The Impact of Building Certifications in Commercial Real Estate
4 min read
In today’s commercial real estate (CRE) landscape, building certifications have become more than just a badge of honour; they’re a critical tool for driving value, attracting tenants, and meeting evolving sustainability standards. From LEED to BOMA BEST and WELL, certifications help property owners demonstrate commitment to environmental performance, health and wellness, and operational efficiency.
In this article, we explore how building certification influences commercial property value, tenant expectations, and long-term asset performance, and why it’s becoming essential in the future of CRE.
What Are Building Certifications?
Building certifications are third-party designations awarded to properties that meet specific performance or sustainability criteria. These certifications assess a range of factors, including energy and water efficiency, air quality, materials used, waste management, and even tenant comfort and wellness. Commonly recognized programs include:
LEED (Leadership in Energy and Environmental Design) – focuses on green building practices
BOMA BEST – a Canadian certification for energy and environmental management in existing buildings
WELL Building Standard – prioritizing human health and wellness in the built environment
ENERGY STAR - measuring energy performance relative to similar properties
Why Certifications Matter in Commercial Real Estate
Certified buildings often command higher rents and have greater appeal to environmentally conscious tenants. They’re also seen as lower-risk investments, particularly as sustainability becomes a priority for institutional investors and asset managers.
Tenants, especially large corporations with their own ESG mandates, are increasingly choosing to lease in certified spaces. Features such as improved air quality, enhanced lighting, and intelligent environmental controls contribute to employee satisfaction, increased productivity, and improved retention.
Certified buildings typically operate more efficiently, consuming less energy and water and generating less waste. Over time, these operational savings can significantly improve a property’s net operating income (NOI)
As jurisdictions introduce climate-related building performance standards and emissions caps, certifications help properties comply. In some cities, certifications are a prerequisite for accessing grants or incentives for sustainable upgrades.
Challenges and Considerations
While the benefits are significant, obtaining and maintaining certifications can require upfront investment in building audits, system upgrades, and ongoing performance tracking. However, these costs are often offset by improved tenant satisfaction, energy savings, and competitive positioning.
It’s also essential to choose the certification that best aligns with your property’s goals, whether that’s reducing carbon emissions, enhancing occupant wellness, or demonstrating broad sustainability leadership.
Certifications as a Competitive Advantage
In increasingly competitive CRE markets, certifications help differentiate properties. They serve as a visible and credible signal of a building’s quality, care and forward-thinking approach, essential factors for both tenants and investors. As sustainability reporting becomes standard in global investment portfolios, certifications will likely play an even greater role in assessing and valuing buildings.
Building certifications are no longer optional; they’re a strategic asset in commercial real estate. From increasing property value to enhancing tenant experience and aligning with global ESG goals, certifications play a vital role in future-proofing commercial properties. For landlords, investors, and developers, embracing certifications is a smart step toward a more resilient, efficient, and competitive portfolio.
References
Joseph, N. (2024, May 6). The Hidden Value of Sustainable Building Certifications. BOMA BEST - English. https://bomabest.org/the-hidden-value-of-sustainable-building-certifications/
Judelson-Kelly, O. (2024, July 26). The impact of Green Building Certifications on GRESB ratings for in-use buildings. GRESB. https://www.gresb.com/nl-en/the-impact-of-green-building-certifications-on-gresb-ratings-for-in-use-buildings/
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