Decisions by Key Office Building Stakeholders to Build or Retrofit Green in Toronto’s Urban Core

Abstract

The environmental impact of greenhouse gas emissions from buildings—especially in global cities such as Toronto—is well documented. Green mitigation of new and existing buildings has also been researched. Few studies, however, have focused on the decision to build or retrofit green. Are key stakeholders in Toronto’s office building sector aligning their decisions to achieve sustainable environmental goals? Do they support LEED certification regardless of the impact on market valuation? Are tenants willing to pay higher rents in LEED office buildings? The study first obtained data on 16 LEED and 52 conventional buildings to determine if LEED certification has a significant impact on net asking rent. Pearson correlation and linear regression analysis did not find LEED certification to be statistically significant in explaining the variance in net asking rent (market value). The second stage included interviews with senior executives engaged in Toronto’s office building sector. The expert informtabants were asked to assess if financial drivers are the deciding factor in decisions to pursue LEED certification. They concurred that LEED certification is not the primary driver. It is a combination of numerous factors that overall have an impact on a firm’s financial bottom line.