Green noise or green value? Measuring the effects of environmental certification on office values

This study investigates the price effects of environmental certification on commercial real estate assets. It is argued that there are likely to be three main drivers of price differences between certified and noncertified buildings. These are additional occupier benefits, lower holding costs for investors and a lower risk premium. Drawing upon the CoStar database of U.S. commercial real estate assets, hedonic regression analysis is used to measure the effect of certification on both rent and price. The results suggest that, compared to buildings in the same submarkets, eco-certified buildings have both a rental and sale price premium.

The climatology of the middle atmosphere in a vertically extended version of the Met Office's climate model. Part I: mean state

The climatology of a stratosphere-resolving version of the Met Office’s climate model is studied and validated against ECMWF reanalysis data. Ensemble integrations are carried out at two different horizontal resolutions. Along with a realistic climatology and annual cycle in zonal mean zonal wind and temperature, several physical effects are noted in the model. The time of final warming of the winter polar vortex is found to descend monotonically in the Southern Hemisphere, as would be expected for purely radiative forcing. In the Northern Hemisphere, however, the time of final warming is driven largely by dynamical effects in the lower stratosphere and radiative effects in the upper stratosphere, leading to the earliest transition to westward winds being seen in the midstratosphere. A realistic annual cycle in stratospheric water vapor concentrations—the tropical “tape recorder”—is captured. Tropical variability in the zonal mean zonal wind is found to be in better agreement with the reanalysis for the model run at higher horizontal resolution because the simulated quasi-biennial oscillation has a more realistic amplitude. Unexpectedly, variability in the extratropics becomes less realistic under increased resolution because of reduced resolved wave drag and increased orographic gravity wave drag. Overall, the differences in climatology between the simulations at high and moderate horizontal resolution are found to be small.

Asymmetric adjustment in the City of London office market

Earlier estimates of the City of London office market are extended by considering a longer time series of data, covering two cycles, and by explicitly modeling of asymmetric space market responses to employment and supply shocks. A long run structural model linking real rental levels, office-based employment and the supply of office space is estimated and then rental adjustment processes are modeled using an error correction model framework. Rental adjustment is seen to be asymmetric, depending both on the direction of the supply and demand shocks and on the state of the space market at the time of the shock. Vacancy adjustment does not display asymmetries. There is also a supply adjustment equation. Two three-equation systems, one with symmetric rental adjustment and the other with asymmetric adjustment, are subjected to positive and negative shocks to employment. These illustrate differences in the two systems.

International financial centres, office market rents and volatility

Despite continuing developments in information technology and the growing economic significance of the emerging Eastern European, South American and Asian economies, international financial activity remains strongly concentrated in a relatively small number of international financial centres. That concentration of financial activity requires a critical mass of office occupation and creates demand for high specification, high cost space. The demand for that space is increasingly linked to the fortunes of global capital markets. That linkage has been emphasised by developments in real estate markets, notably the development of global real estate investment, innovation in property investment vehicles and the growth of debt securitisation. The resultant interlinking of occupier, asset, debt and development markets within and across global financial centres is a source of potential volatility and risk. The paper sets out a broad conceptual model of the linkages and their implications for systemic market risk and presents preliminary empirical results that provide support for the model proposed.