The Financial Impact of Healthy Buildings: Rental Prices and Market Dynamics in Commercial Office

54 Pages Posted: 17 Feb 2021

See all articles by Natasha Sadikin

Natasha Sadikin

Massachusetts Institute of Technology (MIT), Department of Urban Studies & Planning, Students

Irmak Turan

Massachusetts Institute of Technology (MIT)

Andrea Chegut

Massachusetts Institute of Technology

Date Written: February 12, 2021

Abstract

While the benefits of healthy spaces have long been qualitatively understood and appreciated, it has not been financially analyzed to derive their value and impact on economic decision-making. We use CompStak and Healthy Building public databases from Fitwel and WELL to operationalize a real estate hedonic model in order to ascertain the value of healthy spaces on the effective rent of offices spaces in ten cities within the United States: Atlanta, Boston, Chicago, Denver, Los Angeles, New York, Philadelphia, San Francisco, Seattle, and Washington DC.
We find that healthy building effective rents transact between 4.4 and 7.7% more per square foot than their nearby non-certified and non-registered peers. This premium for healthy spaces is independent of all other factors, such as LEED certification, building age, renovation, lease duration, and submarket. These results indicate that healthy buildings are seen as an asset that correlates with employee or tenant well-being and productivity.

Suggested Citation

Sadikin, Natasha and Turan, Irmak and Chegut, Andrea, The Financial Impact of Healthy Buildings: Rental Prices and Market Dynamics in Commercial Office (February 12, 2021). MIT Center for Real Estate Research Paper No. 21/04, Available at SSRN: https://ssrn.com/abstract=3784779 or http://dx.doi.org/10.2139/ssrn.3784779

Natasha Sadikin

Massachusetts Institute of Technology (MIT), Department of Urban Studies & Planning, Students ( email )

77 Massachusetts Avenue
Cambridge, MA 02139
United States

Irmak Turan

Massachusetts Institute of Technology (MIT) ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

Andrea Chegut (Contact Author)

Massachusetts Institute of Technology ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States

HOME PAGE: http://https://web.mit.edu

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
154
Abstract Views
619
rank
237,053
PlumX Metrics