Nils Kok

Turning Up the Heat: The Impact of Indoor Temperature on Cognitive Processes and the Validity of Self-Report

with Piet Eichholtz, Martijn and Martin Stroebl, Judgment and Decision Making (2021)

Download

Indoor climate interventions are often motivated from a worker comfort and productivity perspective. However, the relationship between indoor climate and human performance remains unclear. We assess the effect of indoor climate factors on human performance, focusing on the impact of indoor temperature on decision processes. Specifically, we expect heat to negatively influence higher cognitive rational processes, forcing people to rely more on intuitive shortcuts. In a laboratory setting, participants (N=257) were exposed to a controlled physical environment with either a hot temperature (28ºC) or a neutral temperature (22ºC), in which a battery of validated tests were conducted. We find that heat exposure did not lead to a difference in decision quality. We did find evidence for a strong gender difference in self-report, such that only men expect that high temperature leads to a significant decline in performance, which does in fact not materialize. These results cast doubt on the validity of self-report as a proxy for performance under different indoor climate conditions.

Avoiding Crowded Places During COVID-19: Simple Choice or Complex Strategic Decision?

with Piet Eichholtz and Martijn Stroom, Frontiers in Psychology (2021)

Download

Introduction: Following a period of strict lockdowns during the COVID-19 pandemic, most countries introduced policies in which citizens were expected to avoid crowded places using common sense, as advised by the WHO. We argue that the ambiguity in the recommendation to “avoid crowded places” implicitly forces individuals to make a complex strategic decision. Methods: Using a Dutch representative sample of 1,048 participants [42% male, mean age=43.78years (SD=12.53), we examine the effect of context on the decision to visit a hypothetical recreational hotspot under the policy recommendation to “avoid crowded places.” We randomize four levels of context on the crowdedness “on the streets” (no context, low, medium, and high context). Subsequently, participants are asked to estimate the percentage of others going out in the same situation. Finally, we assess the impact of a selection of personal characteristics on the likelihood of visiting a crowded place. Results: Respondents are proportionally more likely to go in a low context and high context, compared to no context (diff=0.121, p<0.000, and diff=0.034, p<0.05, respectively) and middle context (diff=0.125, p<0.000, and diff=0.037, p<0.05, respectively). Low context information also decreases the expectation of others going out (−2.63%, z=4.68, p<0.000). High context information increases the expected percentage of others going out (significant only for medium to high context; 2.94%, z=7.34, p<0.001). Furthermore, we show that education, age, and health and risk attitude are all predictive of the likelihood to visit a crowded place, notwithstanding the context. Discussion: Although there is a strong inclination to avoid crowded places during the COVID-19 pandemic (81%), we find two context-driven exceptions: when people expect to avoid crowded spots (in the “low” context, i.e., strategical decision-making) and when people expect others to go (social influence). The freedom provided by the ambiguous public policy is implicitly asking more from the population than it initially seems. “Use your common sense” is often the accompanying advice, but our results show that more and better information concerning the context is essential to enable us to make an optimal decision for ourselves, and for society.

Moving to Productivity: The Benefits of Healthy Buildings

with Piet Eichholtz and Juan Palacios, PLOS One (2020)

Download

Health is a critical factor for the generation of value by workers. Companies bear substantial costs associated with absenteeism and presenteeism among their employees. This study investigates the impact of the environmental conditions in the workplace on the health and job satisfaction of employees, as core factors of productivity. We provide evidence based on a natural experiment, in which 70% of the workforce of a municipality in the Netherlands was relocated to a building with a design focused on sustainability and health and well-being. We construct a longitudinal dataset based on individual surveys of the entire municipality workforce and include measures before and after the move. The estimation results show a significant improvement in the perceived environmental conditions, as well as in the health and well-being of the relocated workers, measured by the drop in the incidence of sick building syndrome symptoms. Results are heterogeneous based on age: older groups of employees enjoy larger health impacts. The relocation effects remain persistent in the medium term (two years after the moving date). Importantly, a mediation analysis suggests that the achieved improvements in health and well-being lead to significantly enhanced job satisfaction and a 2% reduction in the prevalence of sick leave.

The Impact of Housing Conditions on Health Outcomes

with Erdal Aydin, Piet Eichholtz, and Juan Palacios, Real Estate Economics (2020)

Download

We investigate the relationship between housing conditions and health outcomes using a dataset that tracks 25,000 German households over 25 years. We document that individuals exposed to poor housing conditions report worse mental and physical health, and experience an 11 percent increase in doctor visits, increasing to 20 percent for age groups over 64. The analysis controls for individual, dwelling and temporal fixed effects, and is robust to changes in socio-economic status, lifestyle choices, and neighborhood conditions. As a robustness check, we use home renovations as major a trigger of changes in housing conditions. Restricting the analysis to tenants, whose renovations are paid by landlords, we document that home renovations significantly reduce doctor visits, corroborating the findings on home conditions and health outcomes.

Indoor Environmental Quality and Learning Outcomes: Protocol on Large-Scale Sensor Deployment in Schools

with Piet Eichholtz, Juan Palacios, and Maartje Willibrordse, BMJ Open (2020)

Download

Exposure to poor environmental conditions has been associated with deterioration of physical and mental health, and with reduction of cognitive performance. Environmental conditions may also influence cognitive development of children, but epidemiological evidence is scant. In developed countries, children spend 930 hours per year in a classroom, second only to time spent in their bedroom. Using continuous sensing technology, we investigate the relationship between indoor environmental quality (IEQ) and cognitive performance of school-aged children. The proposed study will result in a better understanding of the effects of environmental characteristics on cognitive performance, thereby paving the way for experimental studies.

The Capitalization of Energy Efficiency: Evidence from the Housing Market

with Erdal Aydin and Dirk Brounen, Journal of Urban Economics (2020)

Download

Current policies addressing the carbon externality from energy consumption in the building stock often hinge on the assumption that markets efficiently capitalize the energy performance of assets, assuming perfect information. This paper uses different identification strategies to examine the capitalization of energy efficiency in the housing market, addressing methodological shortcomings in the existing literature that may lead to inaccurate estimates. Using an instrumental variable approach, we document that a ten percent increase in energy efficiency leads to an increase in the transaction price of about 2.2 percent for an average home in the residential housing market. We confirm these findings using a repeated sales analysis. Importantly, the results indicate that the extent of capitalization of energy efficiency is not significantly affected by the reduction of information asymmetry through the presence of an energy performance certificate (EPC). Using a regression discontinuity approach, we show that consumers do not capitalize the information that is provided by EPCs. The findings in this paper provide some evidence on the efficiency of the market in pricing home energy performance, indicating that the salience of this information may obviate the need for costly certification programs.

 

Environmental Performance of Commercial Real Estate: New Insights into Energy Efficiency Improvements

with Piet Eichholtz and Rogier Holtermans (Journal of Portfolio Management)

Download

This article provides new insights into the performance of commercial real estate, focusing on the environmental performance of institutional assets. We employ a proprietary dataset of energy consumption data that includes more than 26,000 buildings between 2009 and 2018. We document that, in our sample of commercial real estate, the median energy intensity decreased by more than 40% over the decade. Using a difference-in-difference analysis, we find that the adoption of environmental building certification (Leadership in Energy and Environmental Design) is associated with significantly lower energy consumption and that there is substantial variation in these effects, depending on certification level and program, and label tenure. Moreover, specific interventions aimed at improving the energy efficiency of buildings considerably reduce ex-post energy consumption, with effects varying based on local climatic conditions.

The Price of Innovation: An Analysis of the Marginal Cost of Green Buildings

with Andrea Chegut and Piet Eichholtz (Journal of Environmental Economics and Management)

Download

Energy efficiency plays an important role in reducing the carbon externality from buildings, but economic analyses of more efficient, green building have thus far ignored input costs. This paper finds that the average marginal cost of green-labeled construction projects is smaller than the value premiums documented in the literature. However, design fees, representing just a fraction of development costs but paid largely up-front, are significantly higher for green construction projects. These projects also take longer to complete. The results provide some insight into the market barriers and market failures that may explain the relatively slow adoption of otherwise economically rational green construction practices.

On the Value of Environmental Certification in the Commercial Real Estate Market

with Rogier Holtermans (Real Estate Economics)

Download

A significant part of the global carbon externality stems from the real estate sector. Environmental certification is often hailed as an effective means to resolve the information asymmetry that may prevent markets from effectively pricing the energy performance of buildings. This study analyzes the adoption and financial outcomes of environmentally certified commercial real estate over time. We document that nearly 40% of space in the 30 largest U.S. commercial real estate markets holds some kind of environmental certification in 2014, as compared to less than 5% in 2005. Tracking the rental growth of 26,212 office buildings, we measure the performance of environmentally certified real estate over time. We document that certified office buildings, on average, have slightly higher rental, occupancy and pricing levels, but do not outperform non-certified buildings in rental growth over the 2004–2013 period. Further performance attribution analysis indicates that local climate conditions, local energy prices and the extent of certification lead to significant heterogeneity in market pricing. On aggregate, these findings provide some evidence on the efficiency of the market in the adoption and capitalization of environmental characteristics in the commercial real estate market.

Environmental Performance and the Cost of Debt: Evidence from Commercial Mortgages and REIT Bonds

with Piet Eichholtz, Rogier Holtermans, and Erkan Yonder, working paper (Journal of Banking and Finance)

Download

The increasing societal focus on environmental issues leads to important questions about the relationship between corporate environmental (ESG) performance and firms’ cost of capital, but research on this topic remains scant. The real estate sector offers an ideal testing ground to investigate the relationship in two distinct manners, while specifically addressing concerns about endogeneity. We first investigate the spreads on commercial mortgages collateralized by real assets, some of which are environmentally certified. We then study spreads on corporate debt of property companies (REITs), both at issuance and while trading in the secondary market. The results show that loans on environmentally certified buildings command lower spreads than conventional, but otherwise comparable buildings, varying between 24 and 29 basis points, depending on the specification. At the corporate level, REITs with a higher fraction of environmentally certified buildings have lower bond spreads in the secondary market. These results are robust to different estimation strategies, and signal that environmental risk is efficiently priced in the real estate debt market.

Information Provision and Energy Consumption: Evidence from a Field Experiment

with Erdal Aydin and Dirk Brounen (Energy Economics)

Download

Energy consumption and the residential real estate market are closely related, leading to a multitude of policy interventions targeted to reduce the carbon externality from the housing market. Feedback provision regarding household energy consumption is considered a low-cost strategy for promoting energy conservation. Although various studies investigate the impact of information feedback on energy consumption, less is known about the heterogeneity of these responses. In this paper, we report the findings from a field experiment where participants are exposed to consumption feedback through the use of in-home displays during two discrete stages. The results show that information provision reduces electricity consumption by around 20%, on average, relative to a sample of non-treated households. Importantly, we also show that this average effect significantly differs based on the time of day and across the treatment group. Most of the feedback effect occurs during off-peak hours, and clusters among households that are older and that are most focused on energy conservation.

Is California More Energy Efficient than the Rest of the Nation? Evidence from Commercial Real Estate

with Matthew Kahn and Peng Liu, NBER Working Paper

Download

California’s per-capita electricity consumption is 50 percent lower than national per-capita consumption. Mild climate, deindustrialization, and its demographics explain part of this differential. California energy efficiency policy is often claimed to be another key factor. A challenge in judging this claim is the heterogeneity of the real estate capital stock. Residential homes differ along a large number of physical attributes. We access a proprietary dataset from a large hotel chain that allows us to evaluate the environmental performance of comparable commercial real estate across the United States. Controlling for climate conditions and geographic location, we document that California’s commercial real estate stock is the most energy efficient at a point in time but this differential is quantitatively small. However, over the years 2007 to 2013, California’s hotels achieved much greater energy efficiency progress than hotels in other states.

Energy Efficiency and Household Behavior: The Rebound Effect in the Residential Sector

with Erdal Aydin and Dirk Brounen, RAND Journal of Economics

Download

Policies designed to reduce energy consumption in the residential sector through energy efficiency measures are typically based upon engineering calculations, which may differ significantly from outcomes observed in practice. A widely acknowledged explanation for this gap between expected and the realized energy savings is household behavior, as energy efficiency gains alter the perceived cost of comfort and thereby generate shifts in consumption patterns -- a "rebound effect". This paper adds to the ongoing discussion about the method of identification and the magnitude of this effect, by examining the elasticity of energy consumption with respect to a predicted measure of thermal efficiency, using a sample of 560,000 dwellings and their occupants in the Netherlands. We document significant deviations between engineering predictions and the actual energy consumption of households: our results show a rebound effect of 26.7 percent among homeowners, and 41.3 percent among tenants. There is significant heterogeneity in the rebound effect across households, determined by household wealth and income, and the actual energy use intensity (EUI). The effects are largest among the lower income and wealth cohorts, and among households that tend to use more energy than the average household

Carbon Emissions from the Commercial Building Sector: The Role of Climate, Quality, and Incentives

with Matthew Kahn and John M. Quigley, Journal of Public Economics

Download

This is an updated version (March 2014) from the paper "Energy Consumption and the Durable Building Stock: The Capital Vintage Paradox." Commercial buildings play a major role in determining U.S. greenhouse gas emissions, yet surprisingly little is known about the environmental performance of different buildings at a point in time or how the same buildings perform over time. By exploiting a unique panel of commercial buildings from a major electric utility, we study the association between a building’s electricity consumption and the physical attributes of buildings, lease incentive terms, indicators of human capital, and climatic conditions. We find that buildings that are newer and of higher quality consume more electricity, contrasting evidence for the residential sector. However, using our panel data set, we document that newer buildings are most resilient when exposed to hotter weather. Those buildings that have a building manager on site and whose tenants face a positive marginal cost for electricity also demonstrate better environmental performance.

Big-Box Retailers and Urban Carbon Emissions: The Case of Wal-Mart

with Matthew E. Kahn, NBER Working Paper

Download

The commercial real estate sector is responsible for a large share of a city’s overall carbon footprint. An ongoing trend in this sector has been the entry of big-box stores such as Wal-Mart. Using a unique monthly panel data set for every Wal-Mart store in California from 2006 through 2011, we document three main findings about the environmental performance of big-box retailers. First, Wal-Mart’s stores exhibit very little store-to-store variation in electricity consumption relative to a control group of similar size and vintage retail stores. Second, Wal-Mart’s store’s electricity consumption is lower in higher priced utilities and is independent of the store’s ownership versus leased status. Third, unlike other commercial businesses, Wal-Mart’s newer buildings consume less electricity. Together, these results highlight the key roles that corporate size and centralization of management play in determining a key indicator of a firm’s overall environmental performance.

CEO Political Preferences and the Sustainability of REITs

with Piet Eichholtz and Erkan Yonder

Download

This paper investigates how political preferences of real estate investors affect their investment decision-making. Specifically, we address the relationship between the political color of CEOs and the corporate sustainability of U.S. Real Estate Investment Trusts (REITs). We hypothesize that REITs with Republican-oriented CEOs are less likely to own “green” buildings as compared to REITs with Democrat-leaning CEOs. For each REIT CEO, we determine the ratio of contributions to Democrats compared to total political contributions during federal elections, and analyze whether this ratio is related to REIT holdings of “green” buildings, measured by Energy Star and LEED certification. We find that the Democrat ratio is positively related to the likelihood and intensity of green property investment of a REIT when we use the Energy Star label as a proxy for portfolio greenness. We do not find a significant relationship between political preference and ownership of LEED-labeled buildings. Additionally, we document that REITs with less experienced CEOs and larger firm size, as well as REITs operating in greener locations, are more likely to invest in green buildings.

The Capitalization of Green Labels in the California Housing Market

with Matthew Kahn, Regional Science and Urban Economics

Download

The residential sector accounts for 33 percent of electricity consumption in the U.S., with a total expenditure of $166 billion in 2010. Increasing the energy efficiency of the durable housing stock can thus provide significant cost savings for consumers. One promising trend is the rise of homes labeled by a third party as “green” or energy efficient. The modeled energy consumption of such homes is substantially lower as compared to conventional homes of the same vintage. This paper provides the first systematic evidence on the effects of green labels attesting to the energy efficiency and sustainability of homes on consumer choice. We conduct a hedonic pricing analysis of all single-family home sales in California over the time period 2007 to 2012, documenting that homes labeled with Energy Star, LEED or Greenpoint Rated, transact for a premium of nine percent relative to otherwise comparable, non-labeled homes. Given the large size of this effect, we explore its robustness and examine a number of different hypotheses, focusing on recovering heterogeneous effects. The results show that both environmental ideology and local climatic conditions play a role in explaining the variation in the green premium across geographies. Some press coverage: Washington Post LA Times USA Today Daily Herald   NPR Marketplace

The Economics of Green Building

with Piet Eichholtz and John Quigley, 2013, Review of Economics and Statistics 95(1)

Download

This paper analyzes the economics of “green” building. First, we analyze a panel of office buildings “certified” by independent rating agencies, finding that large recent increases in the supply of green buildings and the unprecedented volatility in property markets have not significantly affected the relative returns to green buildings. Second, we analyze a large cross section of office buildings, demonstrating that economic premiums in rent and asset values are substantial. Third, we relate the economic premiums for green buildings to their sustainability, confirming that the attributes rated for both thermal efficiency and sustainability contribute to premiums in rents and asset values. Even among green buildings, increased energy efficiency is fully capitalized into rents and asset values. The Economics of Green Building View more presentations from nilskok

The Impact of Energy Labels and Accessibility on Office Rents

with Maarten Jennen,  Energy Policy

Download

Energy consumption in the commercial property sector offers an important opportunity for conserving resources. In this study, we evaluate the financial implications of two elements of “sustainability” – energy efficiency and accessibility – in the market for commercial real estate. An empirical analysis of some 1,100 leasing transactions in the Netherlands over the 2005-2010 period shows that buildings designated as inefficient (with an EU energy performance certificate D or worse) command rental levels that are some 6.5 percent lower as compared to energy efficient, but otherwise similar buildings (labeled A, B or C). Furthermore, this study shows that office buildings in multi-functional areas, with access to public transport and facilities, achieve rental premiums over mono-functional office districts. For policymakers, the results documented in this paper provide an indication on the effectiveness of the EU energy performance certificate as a market signal in the commercial property sector. The findings documented here are also relevant for investors in European office markets, as the importance of energy efficiency and locational diversification is bound to increase following stricter environmental regulation and changing tenant preferences.

Doing Well by Doing Good: Green Office Buildings

with Piet Eichholtz and John Quigley, 2010, American Economic Review, 100(5)

Download

This paper provides the first credible evidence on the economic value of the certification of “green buildings” -- derived from impersonal market transactions rather than engineering estimates. Our analysis of clusters of certified green buildings and nearby comparables establishes that buildings with “green ratings” command ubstantially higher rents and selling prices than otherwise identical buildings. Moreover, variations in the premium for green office buildings are systematically related to their energy-saving characteristics. An increase in the energy efficiency of a green building is associated with a substantial increase in selling price – over and above the premium for a labeled building. Further evidence suggests that the intangible effects of the label itself may also play a role in determining the values of green buildings in the marketplace.

More information

Portfolio Greenness and the Financial Performance of REITs

with Erkan Yonder and Piet Eichholtz, Journal of International Money and Finance, 2012

Download

This paper investigates the effects of the energy efficiency and sustainability of commercial properties on the operating and stock performance of a sample of US REITs, providing insight into the net benefits of green buildings. We match data on LEED and Energy Star certified buildings with detailed information on REIT portfolios and calculate the share of green properties for each REIT over the 2000-2011 period. We estimate a two-stage regression model and document that the greenness of REITs is positively related to three measures of operating performance – return on assets, return on equity and the ratio of funds from operations to total revenue. We also document that there is no significant relationship between the greenness of property portfolios and abnormal stock returns, suggesting that stock prices already reflect the higher cash flows deriving from investments in more efficient properties. However, REITs with a higher fraction of green properties display significantly lower market betas.   Slideshow "Portfolio Greenness and the Financial Performance of REITs" View more presentations from nilskok

Supply, Demand, and the Value of Green Buildings

with Andrea Chegut and Piet Eichholtz, forthcoming in Urban Studies

Download

Download the (just-released) RICS Report here!   Attention to “sustainability” and energy efficiency rating schemes in the commercial property sector has increased rapidly during the past decade. In the UK, commercial properties have been certified under the BREEAM rating scheme since 1999, offering fertile ground to investigate the economic dynamics of “green” certification in the commercial property market. In this paper, we document that over the 2000-2009 period, the expanding supply of “green” buildings within a given London neighborhood had a positive impact on rents and prices in general, but reduced rents and prices for environmentally-certified real estate. The results suggest that there is a gentrification effect from “green” buildings. However, each additional “green” building decreases premiums for a certified building in the rental and transaction markets by one percent and four percent, respectively. In addition, controls for lease contract features, like contract length and the rent-free period, modify the impact of certification on rental prices.

Energy Literacy, Awareness, and Conservation Behavior of Residential Households

with Dirk Brounen and John M. Quigley, Energy Economics

Download

The residential sector accounts for one-fifth of global energy consumption, resulting from the requirements to heat, cool, and light residential dwellings. It is therefore not surprising that energy efficiency in the residential market has gained importance in recent years. In this paper, we examine awareness, literacy and behavior of households with respect to their residential energy expenditures. Using a detailed survey of 1,721 Dutch households, we measure the extent to which consumers are aware of their energy consumption and whether they have taken measures to reduce their energy costs. Our results show that “energy literacy” and awareness among respondents is low: just 56 percent of the respondents are aware of their monthly charges for energy consumption, and 40 percent do not appropriately evaluate investment decisions in energy efficient equipment. We document that demographics and consumer attitudes towards energy conservation, but not energy literacy and awareness, have direct effects on behavior regarding heating and cooling of the home. The impact of a moderating factor, measured by thermostat settings, ultimately results in strong variation in the energy consumption of private consumers. Slideshow on this paper:  My colleague Dirk Brounen on this paper:

Residential Energy Use and Conservation: Economics and Demographics

with Dirk Brounen and John Quigley, 2012, European Economic Review

Download

Energy consumption in the residential sector offers an important opportunity for conserving resources. However, much of the current debate regarding energy efficiency in the housing market focuses on the physical and technical determinants of energy consumption, neglecting the role of the economic behavior of resident households. In this paper, we analyze the extent to which the use of gas and electricity is determined by the technical specifications of the dwelling as compared to the demographic characteristics of the occupying household, using a unique set of microeconomic data for a sample of more than 300,000 Dutch homes. The results show that residential gas consumption is determined principally by structural dwelling characteristics, such as the vintage, building type and quality of the home, while electricity consumption varies more directly with household composition, in particular income and family composition. Combining these results with projections on future economic and demographic trends, we find that, absent price increases for residential energy, the aging of the population and their increasing wealth will mostly offset improvements in the energy efficiency of the building stock resulting from policy interventions and natural revitalization.

The Diffusion of Energy Efficiency in Building

with Marquise McGraw and John Quigley, American Economic Review (2011)

Download

In this paper, we analyze the diffusion of buildings certified for energy efficiency across US property markets. Using a panel of 48 metropolitan areas (MSAs) observed over the last 15 years, we trace the diffusion of green building practices across the country. We then model the geographic patterns and dynamics of building certification, relating industry composition, changes in economic conditions, characteristics of the local commercial property market, and the presence of human capital, to the cross-sectional variation in energy-efficient building technologies and the diffusion of those technologies over time. Understanding the determinants and the rate at which energy-efficient building practices diffuse over space and time is important for designing policies to affect resource consumption in the built environment. The short version of the paper is forthcoming in the AEA Proceedings (May 2011) Download the long version of the paper here The Diffusion of Energy Efficiency in Building View more presentations from nilskok.

On the Economics of Energy Labels in the Housing Market

with Dirk Brounen, Journal of Environmental Economics and Management (2011)

Download

This paper reports the first evidence on the market adoption and economic implications of energy performance certificates implemented by the European Union. The results show that adoption rates are low and declining over time, coinciding with negative sentiment regarding the label in the popular media. Labels are clustered among smaller, post-war homes in neighborhoods with more difficult selling conditions. We also document that the adoption rates of energy labels have a positive relation to the number of “green” voters during the 2006 national elections. Within the sample of labeled homes, the energy label creates transparency in the energy performance of dwellings. Our analysis shows that consumers capitalize this information into the price of their prospective homes.

‘Environmental Performance: A Global View on Commercial Real Estate’

with Piet Eichholtz, Rob Bauer and Paulo Peneda.	Download
Research report on the environmental performance of public property companies and private property funds. Commissioned by APG Asset Management, PGGM Investments, and USS. More information at www.gresb.com	More information

Ecological Responsiveness and Corporate Real Estate

with Piet Eichholtz and John Quigley, Business & Society, Spring 2015

Download

Real estate’s large impact on the natural environment has led to a rise in energy-efficient, green building. Financial intermediaries may be affected by this trend, at the level of the company, the asset owner (REIT), and the institutional investor. This paper investigates the ecological responsiveness of more than 11,000 firms in specific industries by analyzing the decisions that these firms make in occupying office space. Controlling for building quality and location, we find that corporations in the oil and banking industries, as well as non-profit and public organizations, are among the most prominent green tenants. Furthermore, measures of an industry’s human capital intensity are positively related to the propensity to lease green office space. These empirical findings confirm the theoretical framework on economic advantage and institutional pressure as important determinants for the ecological responsiveness of firms.

More information

How Green is Your Property Portfolio? The Global Real Estate Sustainability Benchmark

with Rob Bauer, Piet Eichholtz, and John Quigley, March 2011

Download