Does energy performance rating affect office rents? A study of the UK office market

Ke, Q and White, M ORCID: https://orcid.org/0000-0001-7508-7882, 2024. Does energy performance rating affect office rents? A study of the UK office market. Journal of Sustainable Real Estate, 16 (1): 2356715. ISSN 1949-8276

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Abstract

Environmental concerns and the rise in energy costs have heightened the focus on reducing CO2 emissions within the built environment. By concentrating on the office market in the UK, where a significant portion of a service-based economy operates, progress towards achieving emission reduction goals could be accelerated. Nevertheless, the speed at which this sector can enhance its environmental impact and whether individuals are willing to invest in energy-efficient measures and new energy-efficient buildings has remained uncertain. This paper investigates the influence of varying Energy Performance Certificate (EPC) ratings on the rental rates of office buildings in the UK, drawing on an extensive dataset spanning the years of 2011–2021. Our research seeks to determine whether there exists a willingness to pay for more energy-efficient office spaces by assessing whether there is a rental premium associated with office building with higher EPC ratings. Furthermore, we examine whether buildings failing to meet minimum energy efficiency standard (defined as EPC ratings of F and G) experience rental discounts. Our findings, which take into account heteroscedasticity and various disaggregations within the office market, consistently reveal a willingness to pay for energy-efficient office spaces.

Item Type:	Journal article
Publication Title:	Journal of Sustainable Real Estate
Creators:	Ke, Q. and White, M.
Publisher:	Informa UK Limited
Date:	11 June 2024
Volume:	16
Number:	1
ISSN:	1949-8276
Identifiers:	Number Type 10.1080/19498276.2024.2356715 DOI 1903389 Other
Rights:	This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. The terms on which this article has been published allow the posting of the Accepted Manuscript in a repository by the author(s) or with their consent.
Divisions:	Schools > School of Architecture, Design and the Built Environment
Record created by:	Jonathan Gallacher
Date Added:	19 Jun 2024 09:18
Last Modified:	19 Jun 2024 09:18
URI:	https://irep.ntu.ac.uk/id/eprint/51595

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