LEED vs. BREEAM: Which Green Certification Commands Higher Premiums?
In today’s world, where climate change and sustainable living are at the forefront of many people’s minds, it’s becoming increasingly important for buildings to be designed and constructed with environmentally-friendly practices in mind. Green certifications, such as LEED (Leadership in Energy and Environmental Design) and BREEAM (Building Research Establishment Environmental Assessment Method), have been developed to help identify and promote buildings that meet these standards. However, one question that often comes up is which certification commands higher premiums. In this article, we’ll take a closer look at LEED vs. BREEAM and determine which one, if any, can command higher premiums.
Understanding LEED and BREEAM
LEED and BREEAM are both green certification systems that aim to promote sustainable building practices. LEED was developed by the United States Green Building Council (USGBC) and is widely adopted in North America. BREEAM, on the other hand, was developed by the Building Research Establishment (BRE) and is primarily used in Europe. However, both certifications have global reach and are recognized around the world.
Both LEED and BREEAM use similar assessment methods, which include evaluating various categories such as energy efficiency, water efficiency, materials and resources, indoor environmental quality, and innovation in design. The final score of each assessment determines the level of certification a building can achieve; LEED has four levels (Certified, Silver, Gold, and Platinum), while BREEAM has five levels (Pass, Acceptable, Good, Very Good, and Excellent).
The Perception of Higher Premiums
Many people, both in the real estate industry and among the general public, perceive that buildings with green certifications like LEED and BREEAM come with higher price tags. This perception is likely due to the additional costs associated with implementing sustainable practices and technologies into a building’s design and construction. However, whether this translates into higher premiums for LEED or BREEAM-certified buildings is still up for debate.
Research on Premiums
Several studies have been conducted in an attempt to determine if buildings with green certifications like LEED or BREEAM do, in fact, command higher premiums. A 2015 study conducted by the University of California, Los Angeles (UCLA) found that LEED-certified buildings in California did not necessarily receive higher sales prices or rent premiums compared to non-certified buildings. Similarly, a 2017 study by the Massachusetts Institute of Technology (MIT) found that although LEED-certified buildings in Boston had higher energy efficiency and lower operating costs, they did not command higher premiums.
On the other hand, a 2014 study by the University of Reading in the UK found that BREEAM-certified buildings received higher rent premiums compared to non-certified buildings. However, this study also found that BREEAM certification did not necessarily guarantee higher value appreciation over time.
Factors Affecting Premiums
One reason why there is no clear consensus on whether LEED or BREEAM-certified buildings command higher premiums is that there are several factors that can affect the perceived value of a building. These factors include location, building type, market conditions, and tenant preferences. For example, a building located in a highly desirable area may command higher premiums regardless of its green certification, while a building in a less desirable location may see more value from sustainable design and practices.
Additionally, different building types may have different opportunities for incorporating sustainable features. For example, a newly built office building may have more room for energy-saving technologies than a historic building that has been retrofitted for sustainable practices.
It’s also essential to consider the preferences of tenants and buyers. In some markets, tenants may be willing to pay a premium for green certifications, while in others, this may not be a priority.
Conclusion
While there is ongoing debate about whether LEED or BREEAM-certified buildings can command higher premiums, it’s essential to note that both certifications are meant to promote sustainable building practices, not necessarily increase property value. Ultimately, factors such as location, building type, and market conditions will play a more significant role in determining the perceived value of a building. However, as more people prioritize sustainable living, buildings with green certifications may become more desirable and command higher premiums in the future.
In conclusion, LEED and BREEAM are both reputable green certifications that promote sustainable building practices. While there is no clear evidence that they can command higher premiums, they do play an essential role in promoting environmentally-friendly buildings. Whether a building with LEED or BREEAM certification will command higher premiums will depend on various factors, and it’s up to buyers, tenants, and market demand to determine the ultimate value of a green-certified building.
