U.S. Green Building Adoption Index 2018

The nation’s largest cities are getting even greener, according to the fifth annual U.S. Green Building Adoption Index by CBRE and Maastricht University. Researchers have found green certified office space across America’s 30 largest metros has reached 41 percent of market totals – the highest in the index’s history.

“Green” office buildings in the U.S. are defined as those that hold either an EPA ENERGY STAR® label, USGBC LEED certification or both. According to the report, 11.5 percent of all buildings surveyed are ENERGY STAR labeled, while 5.2 percent of buildings are LEED certified, both at all-time highs for the five-year study.

Chicago again claimed the top spot with nearly 70 percent of its space green certified. In addition to defending its title as the nation’s greenest city, Chicago saw a difference of nearly six percent with second-place San Francisco, the largest spread ever recorded in the Green Building Adoption Index. Atlanta maintained the third spot with more than 58 percent of all space green certified, while a surging Los Angeles claimed fourth – up from sixth last year. Minneapolis rounds out the top five with 55 percent of office space certified.

Rank Market Total # of Buildings Total Sq. Ft. Total # of Green Buildings % of Market Green Certified
1 Chicago 1,435 236,516,240 265 69.8%
2 San Francisco 1,386 120,434,025 286 64.0%
3 Atlanta 908 132,828,235 251 58.4%
4 Los Angeles 1,664 206,051,367 363 56.3%
5 Minneapolis 476 69,950,658 102 55.0%

“From moving to 100 percent renewable energy in our public buildings, to supporting our private partners as they work to reduce emissions, Chicago is showcasing to the world the impact that cities can have on climate change for their residents and for people around the world,” said Chicago Mayor Rahm Emanuel. “This national recognition is a testament to the progress and success of our efforts to improve our environment while bettering communities across Chicago.”

Continued improvement in average energy efficiency for the nation’s commercial buildings also prompted the EPA to change the underlying calculations for ENERGY STAR scoring this year. This change is expected to lower average scores for office buildings by as much as 10 points next year. These changes may have a significant impact on next year’s Green Building Adoption Index rankings, particularly for markets whose ENERGY STAR certifications comprise the bulk of their green space.

“Green building certifications have become an important proxy for sustainable practices, recognized by all stakeholders. Any significant change to one of these major certification programs can have a significant impact on the buildings affected. We will be closely watching for the results,” said David Pogue, CBRE’s Senior Vice President, Global Client Care.

Green Buildings Certification Influencing Capital Markets

CBRE and Maastricht University researchers note that building certification has become a more recognized and important part of a building’s profile. As these programs reach maturity, the capital markets are increasingly incorporating these certificates into loan pricing and alternative financial instruments such as green bonds. And, according to additional research by Green Building Adoption Index co-author Rogier Holtermans, buildings certified by ENERGY STAR and/or LEED have been shown to transact for about 10.1 percent more than non-green certified buildings.

In fact, in 2018, for the first time in the four-year history of CBRE’s Investor Intentions Survey, more investors said sustainability is an important criteria in asset selection than said it was unimportant. This reflects a gradual trend of increasing investor interest in sustainability.

On the lending side, there have been significant advances to integrate green building certification into financing programs, and some lenders, like Freddie Mac and Fannie Mae, are adapting their rates based on the presence or absence of green building certification. Freddie and Fannie are providing pricing breaks in the range of 10-30bps to multifamily assets that are rated by one of eight different green rating schemes.

“For investors and lenders in the commercial real estate sector, green building certification affects their cost of capital. The rationale is that such buildings have a more attractive risk profile, and may be more resilient when economic headwinds arrive,” said Dr. Nils Kok, associate professor at Maastricht University.

This is the fifth release of the annual U.S. Green Building Adoption Index. Based on a rigorous methodology, the index shows the growth of ENERGY STAR- and LEED-certified space for the 30 largest U.S. office markets, both in aggregate and in individual markets, over the previous 10 years. A feature again this year is a geographic mapping platform that highlights the name, location and details of the specific green certification for each building in all 30 markets. View the full report HERE, a scrollable and clickable version of the mapping platform is included below.

International Green Building Adoption Index - 2018

We have long understood that buildings, and especially commercial buildings, are at the forefront of many of society's most pressing issues. Water, waste, and significant energy use with the resultant carbon emissions, are each drawing the attention of a growing list of constituents and stakeholders. For example, governments have adopted ever-stricter building codes, comparable to fuel-efficiency standards for cars. Also, the European Union mandates the construction of zero-net energy projects by 2020 (by 2018 for public buildings). Occupiers are increasingly translating corporate carbon and Environmental, Social, and Governance (ESG) goals into requirements for the buildings they occupy, demanding efficient buildings and energy sourced from renewables. And finally, lenders are gradually starting to assess collateral on its energy efficiency, offering carrots such as reduced rates for more efficient buildings, and sticks for non-efficient buildings.

In the face of these issues, building owners have been progressively improving the environmental performance of their assets, but for those active in the commercial real estate market, it is challenging to assess the importance and diffusion of energy efficiency in the national or local market. How does this compare across markets? One way to measure the importance of energy efficiency in buildings is to assess the use of "green" building certification programs. Such certification programs have been in place, in various forms, for more than a decade across the global commercial property market. Although no green building certification program is the same, they all share basic characteristics, such as measuring energy performance, assessing a multitude of other dimensions of sustainability, and providing external certification through typically independent providers.

To discover how the market for "green" building has progressed over time and across markets, we developed a comprehensive, annual review, the U.S. Green Building Adoption Index, a collaborative effort between CBRE and Maastricht University, detailing the growth and distribution of "green building" certifications in the top 30 U.S. markets since 2005. In these annual reviews, published since 2014, we have measured the number and percentage of space in each market that has achieved a defined green building certification. In this report, we are expanding the U.S. Green Building Adoption Index to the global real estate market, seeking to measure the adoption of green certification programs across several international real estate markets. Information on market size (number of buildings and/or square footage of space) is provided by the local teams of CBRE, while the numerator of each index includes a wide variety of "green" and energy certification schemes, such as BOMA BESt, BREEAM, DGNB, HQE, LEED, NABERS, and Green Star (see Appendix A for an overview of schemes). This International Green Building Adoption Index (IGBAI) is similar in spirit to the U.S. Green Building Adoption Index described above, and initially covers 10 cities in Australia, Canada, and Europe. Each market is covered in detail in this report, including a detailed discussion of the methodology.

Key Findings

In the 10 markets covered by this report, we document that 18.6 percent of space is now certified as "green." This represents more than 227 million square feet of green space, out of a total of 1.2 billion square feet of office space reviewed. This is a significant increase from just 6.4 percent a decade ago, in 2007. Market-specific details are below:


  • Melbourne: 29 percent of office space in the CBD was certified under the Green Star or NABERS program at the end of 2016, compared to just 1.4 percent at the end of 2006.
  • Sydney: 46 percent of space in the CBD was certified under the Green Star or NABERS program at the end of 2016, compared to just 0.8 percent at the end of 2006.


  • Toronto: More than 50 percent of office space was certified under the BOMA BESt or the CAGBC LEED program at the end of 2016, compared to 15 percent at the end of 2006. Measured by number of buildings, the adoption of both programs increased from 2.5 percent at the end of 2006 to more than 20 percent at the end of 2016.
  • Vancouver: Almost 52 percent of office space was certified under the BOMA BESt or CAGBC LEED program at the end of 2016, compared to 29 percent at the end of 2005. In number of buildings, the adoption of BOMA BESt and CAGBC LEED increased from 6.7 percent at the end of 2005 to approximately 24 percent at the end of 2016.


  • Amsterdam: BREEAM-NL is the dominant rating program in Amsterdam. At the end of 2016, almost 11 percent of office space was certified under the BREEAM program, compared to just 0.2 percent at the end of 2011. The Amsterdam office market included only 2 LEED certified buildings by the end of 2016.
  • Frankfurt: Two certification programs are used frequently in the Frankfurt office market: DGNB and LEED, with limited overlap. At the end of 2016, 13 percent of space was certified by LEED, compared to just 0.2 percent at the end of 2009. In comparison, at the end of 2016 5.1 percent of space was certified by DGNB, compared to 1.4 percent at the end of 2009.
  • London: BREEAM is the dominant building rating scheme in London. Despite a high number of BREEAM certified buildings, the adoption levels for London are relatively low. At the end of 2016, 9 percent of office space in London was BREEAM certified.
  • Paris: A variety of programs are used in the Paris office markets, although HQE is most prevalent. At the end of 2016, approximately 9 percent of office space was certified under HQE, BREEAM, or LEED, compared to just 0.1 percent at the end of 2007.
  • Stockholm: LEED is the dominant rating program in the Stockholm office market. At the end of 2016, almost 12 percent of space was LEED certified, compared to just 1.2 percent at the end of 2009. Only one building in the office market is certified by BRE.
  • Warsaw: Like Frankfurt, both BREEAM and LEED are frequently employed in the Warsaw office market, although again with limited overlap between both programs. At the end of 2016, 12 percent of office space was certified under the BREEAM program, compared to just 1.2 percent at the end of 2011.

 United  States

  • New York: For comparison purposes, we include the 2016 data from the U.S. Green Building Adoption Index. In 2016, 20.2 percent of the Manhattan office market was certified by LEED, compared to just 0.3 percent in 2006.


The numbers in the International Green Building Adoption Index come with some qualifications. This report includes certification data on office buildings only and other property types are excluded. We further exclude owner-occupied or government buildings. In line with the CBRE definition, we filter out all green-certified assets that are deemed "illiquid." Finally, CBRE typically covers just the central business district and parts of a city with significant office market activity. We only include green-certified assets within the CBRE market boundaries. It should be further noted that, unlike the U.S. markets reported on in our prior work, these global markets are not consistent in data or approach. Our ability to measure total stock per market varies and market boundaries are often indistinct, while the definition of “liquid space” tracked by CBRE varies across markets. Green certification programs often include many owner-occupied and government buildings, which are manually excluded from our measure of green stock per market. Some markets provide detailed information on building count and building square footage, while some markets only measure space, but not the number of buildings. Finally, address data is often inconsistent from development to project completion. As with the U.S. Green Building Adoption Index, many of these initial issues will be addressed and resolved in the coming years. We believe that this report provides some good first insights into what has become a global phenomenon: green building certification.

View the official press release, download the report.

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

Working paper (March 2018), together with Piet Eichholtz, Nils Kok (Maastricht University) and Erkan Yönder (Oyzegin University).


The increasing societal focus on environmental issues leads to important questions about the relationship between corporate environmental (ESG) performance and financial performance. Research on the impact of environmental performance on firms' cost of capital remains especially scant. The real estate sector offers a laboratory to address 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 26 and 32 basis points, depending on the specification. At the corporate level, REITs with a higher fraction of environmentally certified buildings experience lower bond spreads in the secondary market. These results are robust to different estimation strategies, and signals that the debt market efficiently prices in environmental risk.

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

My paper with Nils Kok (Maastricht University) is accepted for publication in Real Estate Economics. The abstract is included below and the full paper can be downloaded by clicking the button at the bottom of this post.


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 percent 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 percent 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.

Green Building Adoption Index 2016

Today we released the Green Building Adoption Index 2016! This is a project in cooperation with the research team of CBRE, led by David Pogue, and my colleague Nils Kok (Maastricht University).

This year's release features an online tool (included below) which maps all the certified buildings that are included in the index, and displays the individual market reports. The national results can be downloaded by using this link, and the official press release can be found here.

Energy Efficiency and Economic Value in Affordable Housing

One of my research papers has been accepted for publication in Energy Policy, this is joint work with Piet Eichholtz (Maastricht Univeristy) and Andrea Chegut (MIT):


Strong rental protection in the affordable housing market often prohibits landlords from charging rental premiums for energy-efficient dwellings. This may impede (re)development of energy efficient affordable housing. In the Netherlands, affordable housing institutions regularly sell dwellings from their housing stock to individual households. If they can sell energy efficient dwellings at a premium, this may stimulate investments in the environmental performance of homes.

We analyze the value effects of energy efficiency in the affordable housing market, by using a sample of 17,835 homes sold by Dutch affordable housing institutions in the period between 2008 and 2013. We use Energy Performance Certificates to determine the value of energy efficiency in these transactions. We document that dwellings with high energy efficiency sell for 2.0–6.3% more compared to otherwise similar dwellings with low energy efficiency. This implies a premium of some EUR 3,000 to EUR 9,700 for highly energy efficient affordable housing.

Full paper: Chegut, Eichholtz, Holtermans (2016)

Information Asymmetry and Sustainability in Real Estate Markets

After years of hard work, and having had the opportunity to travel the world and visit with great institutions, on June 23, 2016 it was finally time to defend my dissertation entitled "Information Asymmetry and Sustainability in Real Estate Markets." Economisch Statistische Berichten, a Dutch magazine for economists published a nice one-page summary on my dissertation (unfortunately only in Dutch). 

Full dissertation: Holtermans (2016)


The Economic Effects of Owner Distance and Local Property Management in U.S. Office Markets

One of my research papers has been accepted for publication in the Journal of Economic Geography, this is joint work with Piet Eichholtz (Maastricht University) and Erkan Yönder (Oyzegin University):


Using a large dataset of U.S. offices we analyse the relationship between investors' distance to their assets and the effective rent of these assets, and study the extent to which property managers can influence this relationship. We construct hedonic rent models to control for other known rent determinants. It turns out that proximity matters: holding everything else constant, investors located closely to their office buildings are able to extract significantly higher effective rents from these assets, especially if these buildings are of low quality. This effect is due to significant differences in occupancy levels. Interestingly, property managers can affect this relationship, mitigating the adverse effects of investor distance on effective office rents. Especially if the owner does not reside in the same state as the building, external property management is of importance, most prominently so for class-B office buildings.

Full paper: Eichholtz, Holtermans, and Yönder (2016)