An Assessment of LEED Certification's Impact on Net Rental Rates for Commercial Office Space in Toronto, Ontario

With the impact that buildings have on the environment, it is important to understand what barriers are preventing or slowing investment in socially and environmentally responsible property. The present study was conducted to determine whether LEED certification has a significant impact on the market value of office buildings in Toronto, Ontario value determined by the average net asking rent for each building. For some 68 subject and control buildings, we matched information on the net asking rent for 16 LEED certified (subject) buildings to 52 otherwise comparable properties (control buildings). Using ordinary least squares (OLS) analysis, we looked to find what relationship exists between net asking rent and the LEED label. Controlling for other variables historically shown to have an impact on property value, we expected the results of this study to determine whether there is a business case for LEED certification in the downtown Toronto office market.