CBRE and USGBC Jointly Publishes White Paper 'Towards Excellence: Market Performance of Green Commercial Buildings in the Greater China Region
Taipei –With public awareness of environmental
protection increasing and green building initiatives on a clear government
agenda, green building concept is increasingly gaining spotlight in the society.
CBRE published a whitepaper entitled “Towards Excellence: Market Performance of
Green Commercial Buildings in the Greater China Region” in conjunction with U.S.
Green Building Council (USGBC). The report aims to analyze market performance
of LEED-certified Grade A office projects in ten major markets in the Greater
China region, along with Hong Kong and Taipei through a number of indicators
such as rental premium, rental growth and occupancy rate, attractiveness to
high-quality tenants, underlining their competitive strength in today’s
commercial real estate market.
In the ten select cities we observed, rentals premium of LEED-certified Grade A
office in most cities is in the range of 10-30% comparing to non LEED-certified
samples. LEED-certified office projects enjoyed higher average rental
performance and were in a better position in a weak downward market.
The number of MNC (multinational
corporations) occupiers in LEED-certified Grade A office buildings is 100-150%
higher than non LEED-certified buildings. (Measured by samples completed during
the same period)
Beijing, Shanghai, Guangzhou and Shenzhentop the market with the fastest pace of increase in the number of LEED-certified
buildings. LEED-certified Grade A office buildings in the four tier I cities
aggregately amount to 3.84 million sq. m., accounting for more than 70% of
LEED-certified buildings among the ten select cities.
Committed to creating a new building economy,
promoting economic restructuring and pushing for sustainable development, Chinese
government is increasingly supportive of green building initiatives. Local
governments have started to provide policy support, such as introducing subsidy
policy to reward projects with LEED certification.
Premium of LEED-Certified Grade A Office in Ten Major Cities in the Greater
LEED promotion and certification started rather
late in Hong Kong and Taipei. However, LEED has recorded considerable
development since then. LEED-certified Grade A office space in Hong Kong and
Taipei registered an average annual growth rate of approximately 28% and
achieved a 30% rental premium.Greater
awareness among the public and enterprises of environmental protection and
sustainable growth will play a positive role in promoting increased market
acceptance of green buildings in the region.
“Every story about LEED is a story about
leadership and this report clearly demonstrates that leaders in China know that
LEED enhances a company’s triple bottom line,” said Mahesh
Ramanujam, COO, USGBC and President, GBCI. “China is no
exception: leaders across China are committing to building healthier, more
sustainable communities where buildings perform at a higher level and human
health is prioritized and enhanced.”
certification gaining increasing recognition; LEED-certified office space growing
During recent years, office supply in major
domestic cities increased significantly while the pace of economic development
continued to slow, posing increasingly severe challenges to the performance of
demand for office space in tier II cities. Against this background, commercial
green building certification is considered to be an embodiment of social
responsibility, as well as a way to boost the brand image of projects and
businesses, an effective means to attract a high-quality tenant mix by creating
a differentiating aspect to help define a building’s unique position in the
market. As such, LEED certification has been attracting more and more attention
from developers. CBRE’s statistics indicate that LEED-certified Grade A office
buildings exceeded 5.6 million sq. m. across ten select major cities in Greater
China by 2015, a year-on-year increase of 7.4%. This accounts for 28% of the
total Grade A office market and reveals a development trend of steady growth.
higher rental performance to multinationals being 100-150% more likely to
occupy LEED-certified buildings than non LEED-certified buildings, leaders know
that LEED works,” added Ramanujam.
“And LEED will continue to work in China as it continues to drive
sustainability at a global scale, creating a more sustainable future, securing
the health and well-being of millions and further accelerating China’s position
as a global leader.”
LEED-Certified Grade A Office Space in the Greater China Region & in Tier I
certification supports above-average pricing strategy in tier I cities,
underpinning rental premium
Mainland China tier 1 cities top the market
with the fastest development trend of steady growth. The relatively higher
proportion of foreign enterprises in Grade A office market in Shanghai gives
rise to higher requirements on the sustainability of building amenities and
facilities. LEED-certified office projects in Shanghai recorded a 13% rental premium
and experienced a rapid rental increase, 15 percent higher than that of
non-LEED certified samples.LEED-certified
Grade A offices in Beijing recorded the lowest rental gap among tier I cities
as Beijing has seen rental hovering at a plateau for several years. Property
owners of LEED-certified office buildings have limited ability to further raise
rents due in part to the restrained rental affordability of tenants.Even so, LEED certification has gradually
become a popular choice for new buildings. LEED-certified Grade A offices account
for 38% of the total Grade A office floor area in Beijing in Q12016, as
compared to only 17% in Q1 2008.
certification boosts occupancy rates in tier II cities, serving as differentiator
Chengdu, Tianjin, Hangzhou and Wuhan, as a
representative of the tier II city markets, is still in the emerging stage as a
whole as LEED certification only began around 2011 in these cities (excluding
Hangzhou). LEED-certified Grade A office buildings cover a floor area of less
than one million sq. m. in total. As LEED certification is increasingly
becoming a differentiator in balanced or tenant markets (the four select tier
II cities all fall under this category) where tenants typically have more
options, LEED-certification will allow buildings to stand out from the competition
in terms of occupancy rate and its growth margins, serving as a positive
indicator of prospective rental growth to a certain extent.
Neither CBRE nor its affiliated companies make any warranties or claims on the implied accuracy of the information contained herein.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2016 revenue). The company has more than 75,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 450 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.