerst and Patrick McAllister 65 Green Buildings and Productivity Norm G. Miller, Dave Pogue, Quiana D. Gough, and Susan M. Davis 91 How Risky Are Sustainable Real Estate Projects? An Evaluation of LEED and Energy Star Development Options Jerry Jackson 107 Removing Market Barriers to Green Development: Principles and Action Projects to Promote Widespread Adoption of Green Development Practices Christopher Choi 139 The Effect of State and City Green Policies on the Market Penetration of Green Commercial Buildings Robert A. Simons, Eugene Choi, and Donna M. Simons 167 Sustainable Real Estate Development: The Dynamics of Market Penetration John Goering 203 Sustainability of Sustainable Real Property Development Kwame Addae-Dapaah, Liow Kim Hiang, and Neo Yen Shi, Sharon 227 Step-by-Step to Sustainable Property Investment Products Christoph Rohde and Thomas Lu ¨ tzkendorf Industry Insight 241 The Green Building Impact Report Rob Watson 245 Personal Perspectives on LEED Management and Investment Jason Tuomey J O SRE Vo l . 1 N o . 1–2 0 0 9 The Board of Directors of the American Real Estate Society e xtends its dee p appre cia tio n to: Uni v ersity of San Diego, Burnham Moores Real Estate Center for its su pport of th e edit ori al fu ncti ons of the Am eri c a n Rea l Est a t e S o cie ty; Florida Gulf Coast Uni v ersity, for its support of the editorial fu nctio ns of the Am eri c a n Real Est at e S o cie ty; Florida Inter national Uni v ersity, for its support of the Di re cto r o f Publi cat ions fu ncti ons of the Am eri c a n Real Est at e S o cie ty; and Kennedy W ilson, for its support of the Ex ecutiv e Director functions of the Ame ri can Real Es ta te Soci ety. 2009 Memb e rsh i p Academic ($125), Professional ($275), Academic Library ($ 550), Corp ora te Library ($550), Student or Retired Academic ($85), Corporate ($ 550), Sp onsor ($1,500), Re gent ($3,000) and President’s Council ($6,000). Checks sh ould be made payable to ARES and correspondence should be addressed to: Dia ne Quarles, Clemson Univ ersity, Colle ge of Business & Beha vioral Sc ience , D e pt. of Finance, 424 Sirrine Hall, Clemson, SC 29634-1323. Ph one: 864-6 56-1 373; F a x : 864-6 56-7 519. Websi te : w w w.AR ESn et. org o r e q uarl e@c l ems on.ed. The Journal of Sustainable Real Estate (1949-8276) is published an nually by the American Real Estate Society at Clemson Univ ersity, School of Busin ess and Beha vioral Science, Department of Finance, 424 Sirrine Ha ll, Clem so n, SC 29634-1323. Periodicals postage paid at Clemson, SC and at additi onal mailing offices. Postmaster, please send address changes to: Dia ne Qu arl es, Clemson Univ ersity, School of Business and Beha vioral Sci ence , Dep art me nt of Finance, 424 Sirrine Hall, Clemson, SC 29634-1323. Changes of addre s s , claims and all correspondence dealing with subscriptions should be se nt to Diane Quarles, Manager of Member Services, Clemson Univ ersity, S c hool of Business and Beha vioral Science, Department of Finance, 424 Sirrine Hall, Clemson, SC, 29634-1323. Phone 864-656-1373, F a x 864-656-7519 or emai l equarle@clemson.edu. F or more information, visit our we bsi te : w w w. ARES net .or g . 2009 American Real E state Society President’s Council Appra is al In stit ute LaS al le Inv e s tme nt Man agem en t Corn ers tone Re al Es tat e Advis ers , I n c . Pri ce w a ter house Cooper s CoSta r G r oup Pru dentia l R e a l E s tat e I nv es tors Insti tutio nal Re al Es tat e, Inc. Regents Ar g u s NYU Sch ack Insti tute of Real Es tat e CCIM In stitu te Roulac Gl obal Pla ce s L L C Cre sen t Res ource s UBS Fre ddie Mac Uni v ers ity of Cin cinnat i C o lle g e of Busines s Nat ional As socia tio n o f R e a l E s tat e Inv e s tmen t Tr ust s ( NA R E I T ) Zic klin Sch ool of Busines s – Bar u c h Colle g e Sponsors Bail ard , I n c . GIC Re al Es tat e P t e . L t d . Blac kro ck Fi nanci al Man agem ent Gra duat e Sch ool of Re al Es tat e Studie s – KonK u k Un i v ers ity BRE Pr oper ti es Jero me Ba in Real Es tat e Insti tute at Burn ham-M oore s C e nter fo r Rea l Flori da Inte rn atio nal Un i v er si ty Est ate – U n i v ers ity of Sa n D i e g o Johns Ho pkins Car e y Busin ess Sc hool CBRE Eco nomet ri c A d visors K e n nedy Wi lson Cengag e L e a rn ing NA I O P Res ear ch F oundat ion Cente r for Rea l Est ate Dev e l opmen t a t Clem son Un i v er sit y Nat ional As socia tio n o f R E A LT O R S ( NAR) Colvin In stit ute for Rea l Est ate Nat ional Inv estme nt Ce nte r for the De v elopme nt – U n i v e r s ity of Mary lan d Sen iors Housin g & Car e Indust ry (N I C ) Counsel ors of Re al Es tate (C RE ) Nat ional Multi Ho using Counci l ( N M H C ) Dea rb orn Re al Es tat e Educa ti on Real Ca pita l A n aly tics Di v idend Ca pita l R e sea rc h L L C The Rea l E s t a t e Cen ter at De P a ul Eme ra ld Gr o u p Publi shing Li mi ted Uni v ers ity 2009 Fellows o f the American Real Estate Society Endowed Doctoral Sponsorships Youguo, Lu c y, M i c h e l le, and Mi a Lian g Gle nn R. an d Jan H. Muel ler Ther on R. and Su san L. Ne l s o n A r t h u r L . S c h wart z H e l e n B e c k e t t S c hwart z Mich ae l J . a n d Vi ck y L . Sei ler Benefactors Jose ph D. Al ber t Seu ng Wo o S h i n Jam es Ma dis on Un i v er si ty K onkuk Un i v er si ty Step hen A. Py hrr K e n ned y W il son Distinguished Fellows Andre w C . Flora nce Norm an G. Mi ller CoSt ar Gr oup Uni v ersi ty of San Die go Kar l L . G u nter man n Mau rici o R o driguez Ari zona Sta te Un i v er si ty Te x a s C h rist ian Uni v ers ity Home r H o y t I n stit ute Kar l-Wer ner Sc hult e Nort h P al m B e a c h , FL Uni v ersi ty of Re g e n s b u r g A l e x K la ts ki n F orsg ate Indust ria l P a r t ner s Jam es D. Shil ling D e P a u l U ni v e rs it y Mar k L. Le v ine Uni v ersi ty of Denv e r Rober t A . S i mons Jose ph B. Li psco mb Cle v e l a n d Stat e Uni v ers ity Te x a s C h rist ian Uni v ers ity Jay Spi v e y Mar c A. Louar gan d CoSt ar Gr oup Sal tas h P ar tn ers LLC Elai ne M. Wo rza l a Chri stopher A. Ma nnin g Lo yola Mar ymount Uni v ers ity Clem so n U n i v e r sit y Fellows D a vi d O . A de di j i LaS al le In v e s tmen t M a n agem en t Bode Ad edij i P ar tner sh ip Char les Car ter Ran dy I. An der so n Florida At lan tic Un i v er sit y Uni v ersi ty of Cen tral Fl orida Lijian Ch en M i c h a e l A . A ni ke ef f U B S R ealt y I n v e s t o r s Johns Ho pkins Un i v er si ty Ping Ch eng John S. Ba e n Florida At lan tic Un i v er sit y Uni v ersi ty of Nort h Te x as Pet er Chin lo y Edw a r d A . Bar yla M c Le an, VA Eas t Te nnes s e e Stat e U n i v ers ity Mar vin F. Chri sten se n John D. Be nja min RRE EF Ame ric an Un i v er si ty Jose ph W. Co lem an Donal d H . B l e i c h Wrig ht Stat e U n i v ers ity Cal ifo rnia Stat e Uni v ers ity – N o r t hridge Gle nn E. Cre lli n WaldoL.Born Wa s hin gton Stat e U n i v ers ity Eas ter n I l linois Un i v ers ity Char les G. Da n nis Ste v e n C . B o uras sa Cro sso n D a nnis Uni v ersi ty of Louisv ille Jam es R. De Li sl e M. Go rdon Br o w n Uni v ersi ty of Wa s h ington Eindho v e n U n i v ers ity of Te c h nology Geo f f r e y Dohrm an n Nic holas Buss Insti tutional Re al Es tat e Inc. In v esc o Rea l Est at e D a vi d H . D o w ns Todd A. Ca nter Vi r ginia Co mmonwe al th Un i v er si ty 2009 Fellows ( con ti nu ed ) Donal d R . Eple y Jose ph L. P a g liar i, Jr. Uni v ersi ty of South Al ab ama Uni v ersi ty of Chic ag o J. Te rre nce F a r ris Rudy R. Ro binson, II I Clem so n U n i v e r sit y Aust in Va l uat ion Co nsulta nts Mich ae l G a t el y Step hen E. Ro ulac Corn erst one Re al Es tat e A d viser s, LLC Roulac Gl obal Plac es LLC John L. Gla sc ock Ronal d C . R u therf ord Uni v ersi ty of Cam brid ge Uni v ersi ty of Te x a s – San An tonio P a u l R. Go eb el Sea n P. Sal ter Te x a s Tec h U n i v ers ity Middle Te nnes se e S t a t e Un i v er si ty Jac ques Go rdon Da v i d S c rib ner LaS al le In v e s tmen t M a n agem en t Bar uch Co lle g e Han y G u i r guis Stac y S i rman s Man hatt an Co lle ge Florida Sta te Un i v er si ty Ronal d Spah r Oti s E . H a c k e t t O t i s E . H ac k e tt & A ss oc ia te s Uni v ersi ty of Mem phis Thomas W. Ha m ilton Thomas M. Spri nger Uni v ersi ty of St. Th omas Clem so n U n i v e r sit y W ill iam G. Har din, II I Simon A. Ste v e n son Florida Inte rnat ional Un i v er si ty City Uni v ers ity – L o ndon Jac k H a r r i s Mar k Sunder man Te x a s A & M Un i v er si ty / R e t ired Uni v ersi ty of Mem phis Da v i d H a r riso n Rober t W. Tay lor Te x a s Tec h U n i v ers ity Vi r ginia Co mmonwe al th Un i v er si ty Mich ae l J . H i ghfiel d Step hen F. Thode Miss is si ppi Stat e U n i v e r s i t y Leh igh Un i v ers ity Aar t C . H o rdijk Gra nt I. Thral l Roz Va st goed inde x Uni v ersi ty of Florid a Thomas O. Ja ck so n Ron Th roupe Te x a s A & M Un i v er si ty Uni v ersi ty of Denv e r K e n H . Johnso n Zhong Y. Tong Florida Inte rnat ional Un i v er si ty U.S. De par tmen t o f the T r ea s ury P a u l L. Jo nes Ray mond G. Tort o Pyram id Re a lty Gro up, Inc. Torto Wh ea to n Res e a r c h G. Do nal d J u d Ray mond Y. C. Tse Uni v ersi ty of Nort h C a r o lina – Gre en sb oro Hong K o ng Inst itu te of Rea l Est at e Ronal d W. K a ise r Jam es R. Va le nte Bai lar d, Inc. K e n ned y A s s o cia tes Ste v e n D . K a p plin K o Wang Uni v ersi ty of South Flo rida — Emer itu s Bar uch Co lle g e / C U N Y John Ki lpat ric k Court Wa s h b urn Gre en fiel d A d viso rs Han co ck T i mber Re s ource GR P Phillip T. K o lbe H. Sh elt on We e k s Uni v ersi ty of Mem phis / R e t i red Florida Gu lf Co as t Uni v ersi ty S. Ne al Kr ie g e r Mar got We i nstei n Arc hon Gr oup MW Lea d ers hip Co nsu ltan ts Ste v e n P. Lap osa Rober t M . W h ite, Jr. Colora do St at e U n i v e r s i t y Rea l C a pita l A n a l ytics , Inc. Emil Ma l izi a John E. W ill iam s Uni v ersi ty of Nort h C a r o lina – Chap el Hi ll Moreh ouse Co lle g e Asi eh Man s o u r Rich ar d W i nco tt RRE EF Price w a t e r house C ooper s John F. McDonald Dan iel T. W i nkler Roose v elt Uni v ersi ty Uni v ersi ty of Nort h C a r o lina – Gre en sb oro W ill ard McI ntosh Lar ry E. Wo f f ord Uni v ersi ty of Cin cinnat i Uni v ersi ty of Tulsa Jam es Mc K e l lar Zhonghua (Ge or g e ) Wu York Uni v ers ity Florida Inte rnat ional Un i v er si ty Isaa c M e g bolugbe Char les H. Wu rtz eb ac h Johns Ho pkins Un i v er si ty Hen der so n Glo bal Inv est ors Iv an J. Mi est ch o vich , J r. Jam es Yo ung Uni v ersi ty of Ne w O r lea n s Uni v ersi ty of Auck lan d Gra em e N e w e l l Leo nard V. Zu mpan o Uni v ersi ty of We s t ern Sydne y Uni v ersi ty of Ala bam a Advisor y Board Ray Ander s o n Marc Louarg and Inte rf a c e Glo bal Sal tas h P a r t n ers Sco tt An ders L. Hunte r L o vin s Univ ers it y o f S a n Di e g o Natu ra l Cap ital ism So lu tions (N C S ) Aaro n Bin kle y Asi eh Ma nso ur AMB Pr o pert y Corp ora ti on RREEF Stu art Bro dsk y Sco tt Mu lda v i n GE Re al Es ta te The Mu lda vin Compan y, In c. John Crews Da vid Po gue Jones Lan g LaSa ll e CB Richar d Elli s Dale De kk er Richard Ree d Dekk er / P e r i ch/S a batin i Deak in Un iv ers i t y Bri an Du nbar Mark Robin so n Colora do St at e U n iv ers i t y Hin es Richard Ep ste in Jay Sp iv e y RNL Desi gn CoSta r Andrew F l ore nce Leanne Tobias CoSta r G r oup, In co rp orat ed Mala chit e L L C Doug Ga tli n Cathy Tu rner U.S. Gr ee n Build ing Council New Build ings In st itu te (N B I ) Lydia Ja co bs-H o r t o n B. Ala n Whits o n Pro cte r & Ga mb le RPA Kent Jeff r e y s Sal ly Wi lso n Inte rn ati onal Council of Shoppin g CBRE Centers Jim Yo ung Da vid Jel lis o n Realco mm Libert y P r oper t y Tr u s t Jerr y Yu dels on Ste phen Ka pp Yudels on As s oci ate s Calif o rnia Cente r f o r Su sta inable Ener g y Da vid Lore nz Lore nz Pr o pert y A d viso rs Preface The quotes below by leaders like Al Gore and Barack Obama set the tone for why we need more research in the area of sustainability, particularly as applied to the field of real estate. We must get it right and we must refrain from biases that serve particular agendas. This independent journal, the Journal of Sustainable Real Estate, the first of its kind in the United States, calls upon those interested in fostering truth surrounding the myriad questions of how to become more efficient, healthier, and more productive while recognizing that economics and regulation will drive the market, not environmental evangelists. Those of us focused on real estate, which encompasses where we live, work, shop, and recreate, may not be able to determine if ideas like clean coal are realistic but we can and should investigate the economics driving the market, the true costs, direct and indirect, the management strategies that will support better user and owner decisions, and the state-of-the-art in terms of best practices. These are the types of questions we hope to address in this inaugural issue of the Journal of Sustainable Real Estate. Norm Miller Editor Journal of Sustainable Real Estate ‘‘By making buildings and homes more efficient, ramping up renewable energy generation, constructing a unified national smart grid, and transitioning to clean and affordable plug-in cars, we can address our country’s economic and national security challenges....In nation after nation, leaders have concluded that they must design a green stimulus and build the infrastructure for renewable sources of energy and put people to work retro-fitting homes and buildings with CO reducing insulation and windows and lighting and more efficient technologies. We can revitalize our economy, increase our energy security, and do our part to cut global warming pollution, all at the same time. We’re committed to changing not just light bulbs, but laws. And laws will only change with leadership.’’ Al Gore, 2007, Nobel Peace Prize Winner. ‘‘For our economy, our security, and the future of our planet, I will set a clear goal as President: in ten years, we will finally end our dependence on oil from the Middle East. Washington’s been talking about our oil addiction for the last 30 years...Now is the time to end this addiction, and to understand that drilling is a stop-gap measure, not a long-term solution. As President, I will tap our natural gas reserves, invest in clean coal technology, and find ways to safely harness nuclear power. I’ll help our auto companies re-tool, so that the fuel- efficient cars are built in America. I’ll invest 150 billion dollars over the next decade in renewable energy—an investment that will lead to new industries and five million new jobs that pay well and can’t ever be outsourced.’’ August 27, 2008, Barack Obama. ‘‘... to truly transform our economy, to protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy the profitable kind of energy. So I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America. And to support that innovation, we will invest $15 billion a year to develop technologies like wind power and solar power, advanced biofuels, clean coal, and more efficient cars and trucks built right here in America.’’ February 24, 2009, President Barack Obama. Acknowledgements We thank the CoStar Group and the support its CEO Andrew Florance for funding this journal in full including prizes. We want to make it clear that while CoStar has provided funding to us and data to many researchers, they have always provided total independence and never asked to see any results prior to publication. I am also deeply indebted to Myla Lorenzo-Wilson, who has worked tirelessly on all the communication with authors, provided content and cover designs, and otherwise managed the entire journal and to the Burnham-Moores Center for Real Estate for their support of this journal. Melissa Sharick, a University of San Diego Master of Science in Real Estate student, also provided valuable research support. This is the first of many issues until such time that sustainable real estate becomes so mainstream that a separate journal is not needed. While it is a peer-reviewed academic journal, we may on occasion accept summaries of prior work or papers published elsewhere in order to disseminate work or perspectives we feel are important. In this vein, there is an Industry Insight section of un-reviewed work that provides some industry perspective. We know that ambitious academics must work hard to publish in the most well known and respected journals and, as such, a few colleagues whom I had hoped would contribute to this journal have sent their work to more traditional economic and real estate outlets. We recognize it will take time to become known and cited via the traditional economic literature route, but we expect more viral circulation of papers accepted here and will post all accepted papers on our website www.josre.org, which is also generously hosted by CoStar. So thank you to all who have contributed and to those whose papers were not accepted, please keep submitting your papers for review, and we will try and provide constructive feedback. In this regard, we want to thank our Editorial Board, who reviewed papers, as well as the Advisory Board that provides support and encourages submissions from those engaged in applicable research. On Behalf of Costar Group On behalf of CoStar Group, I am very pleased to welcome the publication of the first issue of the Journal of Sustainable Real Estate, and to congratulate the authors whose original research is presented in this inaugural issue. CoStar Group continues to be an active supporter of academic research involving the built environment. As part of our ongoing efforts to increase awareness of energy efficiency and sustainability issues in real estate, CoStar has joined with the American Real Estate Society (ARES) to sponsor the Journal of Sustainable Real Estate, with the goal of provoking thought and encouraging discussion by publishing a collection of research papers addressing sustainable real estate issues. Of all the core categories of energy consumption in the United States, the built sector is the least efficient and has the largest potential for cost-effective improvement. Addressing the impact that sustainability practices can have on this major business sector is critical. And yet, businesses and public sector organizations face a daunting task in confronting the fundamental challenges presented by climate change, population growth, and resource constraints. If successful, their decisions may lead to the development of market-leading innovations and technologies and drive changes in business practices and consumer behavior needed to integrate sustainability on a large scale and achieve the economic rewards and long-term viability that sustainable principles offer. However, if we are unsuccessful in meeting those challenges, we collectively face increased costs, diminished opportunities, and a very real threat to our future. Above all, confronting what I believe to be one of the greatest challenges of our time requires innovative thinking and fundamentally questioning the accepted status quo in our real estate and business practices. It requires careful consideration of alternatives, clear-eyed analysis of risks, and thoughtful debate on the merits of pursing different strategies for securing our future and achieving our long-term goals. That is why CoStar is proud to sponsor independent research into sustainable real estate. In doing so, our goal is to help in a small but meaningful way those investors, developers, appraisers, lenders, asset managers, government officials, and land use regulators gain a better understanding of the issues associated with sustainable real estate practices. As more and more providers and occupiers of business real estate integrate sustainability into their business strategies, we believe there will be competitive advantages for innovative companies to unlock opportunities and capture profitable growth. Through our support for this journal, our hope is that independent research in this area can spur additional interest and provide the insight and recognition that helps bring about those needed changes. In addition to sponsoring academic research, CoStar offers qualified university professors and their students access to CoStar’s comprehensive online information services for use in their research and in the classroom. More than 1,100 professors and graduate students at more than 100 universities are currently enrolled in the program. To learn more about this program and research resources available through CoStar, I encourage you to visit www.CoStar.com / specialprograms / costaruniversity.aspx. More information on the Journal of Sustainable Real Estate can be found at www.CoStar.com / JOSRE. Andrew Florance Chief Executive Officer CoStar Group From the Director of Research at USGBC Buildings represent a nexus of impacts and opportunities for people and the environment. We have ample documentation of the far-reaching consequences of buildings for energy use, water consumption, greenhouse gas emissions, human health, occupant productivity, and myriad other factors. The magnitude of these impacts means that the design, construction, and operation of buildings also provide far-reaching opportunities to reduce negative impacts and ultimately strive to make active, positive contributions. This convergence of impacts and opportunities means that buildings must be central to any effort to address the sustainability of human activities. Understanding this confluence of impacts and opportunities requires new interdisciplinary approaches and strong connections between theory and practice. As with so many new fields of study, the issues associated with green buildings and real estate do not fit neatly into existing academic categories. Rather, the most pressing and potentially rewarding intellectual challenges are arising at the boundaries and interfaces between disciplines. This new journal provides an urgently needed vehicle for rigorous, peer-reviewed communication for the growing green building research community that strives to bridge these boundaries and create novel scholarship at the confluence of disciplines. Over time, this journal has the potential to become a critical outlet for new work and, consequently, an essential part of the intellectual foundation for this rapidly growing research community. This journal can fulfill this potential by providing a forum for the rigorous exchange of ideas and seeking an editorial balance that blends concepts and empirical observations to advance both the theory and practice of green building. In this inaugural issue, the editors and contributors have demonstrated this balance with an exceptional collection of papers. Going forward, I encourage the research community to reflect on the example set in this issue and the broader goals and aspirations of this new publication. For me, this reflection leads to a belief that this journal will provide an important outlet for findings that will help shape the future of green building. I am looking forward to working together to fill its pages for years to come. Chris Pyke Director of Research US Green Building Council Introduction This issue of the Journal of Sustainable Real Estate begins with a paper by Richard Reed, Anita Bilos, Sara Wilsinson, and Karl-Werner Schulte that compares international sustainable rating tools. While Leadership in Energy and Environmental Design (LEED), developed by the United States Green Building Council (USGBC), is well known in the United States and utilized in over 55 countries, there are many other measurement systems. We can all learn from each other and any model, LEED, CASBEE, BREEAM or Green Star and so forth should be considered works in progress. For example, while LEED is fairly easy to understand and fairly transparent, it may not sufficiently weigh factors that are of most importance in different geographies and climates. Over time, based on the kind of discussion and dialogue presented here and elsewhere, we expect these measurement systems to adapt and improve for their intended purpose. The second paper, by Sofia Dermisi, is on the effect of LEED rating on office assessed values. It is not clear that appraisers, yet alone assessors, understand much about sustainable real estate features and at the same time some jurisdictions are exempting from property taxes sustainable property improvements, so this will remain an important topic for some time. The third paper is by Franz Fuerst and Patrick McAllister on occupancy rates for eco-labeled office property in the U.S. It is an extension of some of their prior work and continues to support the notion that greener property achieves greater occupancy and in turn supports higher values relative to peer property. The fourth paper is a preliminary effort to understand the role of environment on productivity by Norm Miller, David Pogue, Quiana Gough, and Susan Davis. Using a large data set, this study provides some support for an economic payoff for tenants in buildings with better light and ventilation. Next we have a paper by Jerry Jackson on the risk of sustainable real estate projects. We then have a series of papers that touch on the challenges inherent in green development. The first, by Jennifer Wang, discusses removing barriers to green development. A second is by Robert Simons, Eugene Choi, and Donna Meister Simons on state and city green policies and market penetration. The third paper is by John Goering on sustainable real estate market penetration. Finally, a paper by Kwame Addae-Dapaah, Liow Kim Hiang, and Neo Yen Shi, Sharon on the sustainability of sustainable real property development. The last paper is by Christoph Rohde and Thomas Lutzkendorf on sustainable investment products, which is a natural follow-up to the four previous papers. The Industry Insight section contains two pieces that provide some initial industry- based evidence of the impact of green building. We hope this first issue of JOSRE is the springboard for further research and exploration of the green building environment. Norm Miller Editor Journal of Sustainable Real Estate http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Sustainable Real Estate Taylor & Francis

The Journal of Sustainable Real Estate

Journal of Sustainable Real Estate , Volume 1 (1): 1 – Jan 1, 2009

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Publisher
Taylor & Francis
Copyright
© 2009 American Real Estate Society
ISSN
1949-8284
DOI
10.1080/10835547.2009.12091782
Publisher site
See Article on Publisher Site

Abstract

The Journal of Sustainable Real Estate Volume 1 Number 1 Editorial Board Edit o r Norm an Mil le r Univ ers it y o f S a n Di e g o Ass o ciate Edi t o r Danie l Ko hlhep p Gra nit e Road , LLC Mic hel Bo udria s Hele n N e ill Univ ers it y o f S a n Di e g o Univ ers it y o f N evada – L a s Ve g a s Ti m Dix on Andrew J . Nels o n Oxfo rd Bro ok es Un iv ers i t y RREEF Real Est at e Fra nk Fu ers t Gary Piv o Univ ers it y o f Read ing Univ ers it y o f A r i zona Rebecca Hen n Robert Si mo ns Univ ers it y o f M i chig an Clev ela nd St ate Un iv ers i t y Jerr y J a ckso n Gra nt Thra ll Te xas A& M Univ ers i t y Univ ers it y o f F l ori d a John Ki lp atri c k Ron Thro upe Gre en fiel d A d viso rs LL C Univ ers it y o f D e nv e r Dan Ko hlhep p Bing Wang Gra nit e Road , LLC Harvar d U n iv e r s i t y Stev e Lap osa Elain e Worz al a Pri c e Wa t erh ouse Coopers Clems on Un iv er si t y Richard Lo ope Angela Gu ggemos Ari zo na St ate Un iv ers i t y Colora do St at e U n iv ers i t y Isa ac Me gbolugbe Nil s Kok Johns Ho pkins Univ ers it y Maas tr i cht Univ ers i t y Norm Mi l ler Gra nt Aust in Univ ers it y o f S a n Di e g o Inst i tute of Gre e n Pr o fes si onal s Contents Preface Acknowledgements Introduction 1 International Comparison of Sustainable Rating Tools Richard Reed, Anita Bilos, Sara Wilkinson, and Karl-Werner Schulte 23 Effect of LEED Ratings and Levels on Office Property Assessed and Market Values Sofia V. Dermisi 49 An Investigation of the Effect of Eco-Labeling on Office Occupancy Rates Franz Fuerst and Patrick McAllister 65 Green Buildings and Productivity Norm G. Miller, Dave Pogue, Quiana D. Gough, and Susan M. Davis 91 How Risky Are Sustainable Real Estate Projects? An Evaluation of LEED and Energy Star Development Options Jerry Jackson 107 Removing Market Barriers to Green Development: Principles and Action Projects to Promote Widespread Adoption of Green Development Practices Christopher Choi 139 The Effect of State and City Green Policies on the Market Penetration of Green Commercial Buildings Robert A. Simons, Eugene Choi, and Donna M. Simons 167 Sustainable Real Estate Development: The Dynamics of Market Penetration John Goering 203 Sustainability of Sustainable Real Property Development Kwame Addae-Dapaah, Liow Kim Hiang, and Neo Yen Shi, Sharon 227 Step-by-Step to Sustainable Property Investment Products Christoph Rohde and Thomas Lu ¨ tzkendorf Industry Insight 241 The Green Building Impact Report Rob Watson 245 Personal Perspectives on LEED Management and Investment Jason Tuomey J O SRE Vo l . 1 N o . 1–2 0 0 9 The Board of Directors of the American Real Estate Society e xtends its dee p appre cia tio n to: Uni v ersity of San Diego, Burnham Moores Real Estate Center for its su pport of th e edit ori al fu ncti ons of the Am eri c a n Rea l Est a t e S o cie ty; Florida Gulf Coast Uni v ersity, for its support of the editorial fu nctio ns of the Am eri c a n Real Est at e S o cie ty; Florida Inter national Uni v ersity, for its support of the Di re cto r o f Publi cat ions fu ncti ons of the Am eri c a n Real Est at e S o cie ty; and Kennedy W ilson, for its support of the Ex ecutiv e Director functions of the Ame ri can Real Es ta te Soci ety. 2009 Memb e rsh i p Academic ($125), Professional ($275), Academic Library ($ 550), Corp ora te Library ($550), Student or Retired Academic ($85), Corporate ($ 550), Sp onsor ($1,500), Re gent ($3,000) and President’s Council ($6,000). Checks sh ould be made payable to ARES and correspondence should be addressed to: Dia ne Quarles, Clemson Univ ersity, Colle ge of Business & Beha vioral Sc ience , D e pt. of Finance, 424 Sirrine Hall, Clemson, SC 29634-1323. Ph one: 864-6 56-1 373; F a x : 864-6 56-7 519. Websi te : w w w.AR ESn et. org o r e q uarl e@c l ems on.ed. The Journal of Sustainable Real Estate (1949-8276) is published an nually by the American Real Estate Society at Clemson Univ ersity, School of Busin ess and Beha vioral Science, Department of Finance, 424 Sirrine Ha ll, Clem so n, SC 29634-1323. Periodicals postage paid at Clemson, SC and at additi onal mailing offices. Postmaster, please send address changes to: Dia ne Qu arl es, Clemson Univ ersity, School of Business and Beha vioral Sci ence , Dep art me nt of Finance, 424 Sirrine Hall, Clemson, SC 29634-1323. Changes of addre s s , claims and all correspondence dealing with subscriptions should be se nt to Diane Quarles, Manager of Member Services, Clemson Univ ersity, S c hool of Business and Beha vioral Science, Department of Finance, 424 Sirrine Hall, Clemson, SC, 29634-1323. Phone 864-656-1373, F a x 864-656-7519 or emai l equarle@clemson.edu. F or more information, visit our we bsi te : w w w. ARES net .or g . 2009 American Real E state Society President’s Council Appra is al In stit ute LaS al le Inv e s tme nt Man agem en t Corn ers tone Re al Es tat e Advis ers , I n c . Pri ce w a ter house Cooper s CoSta r G r oup Pru dentia l R e a l E s tat e I nv es tors Insti tutio nal Re al Es tat e, Inc. Regents Ar g u s NYU Sch ack Insti tute of Real Es tat e CCIM In stitu te Roulac Gl obal Pla ce s L L C Cre sen t Res ource s UBS Fre ddie Mac Uni v ers ity of Cin cinnat i C o lle g e of Busines s Nat ional As socia tio n o f R e a l E s tat e Inv e s tmen t Tr ust s ( NA R E I T ) Zic klin Sch ool of Busines s – Bar u c h Colle g e Sponsors Bail ard , I n c . GIC Re al Es tat e P t e . L t d . Blac kro ck Fi nanci al Man agem ent Gra duat e Sch ool of Re al Es tat e Studie s – KonK u k Un i v ers ity BRE Pr oper ti es Jero me Ba in Real Es tat e Insti tute at Burn ham-M oore s C e nter fo r Rea l Flori da Inte rn atio nal Un i v er si ty Est ate – U n i v ers ity of Sa n D i e g o Johns Ho pkins Car e y Busin ess Sc hool CBRE Eco nomet ri c A d visors K e n nedy Wi lson Cengag e L e a rn ing NA I O P Res ear ch F oundat ion Cente r for Rea l Est ate Dev e l opmen t a t Clem son Un i v er sit y Nat ional As socia tio n o f R E A LT O R S ( NAR) Colvin In stit ute for Rea l Est ate Nat ional Inv estme nt Ce nte r for the De v elopme nt – U n i v e r s ity of Mary lan d Sen iors Housin g & Car e Indust ry (N I C ) Counsel ors of Re al Es tate (C RE ) Nat ional Multi Ho using Counci l ( N M H C ) Dea rb orn Re al Es tat e Educa ti on Real Ca pita l A n aly tics Di v idend Ca pita l R e sea rc h L L C The Rea l E s t a t e Cen ter at De P a ul Eme ra ld Gr o u p Publi shing Li mi ted Uni v ers ity 2009 Fellows o f the American Real Estate Society Endowed Doctoral Sponsorships Youguo, Lu c y, M i c h e l le, and Mi a Lian g Gle nn R. an d Jan H. Muel ler Ther on R. and Su san L. Ne l s o n A r t h u r L . S c h wart z H e l e n B e c k e t t S c hwart z Mich ae l J . a n d Vi ck y L . Sei ler Benefactors Jose ph D. Al ber t Seu ng Wo o S h i n Jam es Ma dis on Un i v er si ty K onkuk Un i v er si ty Step hen A. Py hrr K e n ned y W il son Distinguished Fellows Andre w C . Flora nce Norm an G. Mi ller CoSt ar Gr oup Uni v ersi ty of San Die go Kar l L . G u nter man n Mau rici o R o driguez Ari zona Sta te Un i v er si ty Te x a s C h rist ian Uni v ers ity Home r H o y t I n stit ute Kar l-Wer ner Sc hult e Nort h P al m B e a c h , FL Uni v ersi ty of Re g e n s b u r g A l e x K la ts ki n F orsg ate Indust ria l P a r t ner s Jam es D. Shil ling D e P a u l U ni v e rs it y Mar k L. Le v ine Uni v ersi ty of Denv e r Rober t A . S i mons Jose ph B. Li psco mb Cle v e l a n d Stat e Uni v ers ity Te x a s C h rist ian Uni v ers ity Jay Spi v e y Mar c A. Louar gan d CoSt ar Gr oup Sal tas h P ar tn ers LLC Elai ne M. Wo rza l a Chri stopher A. Ma nnin g Lo yola Mar ymount Uni v ers ity Clem so n U n i v e r sit y Fellows D a vi d O . A de di j i LaS al le In v e s tmen t M a n agem en t Bode Ad edij i P ar tner sh ip Char les Car ter Ran dy I. An der so n Florida At lan tic Un i v er sit y Uni v ersi ty of Cen tral Fl orida Lijian Ch en M i c h a e l A . A ni ke ef f U B S R ealt y I n v e s t o r s Johns Ho pkins Un i v er si ty Ping Ch eng John S. Ba e n Florida At lan tic Un i v er sit y Uni v ersi ty of Nort h Te x as Pet er Chin lo y Edw a r d A . Bar yla M c Le an, VA Eas t Te nnes s e e Stat e U n i v ers ity Mar vin F. Chri sten se n John D. Be nja min RRE EF Ame ric an Un i v er si ty Jose ph W. Co lem an Donal d H . B l e i c h Wrig ht Stat e U n i v ers ity Cal ifo rnia Stat e Uni v ers ity – N o r t hridge Gle nn E. Cre lli n WaldoL.Born Wa s hin gton Stat e U n i v ers ity Eas ter n I l linois Un i v ers ity Char les G. Da n nis Ste v e n C . B o uras sa Cro sso n D a nnis Uni v ersi ty of Louisv ille Jam es R. De Li sl e M. Go rdon Br o w n Uni v ersi ty of Wa s h ington Eindho v e n U n i v ers ity of Te c h nology Geo f f r e y Dohrm an n Nic holas Buss Insti tutional Re al Es tat e Inc. In v esc o Rea l Est at e D a vi d H . D o w ns Todd A. Ca nter Vi r ginia Co mmonwe al th Un i v er si ty 2009 Fellows ( con ti nu ed ) Donal d R . Eple y Jose ph L. P a g liar i, Jr. Uni v ersi ty of South Al ab ama Uni v ersi ty of Chic ag o J. Te rre nce F a r ris Rudy R. Ro binson, II I Clem so n U n i v e r sit y Aust in Va l uat ion Co nsulta nts Mich ae l G a t el y Step hen E. Ro ulac Corn erst one Re al Es tat e A d viser s, LLC Roulac Gl obal Plac es LLC John L. Gla sc ock Ronal d C . R u therf ord Uni v ersi ty of Cam brid ge Uni v ersi ty of Te x a s – San An tonio P a u l R. Go eb el Sea n P. Sal ter Te x a s Tec h U n i v ers ity Middle Te nnes se e S t a t e Un i v er si ty Jac ques Go rdon Da v i d S c rib ner LaS al le In v e s tmen t M a n agem en t Bar uch Co lle g e Han y G u i r guis Stac y S i rman s Man hatt an Co lle ge Florida Sta te Un i v er si ty Ronal d Spah r Oti s E . H a c k e t t O t i s E . H ac k e tt & A ss oc ia te s Uni v ersi ty of Mem phis Thomas W. Ha m ilton Thomas M. Spri nger Uni v ersi ty of St. Th omas Clem so n U n i v e r sit y W ill iam G. Har din, II I Simon A. Ste v e n son Florida Inte rnat ional Un i v er si ty City Uni v ers ity – L o ndon Jac k H a r r i s Mar k Sunder man Te x a s A & M Un i v er si ty / R e t ired Uni v ersi ty of Mem phis Da v i d H a r riso n Rober t W. Tay lor Te x a s Tec h U n i v ers ity Vi r ginia Co mmonwe al th Un i v er si ty Mich ae l J . H i ghfiel d Step hen F. Thode Miss is si ppi Stat e U n i v e r s i t y Leh igh Un i v ers ity Aar t C . H o rdijk Gra nt I. Thral l Roz Va st goed inde x Uni v ersi ty of Florid a Thomas O. Ja ck so n Ron Th roupe Te x a s A & M Un i v er si ty Uni v ersi ty of Denv e r K e n H . Johnso n Zhong Y. Tong Florida Inte rnat ional Un i v er si ty U.S. De par tmen t o f the T r ea s ury P a u l L. Jo nes Ray mond G. Tort o Pyram id Re a lty Gro up, Inc. Torto Wh ea to n Res e a r c h G. Do nal d J u d Ray mond Y. C. Tse Uni v ersi ty of Nort h C a r o lina – Gre en sb oro Hong K o ng Inst itu te of Rea l Est at e Ronal d W. K a ise r Jam es R. Va le nte Bai lar d, Inc. K e n ned y A s s o cia tes Ste v e n D . K a p plin K o Wang Uni v ersi ty of South Flo rida — Emer itu s Bar uch Co lle g e / C U N Y John Ki lpat ric k Court Wa s h b urn Gre en fiel d A d viso rs Han co ck T i mber Re s ource GR P Phillip T. K o lbe H. Sh elt on We e k s Uni v ersi ty of Mem phis / R e t i red Florida Gu lf Co as t Uni v ersi ty S. Ne al Kr ie g e r Mar got We i nstei n Arc hon Gr oup MW Lea d ers hip Co nsu ltan ts Ste v e n P. Lap osa Rober t M . W h ite, Jr. Colora do St at e U n i v e r s i t y Rea l C a pita l A n a l ytics , Inc. Emil Ma l izi a John E. W ill iam s Uni v ersi ty of Nort h C a r o lina – Chap el Hi ll Moreh ouse Co lle g e Asi eh Man s o u r Rich ar d W i nco tt RRE EF Price w a t e r house C ooper s John F. McDonald Dan iel T. W i nkler Roose v elt Uni v ersi ty Uni v ersi ty of Nort h C a r o lina – Gre en sb oro W ill ard McI ntosh Lar ry E. Wo f f ord Uni v ersi ty of Cin cinnat i Uni v ersi ty of Tulsa Jam es Mc K e l lar Zhonghua (Ge or g e ) Wu York Uni v ers ity Florida Inte rnat ional Un i v er si ty Isaa c M e g bolugbe Char les H. Wu rtz eb ac h Johns Ho pkins Un i v er si ty Hen der so n Glo bal Inv est ors Iv an J. Mi est ch o vich , J r. Jam es Yo ung Uni v ersi ty of Ne w O r lea n s Uni v ersi ty of Auck lan d Gra em e N e w e l l Leo nard V. Zu mpan o Uni v ersi ty of We s t ern Sydne y Uni v ersi ty of Ala bam a Advisor y Board Ray Ander s o n Marc Louarg and Inte rf a c e Glo bal Sal tas h P a r t n ers Sco tt An ders L. Hunte r L o vin s Univ ers it y o f S a n Di e g o Natu ra l Cap ital ism So lu tions (N C S ) Aaro n Bin kle y Asi eh Ma nso ur AMB Pr o pert y Corp ora ti on RREEF Stu art Bro dsk y Sco tt Mu lda v i n GE Re al Es ta te The Mu lda vin Compan y, In c. John Crews Da vid Po gue Jones Lan g LaSa ll e CB Richar d Elli s Dale De kk er Richard Ree d Dekk er / P e r i ch/S a batin i Deak in Un iv ers i t y Bri an Du nbar Mark Robin so n Colora do St at e U n iv ers i t y Hin es Richard Ep ste in Jay Sp iv e y RNL Desi gn CoSta r Andrew F l ore nce Leanne Tobias CoSta r G r oup, In co rp orat ed Mala chit e L L C Doug Ga tli n Cathy Tu rner U.S. Gr ee n Build ing Council New Build ings In st itu te (N B I ) Lydia Ja co bs-H o r t o n B. Ala n Whits o n Pro cte r & Ga mb le RPA Kent Jeff r e y s Sal ly Wi lso n Inte rn ati onal Council of Shoppin g CBRE Centers Jim Yo ung Da vid Jel lis o n Realco mm Libert y P r oper t y Tr u s t Jerr y Yu dels on Ste phen Ka pp Yudels on As s oci ate s Calif o rnia Cente r f o r Su sta inable Ener g y Da vid Lore nz Lore nz Pr o pert y A d viso rs Preface The quotes below by leaders like Al Gore and Barack Obama set the tone for why we need more research in the area of sustainability, particularly as applied to the field of real estate. We must get it right and we must refrain from biases that serve particular agendas. This independent journal, the Journal of Sustainable Real Estate, the first of its kind in the United States, calls upon those interested in fostering truth surrounding the myriad questions of how to become more efficient, healthier, and more productive while recognizing that economics and regulation will drive the market, not environmental evangelists. Those of us focused on real estate, which encompasses where we live, work, shop, and recreate, may not be able to determine if ideas like clean coal are realistic but we can and should investigate the economics driving the market, the true costs, direct and indirect, the management strategies that will support better user and owner decisions, and the state-of-the-art in terms of best practices. These are the types of questions we hope to address in this inaugural issue of the Journal of Sustainable Real Estate. Norm Miller Editor Journal of Sustainable Real Estate ‘‘By making buildings and homes more efficient, ramping up renewable energy generation, constructing a unified national smart grid, and transitioning to clean and affordable plug-in cars, we can address our country’s economic and national security challenges....In nation after nation, leaders have concluded that they must design a green stimulus and build the infrastructure for renewable sources of energy and put people to work retro-fitting homes and buildings with CO reducing insulation and windows and lighting and more efficient technologies. We can revitalize our economy, increase our energy security, and do our part to cut global warming pollution, all at the same time. We’re committed to changing not just light bulbs, but laws. And laws will only change with leadership.’’ Al Gore, 2007, Nobel Peace Prize Winner. ‘‘For our economy, our security, and the future of our planet, I will set a clear goal as President: in ten years, we will finally end our dependence on oil from the Middle East. Washington’s been talking about our oil addiction for the last 30 years...Now is the time to end this addiction, and to understand that drilling is a stop-gap measure, not a long-term solution. As President, I will tap our natural gas reserves, invest in clean coal technology, and find ways to safely harness nuclear power. I’ll help our auto companies re-tool, so that the fuel- efficient cars are built in America. I’ll invest 150 billion dollars over the next decade in renewable energy—an investment that will lead to new industries and five million new jobs that pay well and can’t ever be outsourced.’’ August 27, 2008, Barack Obama. ‘‘... to truly transform our economy, to protect our security, and save our planet from the ravages of climate change, we need to ultimately make clean, renewable energy the profitable kind of energy. So I ask this Congress to send me legislation that places a market-based cap on carbon pollution and drives the production of more renewable energy in America. And to support that innovation, we will invest $15 billion a year to develop technologies like wind power and solar power, advanced biofuels, clean coal, and more efficient cars and trucks built right here in America.’’ February 24, 2009, President Barack Obama. Acknowledgements We thank the CoStar Group and the support its CEO Andrew Florance for funding this journal in full including prizes. We want to make it clear that while CoStar has provided funding to us and data to many researchers, they have always provided total independence and never asked to see any results prior to publication. I am also deeply indebted to Myla Lorenzo-Wilson, who has worked tirelessly on all the communication with authors, provided content and cover designs, and otherwise managed the entire journal and to the Burnham-Moores Center for Real Estate for their support of this journal. Melissa Sharick, a University of San Diego Master of Science in Real Estate student, also provided valuable research support. This is the first of many issues until such time that sustainable real estate becomes so mainstream that a separate journal is not needed. While it is a peer-reviewed academic journal, we may on occasion accept summaries of prior work or papers published elsewhere in order to disseminate work or perspectives we feel are important. In this vein, there is an Industry Insight section of un-reviewed work that provides some industry perspective. We know that ambitious academics must work hard to publish in the most well known and respected journals and, as such, a few colleagues whom I had hoped would contribute to this journal have sent their work to more traditional economic and real estate outlets. We recognize it will take time to become known and cited via the traditional economic literature route, but we expect more viral circulation of papers accepted here and will post all accepted papers on our website www.josre.org, which is also generously hosted by CoStar. So thank you to all who have contributed and to those whose papers were not accepted, please keep submitting your papers for review, and we will try and provide constructive feedback. In this regard, we want to thank our Editorial Board, who reviewed papers, as well as the Advisory Board that provides support and encourages submissions from those engaged in applicable research. On Behalf of Costar Group On behalf of CoStar Group, I am very pleased to welcome the publication of the first issue of the Journal of Sustainable Real Estate, and to congratulate the authors whose original research is presented in this inaugural issue. CoStar Group continues to be an active supporter of academic research involving the built environment. As part of our ongoing efforts to increase awareness of energy efficiency and sustainability issues in real estate, CoStar has joined with the American Real Estate Society (ARES) to sponsor the Journal of Sustainable Real Estate, with the goal of provoking thought and encouraging discussion by publishing a collection of research papers addressing sustainable real estate issues. Of all the core categories of energy consumption in the United States, the built sector is the least efficient and has the largest potential for cost-effective improvement. Addressing the impact that sustainability practices can have on this major business sector is critical. And yet, businesses and public sector organizations face a daunting task in confronting the fundamental challenges presented by climate change, population growth, and resource constraints. If successful, their decisions may lead to the development of market-leading innovations and technologies and drive changes in business practices and consumer behavior needed to integrate sustainability on a large scale and achieve the economic rewards and long-term viability that sustainable principles offer. However, if we are unsuccessful in meeting those challenges, we collectively face increased costs, diminished opportunities, and a very real threat to our future. Above all, confronting what I believe to be one of the greatest challenges of our time requires innovative thinking and fundamentally questioning the accepted status quo in our real estate and business practices. It requires careful consideration of alternatives, clear-eyed analysis of risks, and thoughtful debate on the merits of pursing different strategies for securing our future and achieving our long-term goals. That is why CoStar is proud to sponsor independent research into sustainable real estate. In doing so, our goal is to help in a small but meaningful way those investors, developers, appraisers, lenders, asset managers, government officials, and land use regulators gain a better understanding of the issues associated with sustainable real estate practices. As more and more providers and occupiers of business real estate integrate sustainability into their business strategies, we believe there will be competitive advantages for innovative companies to unlock opportunities and capture profitable growth. Through our support for this journal, our hope is that independent research in this area can spur additional interest and provide the insight and recognition that helps bring about those needed changes. In addition to sponsoring academic research, CoStar offers qualified university professors and their students access to CoStar’s comprehensive online information services for use in their research and in the classroom. More than 1,100 professors and graduate students at more than 100 universities are currently enrolled in the program. To learn more about this program and research resources available through CoStar, I encourage you to visit www.CoStar.com / specialprograms / costaruniversity.aspx. More information on the Journal of Sustainable Real Estate can be found at www.CoStar.com / JOSRE. Andrew Florance Chief Executive Officer CoStar Group From the Director of Research at USGBC Buildings represent a nexus of impacts and opportunities for people and the environment. We have ample documentation of the far-reaching consequences of buildings for energy use, water consumption, greenhouse gas emissions, human health, occupant productivity, and myriad other factors. The magnitude of these impacts means that the design, construction, and operation of buildings also provide far-reaching opportunities to reduce negative impacts and ultimately strive to make active, positive contributions. This convergence of impacts and opportunities means that buildings must be central to any effort to address the sustainability of human activities. Understanding this confluence of impacts and opportunities requires new interdisciplinary approaches and strong connections between theory and practice. As with so many new fields of study, the issues associated with green buildings and real estate do not fit neatly into existing academic categories. Rather, the most pressing and potentially rewarding intellectual challenges are arising at the boundaries and interfaces between disciplines. This new journal provides an urgently needed vehicle for rigorous, peer-reviewed communication for the growing green building research community that strives to bridge these boundaries and create novel scholarship at the confluence of disciplines. Over time, this journal has the potential to become a critical outlet for new work and, consequently, an essential part of the intellectual foundation for this rapidly growing research community. This journal can fulfill this potential by providing a forum for the rigorous exchange of ideas and seeking an editorial balance that blends concepts and empirical observations to advance both the theory and practice of green building. In this inaugural issue, the editors and contributors have demonstrated this balance with an exceptional collection of papers. Going forward, I encourage the research community to reflect on the example set in this issue and the broader goals and aspirations of this new publication. For me, this reflection leads to a belief that this journal will provide an important outlet for findings that will help shape the future of green building. I am looking forward to working together to fill its pages for years to come. Chris Pyke Director of Research US Green Building Council Introduction This issue of the Journal of Sustainable Real Estate begins with a paper by Richard Reed, Anita Bilos, Sara Wilsinson, and Karl-Werner Schulte that compares international sustainable rating tools. While Leadership in Energy and Environmental Design (LEED), developed by the United States Green Building Council (USGBC), is well known in the United States and utilized in over 55 countries, there are many other measurement systems. We can all learn from each other and any model, LEED, CASBEE, BREEAM or Green Star and so forth should be considered works in progress. For example, while LEED is fairly easy to understand and fairly transparent, it may not sufficiently weigh factors that are of most importance in different geographies and climates. Over time, based on the kind of discussion and dialogue presented here and elsewhere, we expect these measurement systems to adapt and improve for their intended purpose. The second paper, by Sofia Dermisi, is on the effect of LEED rating on office assessed values. It is not clear that appraisers, yet alone assessors, understand much about sustainable real estate features and at the same time some jurisdictions are exempting from property taxes sustainable property improvements, so this will remain an important topic for some time. The third paper is by Franz Fuerst and Patrick McAllister on occupancy rates for eco-labeled office property in the U.S. It is an extension of some of their prior work and continues to support the notion that greener property achieves greater occupancy and in turn supports higher values relative to peer property. The fourth paper is a preliminary effort to understand the role of environment on productivity by Norm Miller, David Pogue, Quiana Gough, and Susan Davis. Using a large data set, this study provides some support for an economic payoff for tenants in buildings with better light and ventilation. Next we have a paper by Jerry Jackson on the risk of sustainable real estate projects. We then have a series of papers that touch on the challenges inherent in green development. The first, by Jennifer Wang, discusses removing barriers to green development. A second is by Robert Simons, Eugene Choi, and Donna Meister Simons on state and city green policies and market penetration. The third paper is by John Goering on sustainable real estate market penetration. Finally, a paper by Kwame Addae-Dapaah, Liow Kim Hiang, and Neo Yen Shi, Sharon on the sustainability of sustainable real property development. The last paper is by Christoph Rohde and Thomas Lutzkendorf on sustainable investment products, which is a natural follow-up to the four previous papers. The Industry Insight section contains two pieces that provide some initial industry- based evidence of the impact of green building. We hope this first issue of JOSRE is the springboard for further research and exploration of the green building environment. Norm Miller Editor Journal of Sustainable Real Estate

Journal

Journal of Sustainable Real EstateTaylor & Francis

Published: Jan 1, 2009

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