Lea Milanini & Sofie R. Waltl
Department of Land Economy, University of Cambridge
Abstract
LEED certification premiums are widely documented, but their internal structure is not: does the market pay for higher certification tiers, or simply for being certified at all – and does that value persist as certification becomes common? We address both questions using 1,755 office properties across four major Northeastern U.S. markets – Boston, New York City, Philadelphia, and Washington D.C. – matched at the submarket level within a hedonic pricing framework, with commercial (CoStar) certification data cross-validated against the official USGBC Directory. This cross-validation reveals substantial measurement error in existing green premium estimates: LEED-certified buildings command a rental premium of approximately 9.8% after controlling for location, building class, vintage, and height, compared with 6.7% when certification status is taken from unverified commercial data alone. Individual tiers command premiums of roughly 4–11% but are not monotonically ordered, with only the base Certified tier statistically indistinguishable from zero; a clearer distinction emerges when tiers are aggregated into High (Gold/Platinum) and Low (Certified/Silver) categories. The results are stable across construction cohorts, renovation histories, and pre-/post-pandemic timing – suggesting a genuine market feature rather than a lifecycle artefact. Its magnitude, however, is not: premiums are systematically largest where certification remains scarce, in Philadelphia and among Class B buildings, and compress toward zero where it has become commonplace, like in Washington D.C. and the Class A stock. This scarcity-signal pattern suggests LEED functions less as a stable quality attribute than as a first-mover advantage that erodes as sustainable buildings become standard practice.
Keywords: LEED certification tiers; green premium heterogeneity; scarcity signalling; office rents; commercial real estate
JEL codes: R33, Q51, D82, Q56
Dissemination: [2026 Land Economy Early Career Researchers’ Conference, University of Cambridge][Cambridge Climate Society Research Night, University of Cambridge]
