By: M. Harrison, Texas Tech University and Michael J. Seiler, Old Dominion
Empirical evidence on the effect of environmental certification on commercial real estate properties routinely finds evidence of both significant rental rate and occupancy rate premiums accruing to owners of LEED and/or Energy Star certified properties. The current investigation expands our understanding of environmental certification and valuation effects by examining a previously unexplored property type - industrial warehouse facilities. Specifically, "green" warehouses in politically conservative areas rent at a significant discount relatively to their non-certified counterparts, while similar properties in politically liberal areas rent at a significant premium. These results provide further evidence on the importance of political ideology to real estate decision-making, and offer the first insight into the importance of environmental certification within the industrial warehouse property type sector.