Green Building Management in Property Management: Value Proposition for Investors and Owners

Chakrapan Pawangkarat

Co-Head of Property and Asset Management, JLL Thailand

B.Eng (Mechanical), MSc (Real Estate Business), Member ASHRAE

Abstract

This article synthesizes empirical and secondary research on the economic, operational, and tenant-related benefits of green building management practices within commercial property management. It demonstrates how property owners and investors can realize cost savings, higher asset value, enhanced tenant satisfaction, and ESG alignment through green operational strategies.

1. Introduction

Green building management—encompassing energy‑ and water‑efficiency, indoor environmental quality, preventive maintenance, and ESG alignment—has become an essential strategic pillar for modern property management. This research reviews international academic literature to articulate a robust value proposition for building owners and investors.

2. Literature Review

A growing body of research supports the operational and financial benefits of green building practices. Energy and water efficiency not only reduce operating costs but also enhance the long-term value and competitiveness of real estate assets. This section discusses cost savings, market premiums, and the strategic alignment of green management with ESG and investor expectations.

3. Analytical Framework

Based on the reviewed literature, we propose the following value‑proposition framework for Green Building Management in property operations:

Strategic Pillar	Mechanisms / Practices	Investor Value
Operational Efficiency	Energy‑ & water‑efficiency, IoT‑enabled BMS, bio‑materials	Lower OPEX, faster payback
Asset Value Enhancement	Green certifications, tenant premium pricing	Higher rents, lower vacancy, higher sale value
Tenant Well‑being	Indoor comfort, health‑oriented maintenance, green leasing	Loyalty, retention
ESG Alignment & Reporting	Transparent BMS/EMS data, ESG disclosure	Access to green funding, reputational gains

4. Value Realization Through Green Premium

4.1 The “Green Premium” in Building Market Valuation

One of the most compelling financial rationales for adopting green building management is the realization of the “green premium”—the increase in rental income and asset value observed in buildings with recognized environmental certifications such as LEED, BREEAM, Green Mark and TREES. This premium represents a direct monetization of environmental and operational performance through improved occupier demand, reduced risk, and enhanced investor confidence.

A meta-analysis by the U.S. Department of Energy identified rent premiums for certified green buildings ranging from 3% to 20%, with most empirical studies reporting a 5–10% average premium depending on market conditions and certification level1.

In the context of Asia Pacific markets, JLL’s global research confirms similar trends. Their 2022 report on Sustainable Real Estate: Impact of ESG on Asset Performance notes that green-certified buildings in core office markets such as Singapore, Tokyo, and Sydney command rent premiums of 4% to 9%, with stronger price resilience during market downturns2. JLL attributes this not only to lower operating costs but also to tenant ESG mandates and growing alignment with green finance frameworks.

In Europe, JLL’s Responsible Real Estate report highlights that BREEAM-certified buildings deliver a sale price premium of up to 12% in key investment-grade locations. This is reinforced by investor sentiment favoring assets that are climate-resilient, operationally efficient, and ESG-compliant3.

Further, in tenant retention, JLL's leasing research indicates that green-certified buildings typically exhibit higher renewal rates, especially among multinational tenants with science-based net-zero targets. This retention effect adds hidden value beyond headline premiums and contributes to reduced vacancy volatility over time.

Lastly, a meta-analysis in the residential sector by Cespedes-Lopez et al. (2019) showed that properties with energy performance certifications (e.g., EPC A or B) sold for 4.2% higher on average globally, with Asia showing a 4.81% premium4.

Table 1: Summary of Green Premium Ranges

Region	Certification	Rent Premium	Sale Price Premium
U.S. (DOE)	LEED / Energy Star	3% – 20%	5% – 10%
Asia Pacific	LEED, Green Mark	4% – 9% (JLL)	~8% – 12% (JLL)
Europe (UK)	BREEAM	7% – 22%	9% – 14%
Residential	EPC (A or B)	~4.81% (Asia avg.)	4.2% global avg.

These findings establish that green-certified properties—when managed with operational integrity and data-driven efficiency—deliver measurable financial advantages. The green premium, in this context, is not speculative but increasingly supported by leasing performance, investment yields, and long-term value preservation.

5. Discussion

The weight of evidence supports that a modest initial investment—often 1–2% above conventional operating budgets—yields lifetime savings that can exceed tenfold in reduced energy, water, and maintenance costs, along with enhanced tenant satisfaction and asset performance.

Owners who implement green strategies via professional property management services benefit not only from operational cost savings but also from stronger marketability, tenant retention, and lower ESG-related risks. Green leasing further aligns incentives between managers and tenants, deepening engagement and operational transparency.

6. Conclusion

Green Building Management, implemented through professional property management practices, offers a compelling value proposition for building owners and investors:

1. Operational cost reduction via energy, water, and maintenance efficiency

2. Asset value uplift through certification, market appeal, and rental premiums

3. Enhanced tenant satisfaction and retention through comfort-driven service

4. ESG alignment and risk mitigation, facilitating sustainable finance and reputation uplift

Investors and owners should consider operationalizing green building strategies at scale—supported by IoT-based BMS, certification (e.g., LEED, BREEAM), green leasing frameworks, and bio-sustainable materials—to unlock long-term financial, social, and environmental returns.

References

1. U.S. Department of Energy. (2021). Raising the Rent Premium: Green Building Valuation in Peer-Reviewed Literature. Lawrence Berkeley National Laboratory. ↩

2. JLL Research. (2022). Sustainable Real Estate: ESG and Asset Performance. Retrieved from https://www.jll.com/th/en/trends-and-insights/research/sustainable-real-estate-impact-of-esg ↩

3. JLL EMEA. (2021). Responsible Real Estate: The Value of Green Buildings in Europe. Retrieved from https://www.jll.eu/en/trends-and-insights/research/responsible-real-estate ↩

4. Cespedes-Lopez, M., Mora-Garcia, R., & Paredes, M. (2019). The Effect of Energy Efficiency Labels on Residential Property Prices: A Meta-Analysis. Sustainability, 11(22), 6303. https://doi.org/10.3390/su11226303 ↩