Do office tenants really pay for the greenness?: Findings from PLS-SEM

Abstract

In Australia, it is not surprising to see tenants pay premium prices for the higher level of greenness of their office buildings. This is reflected by the ever-increasing number of environmentally friendly and energy efficient green buildings nationwide especially across the major Commercial Building Districts (CBDs). Nevertheless, the impact of tenants’ office leasing behaviours on rents have not been fully explored. To address this knowledge gap, a survey of tenants who have leased the Sydney CBD-located office buildings was undertaken. The collected data were analysed using Partial Least Square - Structural Equation Modelling (PLS-SEM) techniques to identify the relationships amongst various tenants’ leasing motivators, the level of greenness of their office buildings, and rents. The results show that tenants’ leasing decisions about the level of greenness of their office buildings do not significantly contribute to office rents. Instead, the conventional attribute of building quality (e.g. floor plate...