The growth of the green office market in the UK

Abstract

Purpose-This paper examines the experience of the UK office market in embracing green buildings. The empirical analysis considers the spatial pattern and growth of green buildings in cities since 1990. It examines the perceived industry wisdom that the establishment of a green premium for occupation is the key to greening the office stock Design/methodology/approach-The paper begins by looking at the concept of a green office and then examines the evolving attitudes towards these offices and the issues for local market dynamics. The empirical analysis examines the current spatial pattern of green office buildings in the UK and then their impact on city office markets where there is a major concentration. The latter part of the paper examines the growth of green offices since 1990. It begins with national trends and then examines the evolution of green development in individual cities. Findings-The initial adoption of green offices was slow. There has been a dramatic rise in green offices at the peak of the last decade's development boom and in the immediate years that follow. Market acceptance of the importance of greenness appears still to be in the melting pot with limited market transactions since 2008. Green offices represent only 2.7% of office buildings and 12% of total space in the market. Most green offices are in the principal cities with the largest concentration in London. London represents the only potential locality where a green market could have been established so far. Practical implications-The paper provides an empirical assessment of the growth of green offices in the UK. Originality/value-This is the first paper to consider the development and scale of green offices in the context of local markets. It challenges the perceived wisdom that a green premium is central to the green transformation to date.

Decisions by Key Office Building Stakeholders to Build or Retrofit Green in Toronto’s Urban Core

“…A significant finding was that in the Class A office market segment, eco-certified space (LEED and/or Energy Star) had become part of the Class A office sector and not a niche submarket. LEED building certification had become a factor in the property's market valuation, defined as premium rent [34]. This calculation shapes the investment decisions of developers, investors and owner landlords in determining the degree to that they will pursue specific green building attributes.…”

“…Both of the areas were used. The comparison of two submarkets will provide for an accounting of various location characteristics that may impact the value of LEED in any given submarket but are not explicitly accounted for in this study [34]. CBD urban core office buildings in this study will refer to the area bounded by Bloor Street to the North, Lake Ontario to the south, the Don River to the East, and Bathurst Street to the West.…”

“…al. [34] cautioned that the academic hedonic regression models dealing with green rent premium studies need to guard against three things: missing variables; coefficients based on equilibrium assumptions during periods of market volatility; and distinguishing between a new and a green office premium when green offices represent a high proportion of new offices in a study.…”

Dimensions of Green Office Evidence From Regency/City Government Offices in Central Java, Indonesia

“…The reports had stated that the quality of Indonesia's environment in 2018 was ranked 133 out of 180 countries, with a score of 46.92, just below the two closest neighboring countries of Singapore, and Malaysia which were respetively ranked 49 and 75 (Yale 2018). Apart from this low environmental quality ranking, the Indonesian government also faced other challenges involving the enviroment such as its lack Studies (Oyedokun et al 2015) have also noted that most implementation of the green office concept seemed to be concentrated within principal cities only which implies that rural areas may be even less aware of the implementation. In the context of a developing nation like Indonesia, the green office phenomenon had just been improvised, hence literature on this aspect of research is scant, particularly on its environmental quality (Minstry of Energy and Mineral Resources -(ESDM 2011).…”

Energy-related standards and UK speculative office development

“…(Schiellerup & Gwilliam, 2009, p. 802) Another potential explanation is then that investors and developers might see no financial incentive to do so, as 'customers' (i.e. building investors, managers and tenants) might not pay a 'green premium' or avoid a 'grey discount' (De Jong & Parkinson, 2013;Elliott, Bull, & Mallaburn, 2015;Kontokosta, 2013;Oyedokun, Jones, & Dunse, 2015;Surmann, Brunauer, & Bienert, 2015). The link between energy efficiency or green certification and higher rents is, however, taken for granted in the industry and evidenced as a 'willingness to pay' for a certified 'eco-label' (Fuerst & van de Wetering, 2015).…”