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Economic studies of Green Commercial Buildings in Sweden
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Building and Real Estate Economics.ORCID iD: 0000-0003-4921-9479
2013 (English)Licentiate thesis, comprehensive summary (Other academic)
Abstract [en]

Climate change has risen to become one of our most critical global issues to resolve. Greenhouse gas emissions have been identified as one of the main causes for increased global temperature. As most energy production causes emission of greenhouse gases, a more energy efficient real estate sector could reduce the global greenhouse gas emissions. This reduction could be dramatic, as the real estate sector accounts for quite a large share of the society’s total energy usage. However, it is argued that even economically profitable investments are not being conducted to the full extent, leaving an “energy efficiency gap”. From an economic perspective there are multiple hinders that hampers environmental and/or energy efficiency investments (e.g. transaction costs, split incentives, capital constraints).

This licentiate thesis studies environmental issues from an economic point of view in the commercial built environment in Sweden. The main purpose is to illustrate how different real estate actors respond to building environmental and/or energy performance, with focus on barriers, actions and economic outcome/impact. The thesis consists of an introductory essay and two articles.

The first article studies the implementation of green leases. The study showed that complex contract structure involving different parties easily create so called “split incentives”, which can be very hard to resolve by additional agreements. This could be one explanation to why some profitable energy efficiency investments are not being realized. Furthermore, the study showed that the building owners were quite risk averse, in the sense that they were reluctant to conduct energy efficiency investments with longer pay-off periods than the current lease term. As Swedish commercial leases have a short contract length, this myopic view hampers energy efficiency investments with longer pay-off periods. An additional result from the study was the emotional aspect, from the tenant’s point of view, to invest in somebody else’s property. In general, the tenant considered building improvements to be the landlord’s responsibility. All in all, a conclusion that could be drawn is that the separation of building ownership and usage may have a negative impact on the leased commercial building stock’s energy performance.

The second article studies whether energy performance affects the appraised value of office buildings. The overall result was that the energy performance rating had no impact on the commercial office buildings’ market values. The study indicated that rents, “time of valuation”, changes in vacancy rates, location and “low building age” had the greatest impact on assessed market values. This result could be due to that the correlation between energy usage and maintenance costs is low. Further explanation could be that the specified model suffers from multicollinearity, as the effect of improved energy efficiency cannot be separated from the building age or rent.

The including studies support the notion that energy efficiency measures are difficult to implement and appraise to the full extent. Hence, future research is going to focus on how “green” features better could be incorporated into real estate valuation practices as well as evaluation of how environmental certified buildings are actually performing (concerning rents, energy usage, user satisfaction etc.).

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2013. , 27 p.
Series
TRITA-FOB, 2013:1
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:kth:diva-116450ISBN: 978-91-85783-29-8 (print)OAI: oai:DiVA.org:kth-116450DiVA: diva2:589630
Presentation
2013-02-15, L1, Drottning Kristinas väg 30, KTH, Stockholm, 13:00 (English)
Opponent
Supervisors
Note

QC 20130121

Available from: 2013-01-21 Created: 2013-01-18 Last updated: 2013-01-21Bibliographically approved
List of papers
1. Difficulties in changing existing leases - one explanation of the "energy paradox"?
Open this publication in new window or tab >>Difficulties in changing existing leases - one explanation of the "energy paradox"?
2012 (English)In: Journal of Corporate Real Estate, ISSN 1463-001X, E-ISSN 1479-1048, Vol. 14, no 1, 63-76 p.Article, review/survey (Refereed) Published
Abstract [en]

Purpose – The purpose of this paper is to investigate if a green lease could eliminate the splitincentive problem in two office buildings located in Stockholm, Sweden. It aims to provide a theoreticaloverview concerning the “energy paradox” and to describe a case study in which a green lease was tobe implemented in the legal framework for two office buildings in the Stockholm region.

Design/methodology/approach – This paper documents a case study, in which a green lease wasto be implemented in the legal framework for two office buildings, to promote a more activeengagement in the buildings energy performance. In order to accomplish this, a project group wasformed which consisted of representatives from the building owners, tenant, property manager,energy consultants and KTH, Royal Institute of Technology, Stockholm.

Findings – This paper reveals that it is very hard to alter already legally binding agreements.Furthermore, it shows that the separation of ownership and usage of a building may not be optimalfrom an energy efficiency point of view.

Originality/value – The paper gives an empirical explanation as to why at times energy efficiencymeasures are not undertaken, even though the investments themselves bring about a positive netpresent value. In addition, the paper analyses the situation where property maintenance is outsourcedto a property management firm, which is a common but seldom discussed situation in the literature.

Keyword
Green leases, Energy efficiency, Energy consumption, Split incentives, Office buildings, Energy paradox, Energy efficiency gap, Sweden
National Category
Economics
Identifiers
urn:nbn:se:kth:diva-116374 (URN)10.1108/14630011211231446 (DOI)
Note

QC 20130121

Available from: 2013-01-17 Created: 2013-01-17 Last updated: 2017-12-06Bibliographically approved
2. Is energy performance capitalized in office building appraisals?
Open this publication in new window or tab >>Is energy performance capitalized in office building appraisals?
2013 (English)In: Property Management, ISSN 0263-7472, E-ISSN 1758-731X, Vol. 31, no 3, 200-215 p.Article in journal (Refereed) Published
Abstract [en]

Purpose: Since 2009, all commercial buildings in Sweden should have undergone an energy performance rating in accordance with the European Union directive on the Energy Performance of Buildings. The main purpose of this rating is to illustrate a building's energy performance in an easy, straightforward manner. In doing so, it becomes easier for the actors on the real estate market to assess the building's energy performance, which in the end should be reflected in the capital value of the property. The aim of this paper is to study the EU Energy Performance Certificates' impact on office buildings' capital values. Design/methodology/approach: In this paper an econometric approach is used to estimate the energy performance impact on buildings' capital values. A panel data set was constructed using economic data from IPD Nordic and Energy Performance Certificates from the Swedish National Board of Housing, Building and Planning. Findings: This study shows that a building's energy performance has no impact on its capital value. Research limitations/implications: There may be a selection bias in the sample as the study is dependent on data from IPD Nordic. Originality/value: This is one of the first papers that study the EU Energy Performance Certificates' impact on office buildings' capital values in Sweden.

Keyword
Capital value, Energy Performance Certificate, EPC, Hedonic price model, Office buildings, Sweden
National Category
Economics and Business
Identifiers
urn:nbn:se:kth:diva-116502 (URN)10.1108/02637471311321450 (DOI)2-s2.0-84878882456 (Scopus ID)
Note

QC 20140617

Available from: 2013-01-21 Created: 2013-01-21 Last updated: 2017-12-06Bibliographically approved

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