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Volume 32, Number 3, 2010

Income, Value and Returns in Socially Responsible Office Properties

Gary Pivo
University of Arizona
Jeffrey D. Fisher
Indiana University


Responsible property investing (RPI) seeks to address social and environmental issues while also achieving acceptable financial returns. It includes a variety of strategies such as investing in properties that are Energy Star labeled, close to public transit and located in urban redevelopment areas. A critical question for those interested in RPI is how such properties perform financially in comparison to other property investments. This study answers that question by examining a sample of 1,199 office properties with a total market value of over $93 billion from throughout the USA using NCREIF data. We find that with few exceptions, RPI properties over the past 10 years had net operating incomes, market values, price appreciation and total returns that were either higher or the same as conventional properties, with lower cap rates. Based on this evidence, we conclude that RPI can be practiced without diluting returns and can potentially yield higher profits for developers and investors.


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