green office buildings: a qualitative exploration of green office … · 2015-07-04 · j o s r e u...

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Green Off i ce Bui ld ings:

A Qual i ta t ive Explorat ion

of Green Off i ce Bui ld ing

At tr ibutes

A u t h o r s Robert A. Simons, Spenser Robinson, and Eunkyu Lee

A b s t r a c t In this paper, we identify specific green building attributes important totenants using a mixed-industry series of focus-groups in Chicago,Denver, Washington D.C., and the San Francisco Bay Area. The focusgroups reveal the relative importance of green office building attributesand further explore the qualitative reasons for those rankings. Regionalpreferences were revealed through differing priorities of publictransportation, indoor air quality, HVAC, and other attributes. Six outof the seven focus groups agreed that green building attributes were themost important for people, compared to the economic and environmentalimpact of the attributes. These focus group results provide thefoundation for a future comprehensive survey of office tenants on theirgreen building feature preferences.

Buildings have played an important role in human society throughout globalhistory. The last 10–20 years have seen significant advances in sustainablebuilding construction and management. Systems such as Leadership in Energyand Environmental Design (LEED) and ENERGY STAR have helped promote theadoption of these advances. We begin the process of moving beyond the currentgreen building labels systems by asking: What sustainable building attributes aremost important to tenants? Results are reported from a series of national focusgroups, the first phase of a three-year long research project.1 The focus groupsprovide a foundation for what building attributes are the most important to tenantsand in what ways they are important.

Although the architectural design and the technology of building construction haveevolved in different ways across regions, the fundamental functions of buildingshave not changed. According to the U.S. Environmental Protection Agency (EPA)(2008), people in the United States spend about 90% of their time inside buildings.Additionally, U.S. buildings accounted for about 41% of the total U.S. energyconsumption in 2010 (44% more than the energy consumption from transportationand 36% more than the industrial sector), while contributing 40% of the nation’stotal carbon dioxide emissions (U.S. Department of Energy, 2012). Florance,Miller, Peng, and Spivey (2009, 117) estimated that over 12 billion square feet ofoffice space exist in the U.S., at a value of over $1.2 trillion, although this figurelikely reflects all office space, of which newer, high-efficiency space is a subset.

2 1 2 u S i m o n s , R o b i n s o n , a n d L e e

Furthermore, the size of commercial building floor space is expected to increaseby 33% by 2040 (U.S. EIA, 2013).

Part of the increasingly important role of buildings in urban society includesbuilding construction, operation, and usage. Thus, the environmental impact ofbuildings has attracted attention from both researchers and policymakers(Khasreen, Banfill, and Menzies, 2009). Cole and Kernan (1996) examined thetotal lifecycle energy use of an office building and find the predominance of energyconsumption in the operations stage of buildings. They suggested alternativedesigns to reduce operational energy consumption based on the assumption thatenergy use in buildings contributes many environmental burdens. In his recentpopular book Cubed: A Secret History of the Workplace on the history of officespace in the U.S., Saval (2014) demonstrates the changing trends in use of space,and it appears that the current trend toward open space plans is ‘‘back to thefuture’’ (i.e., a throwback to earlier open space bullpen plans from decades ago).

As a response to concerns about the environmental impact of buildings, there hasbeen a movement towards green buildings, also called sustainable or high-performance buildings. According to the U.S. EPA (2008), a green building strivesto maximize the efficiency of building resources, such as energy, water, andmaterials while minimizing building impacts on human health and the environmentthroughout the process of siting, design, construction, operation, renovation andreuse. The practice of green building emphasizes two elements of the buildingprocess: the efficient use of resources and the impact of buildings on theenvironment. In practice, green building adoption is driven by potential or realizedcosts savings, improved employee morale and/or productivity, and corporate socialresponsibility (CSR) objectives. These elements could be construed as profit,people, and planet in the context of a triple bottom line (Elkington, 1999).

The initiative of the green building movement has been driven by a wide varietyof organizations around the world (Kibert, 2004). In the U.S., the U.S. GreenBuilding Council (USGBC) has played an important role in developing greenbuilding practices by promulgating the LEED standards. In addition, state andlocal governments have been involved in the promotion of green building invarious ways. At least 28 states have laws, executive orders, or grant programsrequiring or encouraging LEED buildings in their state.2 However, the broadermarket often interprets a LEED building certification as a package of attributesbranded by an overall tier (LEED Silver, LEED Gold, etc.), which does notimmediately reveal the presence or absence of specific green office buildingfeatures. In fact, some state level pushback on LEED’s specific bundle of attributeshas occurred in several states, specifically with Alabama, Georgia, and Mainerecently issuing executive orders that effectively prohibit LEED certification forstate buildings.3 The subject research findings, the first in a several year-longresearch program, aim to provide momentum to providing more detail on greenoffice building features by collecting and reporting findings from market-drivendata from office tenants.

In addition to policy-based efforts designed to promote green buildings, the privatesector plays a critical role in driving both the supply-side and the demand-side of

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green buildings. On the supply side, building developers, owners and propertymanagers, architects, and construction companies provide a variety of greenbuilding design and construction techniques to the market, making it attractive toprivate office tenants. On the demand side, tenants, mostly private companies,consider locating their offices in green buildings for various economic,productivity, environmental, and social benefits. Furthermore, commercial realestate brokers and agents provide services that include leasing and green buildingmanagement practices. For instance, CBRE, one of the largest commercial realestate service businesses in the U.S., implements several programs in buildingoperations that promote sustainability in the built environment, as well as throughCBRE’s ongoing academic research support (i.e. ‘‘Real Green ResearchChallenge’’).4

The final goal of the several-year research program, of which this current researchis the beginning, is to create a green building index that ranks office buildingsbased on tenant’s stated and revealed preferences for a building’s specific greenattributes. To develop the building blocks of this green building index, thisresearch examines both the demand-side and the supply-side of green buildings.

On the demand-side, the focus groups are used to identify specific green buildingattributes important to tenants. These findings will be used to conduct greenbuilding tenant surveys to further understand tenant perspective on green buildingsand occupant behavior. On the supply-side of green buildings, data on actual officebuilding lease data acquired from CBRE will also be incorporated. In the broadercontext of this research, this paper focuses on the demand-side approach. Theresults from 48 participants from seven focus groups in four U.S. cities aresummarized here.

Several preliminary insights are gained through the focus group process on greenbuilding attributes. First, potentially different regional preferences are revealedacross different U.S. geographies. Second, while much of the research has focusedon profit-oriented topics, these focus groups suggest that people-oriented benefitsare the most important. This may inform future research prospects in thesustainable arena.

In addition, the single online focus group, performed through a webinar andconference call, provided similar insights to the in-person focus groups, andthis format may provide a viable alternative for future qualitative research.Furthermore, the initial results indicated that both green ‘‘evangelicals’’ and green‘‘doubters’’ are few and far between. The vast majority of participants appreciatethe benefits of green buildings but feels that cost-benefit analysis should informthe implementation choice.

In the following section, previous studies on green buildings are reviewed, byfocusing on empirical studies that examine the impact of green building attributeson office building rental prices and property values. In the next section, wedescribe the process of conducting seven focus groups in different cities. In thefollowing section, the focus group results are summarized in two parts: the firstsubsection reveals the extent to which the green building attributes are relevant to


the triple bottom line categories of ‘‘profit,’’ ‘‘people,’’ and ‘‘planet’’ (PPP), whilethe second addresses the importance of each green building attribute from a tenantperspective. We conclude with a discussion and interpretation of the study’s mainfindings regarding the identification of specific green office building features.

u L i t e r a t u r e R e v i e w

There have been various researchers that suggest economic, environmental, andsocial benefits accrue to owners and occupants of green buildings. They discusshow green buildings provide benefits to one or more stakeholders through severalmechanisms including but not limited to lower relative operating costs, improvedoccupant well-being, and/or productivity, tax incentives, and/or market goodwill(Fuerst and McAllister, 2011). Kok, Miller, and Morris (2012) find that LEED-certified buildings have a 7.1% rental premium compared to non-certifiedbuildings. Additionally, their study demonstrates that buildings have a marginallygreater rental premium when buildings have both a LEED certification and anENERGY STAR label. Fuerst and McAllister (2011) also examine the pricedifferentials between LEED and ENERGY STAR rated commercial buildings ascompared to non-rated buildings in the U.S. They report a rental premium of 5%for LEED-certified buildings and 4% for ENERGY STAR-labeled buildings.Furthermore, they also find a price premium of 25% for LEED buildings and 26%for ENERGY STAR buildings, with higher levels of certification providing ahigher premium. Additionally, Wiley, Benefield, and Johnson (2010) find a rentalpremium of 17% for LEED buildings and 8% for ENERGY STAR-labeledbuildings by conducting a two-stage simultaneous regression analysis.

Many commercial building tenants also consider buildings as an avenue forcommunicating environmental achievements and outcomes. In an older study,Wood (1991) documents how some tenants reflect an attitude that green buildingis ‘‘the right thing to do.’’ Carrying this theme forward, Eichholtz, Kok, andQuigley (2009) discuss corporate social responsibility (CSR) in terms of the socialbenefits from green buildings. Furthermore, certain public policy offers officebuilding developers, owners, and/or tenants the opportunity to earn financialbenefits from tax credits and/or tax deduction programs, as well as other policy-based preferences or incentives (Fuerst and McAllister, 2011).

A growing number of studies demonstrate the positive relationship between greenoffice building attributes and employee productivity. Loftness et al. (2003)summarize 15 case studies analyzing changes in productivity based on buildingimprovements. The study reveals that improved indoor air quality increasesproductivity by 0.5% to 11%. The same study also finds that better access todaylight in office space leads to productivity increases of 5% to 15%. Miller,Pogue, Gough, and Davis (2009) conduct a survey of over 500 tenants who movedfrom conventional buildings to either LEED or ENERGY STAR-labeled buildings.They report that about 54.5% of the total respondents agree that employees aremore productive after moving into green-certified space. Additionally, Delmas andPekovic (2012) survey about 10,000 employees and find that private companies


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that have adopted green practices and/or standards achieve up to 16% higherproductivity, compared to companies that have not adopted the standards.

A complicating factor with green office buildings is the split incentive dynamicwhereby the lease structure governs who achieves economic benefits from greenbuildings as it pertains to the building owner or the building tenants. As anexample, tenants may benefit from reduced utility operating expenses found inmany green buildings based on the existence of a triple net lease structure wherebytenants pay all utility costs. Under the same scenario, building owners benefitfrom a full service gross lease structure whereby the owner pays all utility costsas part of the base rent. In this context, we paper discuss the importance of leasestructure in green building studies.

In addition to the empirical studies that investigate the impact of green buildingson economic, environmental, and social sectors, several researchers examine theeffect of public policies on green building market penetration. Simons, Choi, andSimons (2009) discuss how public policies affect the green building market indifferent ways. They finds that executive orders are a quicker method forencouraging green buildings, while legislative-based efforts are prone to politicalposturing and similar motivations.

Considering the research content of published studies, there is a lack of researchthat focuses on the specific attributes of green buildings and their effect(s) onmarket behavior. In this paper, we examine various green office building attributesfrom a tenant perspective.

u S a m p l e P l a n f o r F o c u s G r o u p s

The main purpose of the focus groups of office market participants from Chicago,Denver, Washington D.C., and the San Francisco Bay Area5 was to identifyspecific green office building attributes and then determine their relative impacton real estate markets and beyond. As a secondary goal, focus group participantswere used to help refine an online survey instrument in varying degrees ofcompletion.6

The initial Chicago focus group was designed to create a list of green attributesapplicable to tenants. The Denver and D.C. focus groups resulted in refining ahard-copy version of the survey instrument, and the Bay Area group pre-testedthe online version of the near-final survey.

The selection of focus group cities was intended to broadly represent regions inthe U.S.: East Coast, Midwest, Mountain West, and California. All participantswere invited to attend by CBRE. Focus group participants consisted of officebuilding tenant representatives, developers, building managers, and commercialreal estate brokers and researchers. Exhibit 1 shows the percentage of focus groupparticipants.

The focus groups were conducted between December 2013 and May 2014. Eachfocus session was led jointly by the co-principal investigators. In addition to the


Exhibit 1 u The Proportion of Focus Group Participants

ProjectManagement

TenantRepresentatives

Developer/Architect/Engineer

BuildingManagement

CBREBrokers

Valuation/Research Total

21% 26% 14% 12% 18% 10% 100%

Note: the average number of focus group participants was 7 for each group. The number of observations is48.

focus group members, David Pogue, Global Director of Sustainability for CBRE,attended each session. In many cases, CBRE employee participants also acted asgreen facilitators in each metropolitan area, attending both morning and afternoonfocus group sessions. However, facilitator survey results were only counted inaggregate participation once.

Two different focus group formats were used. The first three city sets wereconducted in person, on site, in a CBRE conference room. Participants were notprovided with any materials beforehand except an agenda. To maximize returnson the travel budget, two 2-hour morning and afternoon sessions were held, withdifferent participants. The order of activities included introductions all around,identification of specific green office building features, prioritization of theimportance of those features, determining their PPP (profit, people, planet)priorities, and feedback on the current version of the survey instrument.

The focus group in the fourth city (Bay Area) covered the same items, but in adifferent format. First, it was a webinar format, including a separate dial-up foraudio, and a shared live screen managed by one of the PIs. Secondly, an onlineversion of the entire survey was sent to all participants beforehand, and theirresults were recorded. A secondary goal of this focus group was to see if thedifferent format yielded qualitatively similar results (which it did). Future research,beyond the scope of the current research, is planned to include virtual discussions,and this test supports the assertion that virtual discussions are a viable alternativeto an in-person format (Reid and Reid, 2005).

Each of the four geographic regions had diverse participants in the focus groups.Participants included members of several functional groups, and includedcontributors from a broad variety of companies. Due to confidentialityconsiderations, specific companies (outside of the project sponsor, CBRE) cannotbe disclosed, but an overview of the roles and expertise represented from a varietyof companies in the focus groups is provided.

Project management, which included experts in tenant improvements, LEEDdesign, and building operations, composed approximately 21% of our 48respondents. Representatives of building tenants, the primary focus of theforthcoming survey, are roughly 26% of the participants. Although higher tenantrepresentation throughout would have been preferred, convincing tenants withoutdirect involvement in the project to donate several hours of their time proved


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challenging. By the last focus group (Bay Area), the majority of participants weretenants, since a secondary focus was to assess the efficacy of the tenant-orientedonline survey. A group broadly defined as developers, architects, and engineersmade up 16% of focus group participants. Building managers, whose primary roleis to run day-to-day operations on a building level constituted 14%. Leasingbrokers, who were a mix of tenant representative brokers and building sale/brokers, were another 18%. Valuation, appraisal, and research professionals madeup the remaining 11%.

Overall perspectives on green buildings varied throughout the groups. The bulkof the participants expressed the view that green buildings provided some value,and most stated in some form that they valued environmental benefits. Mostparticipants seemed to balance and consider economic advantages withsustainability benefits. Each session included a discussion of who benefits fromenergy savings, and members examined the direction of cash flow when evaluatinggreen features.

A few green ‘‘evangelists’’ were present, and they typically voiced opinions thatmore should be done to advance sustainable buildings, educate tenants, and reducecarbon footprints. On the other side, some highly economically-driven participantssuggested that many of the green expenditures are wasteful, and that tenantsonly pay for locational attributes and direct building amenities. However, theseextremes were the minority.

In a broader context of this research, the focus groups are designed to be usedfor extensive survey research on the tenants’ perspectives on green office buildingattributes. Exhibit 2 shows the comprehensive research design and process. Withinthis research process, we summarize the findings from focus groups, which arethe initial stage of the overall research process.

u F o c u s G r o u p R e s u l t s

The Triple Bottom Line (Profit, People, and Planet)

We initially examined how green building attributes are considered by officebuilding tenants in terms of economic, social, and environmental benefits. Eachsector is called ‘‘profit,’’ ‘‘people,’’ and ‘‘planet,’’ (PPP) respectively, in this study.The basic concept of the triple bottom line was coined by Elkington (1999). Thetriple bottom line consists of economic and environmental factors and socialequity. The category ‘‘profit’’ is defined as economic values created by a greenbuilding attribute. More specifically, the economic values are considered to bemanifested in return to the tenant firm’s financial bottom line. The category‘‘people’’ is defined as social benefits from a building attribute and a tenant’semployees’ satisfaction with their working environments. The category ‘‘planet’’is defined as environmental benefits from a specific green building attribute.Collectively, the three categories are defined as the triple bottom line of greenbuildings.7


Exhibit 2 u The Broader Context of the Research Process

The focus group participants were asked what sector was most relevant to eachgreen building attribute. Their responses were coded into three categories thatrange from 0 (least relevant) to 2 (most relevant). For example, when participantsagreed that the access to public transportation was ‘‘most’’ relevant to ‘‘people’’in terms of the benefit from the attribute, the category ‘‘people’’ was coded as‘‘2.’’ Additionally, when they agreed that the public transportation access was alsorelevant to ‘‘planet’’ in terms of the benefit to an environmental sector, the planetcategory got one point. On the other hand, if the green building attribute was notrelevant to the profit sector, the category was just coded as ‘‘0.’’ Participants wereasked about each green attribute in terms of the level of relevance to the triplebottom line. In Exhibit 3, we summarize the perspectives of participants on thetriple bottom line. Appendix 1 shows these results in more detail.

As summarized in Exhibit 3, among the participants, green building attributes werecollectively considered to be most relevant to the category ‘‘people.’’ In otherwords, participants (N 5 48) jointly believed that green buildings primarily bringmore benefit to people, compared to economic (profit) and environmental benefits(planet). This finding was different from the research team’s expectation that greenbuildings would be perceived to be more beneficial to the tenant firm andlandlord’s economic position.

When looking at each green building attribute separately, access to publictransportation and the temperature control in a building received the highest scoreof 2.0 for the category ‘‘people’’ among the 10 most common green buildingattributes. The pooled consensus of participants indicated that people (the tenantfirm’s employees) prioritized access to public transportation and a temperaturecontrol system.

LEED designation, an efficient HVAC system, and the type of lease structure werethe three highest ranked green building attributes that were perceived to bringmore economic benefits. Main factors for the planet were efficient water use,LEED designation, and water use. This finding corresponds to the results of manyprevious studies that show the positive impact of LEED designation on buildingvalues and rental prices.


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Exhibit 3 u Triple Bottom Line of the 10 most Common Green Building Attributes

Green Building Attribute Profit People Planet

Public transportation (within 5 min. walk) 0.6 2.0 1.1

Natural light 0.7 1.9 0.3

Temperature control/comfort 1.0 2.0 0.2

LEED designation 1.3 0.8 1.5

Efficient HVAC 1.4 0.7 0.9

Lease structure rewards green behavior 1.3 0.7 0.4

Efficient lighting 0.7 1.3 0.8

Recycling (bulbs, paper, toner, solid waste) 0.7 0.7 1.7

Indoor air quality 0.2 1.8 0.4

Efficient water use 1.2 0.0 1.8

Average score (N 5 48) 0.9 1.2 0.9

Notes: The table only shows the 10 most common green building attributes. Appendix 1 contains the fullresults. Scores range from 0 (not relevant) to 2 (most relevant). ‘‘Profit’’ refers to a tenant’s and landlord’sfinancial bottom line. ‘‘People’’ refers to a tenant’s employees. ‘‘Planet’’ refers to general environmental issues.

Exhibit 4 u Triple Bottom Line Across Focus Groups In Different Cities

Focus Group Profit People Planet Sample

DC 1 1.0 1.5 0.9 8

DC 2 0.8 1.6 1.0 3

Denver 1 0.4 1.4 1.0 10

Denver 2 1.0 1.6 0.5 8

Chicago 1 1.0 0.9 0.7 6

Chicago 2 1.1 1.4 0.6 6

Bay Area 0.8 1.0 0.8 7

Average 0.9 1.3 0.8 6.9

Notes: These results, while interesting, are based on different mixes of various real estate professionals ineach market. The total number of observations is 48. Scores range from 0 (not relevant) to 2 (most relevant).

Exhibit 4 shows the findings of triple bottom line analysis in different regions.Most participants agreed that green buildings were most important for people,except for the first participants in the first Chicago focus group. Althoughcollectively the first Chicago focus group weighted green buildings as moreimportant for economic profits, compared to social benefits, there was only a slightdifference between the two categories. Bay Area participants also ranked peopleas the biggest winner in the green arena.


Exhibit 5 u Focus Group Results from D.C. Group 1

Green Attribute A B C D E F G H Count Ave. Rank

Public transportation (within 5 min.) 3 2 2 1 2 2 1 3 8 2.0

Natural light 5 4 3 1 3 3 2 7 3.0

Temperature control/comfort 5 5 4 4 4 5 6 4.5

Efficient HVAC 1 3 2 5 4 2.8

Efficient lighting 2 4 1 3 2.3

Open space layout 1 2 4 3 2.3

Floor plate size/depth 3 5 1 3 3.0

LEED designation 1 1 1.0

Column spacing 3 1 3.0

Bike racks 4 1 4.0

Lease structure rewards green behavior 4 1 4.0

Green roof 5 1 5.0

Recycling (bulbs, paper, toner, solid waste) 5 1 5.0

Notes: A–H represent the 8 respondents. Count (high numbers better) is the number of respondents whoranked each attribute in the top 5. Average rank (smaller numbers better) gives the relative weights of eachgreen attribute. Ranks range from 1 (most important green attribute) to 5 (least important green attribute).

Importance of Green Building Attributes from a Tenant Perspective

In addition to the triple bottom line analysis, all the participants were asked whichgreen building attributes are considered most important from a tenant’sperspective.8 The research team made the list of green building attributes basedon the participants’ responses, then asked them to rank each attribute from 1 (mostimportant green attribute) to 5 (least important attribute).9 Unranked attributeswere considered unimportant.

As an example, in Exhibit 5 we summarize the results from the Washington D.C.morning focus group. They responded that access to public transportation was themost important green building attribute, with an average score of 2, and thisattribute was ranked by every respondent. This result in part reflects the regionalcharacteristic that the Metro subway system connects most office building nodesin D.C. The importance of natural light in buildings was highly rated by that samefocus group, ranked by 7 out of 8 respondents.10 See Appendices 2–7 for all otherfocus group results.

The first Denver focus group was the biggest focus group among the seven groupsin terms of the number of attendees who fully participated.11 The participantsconsisted of office building tenants, building managers, and commercial real estatebrokers. Unlike the results from D.C., the importance of indoor air quality and


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natural light in a building were most valued by the Denver participants. Among10 participants, 9 agreed that the indoor air quality was the most important greenbuilding attribute. In addition, 5 out of 8 participants gave a high score to theindoor air quality in another Denver focus group.

In addition to the findings summarized above, several more key themes emergedfrom the focus group discussions. Several tenants (a mix of decision makers andoffice managers) stated that a building’s green status did not factor into theirdecision to lease. They said that location and proximity to transit were the leadingfactors. However, most expressed that being in a green building was a ‘‘bonus.’’While several brokers echoed that green buildings are not often high on the wishlist for tenants, they almost universally agreed that green buildings are easier tomarket. So even if it is not high on a tenant’s priority list, it appears that a greendesignation may help to market and distinguish a building.

Anecdotally, a small number of tenants said that their company was ‘‘green,’’ andthat they had to be in green buildings. This sentiment was supported by brokersand project managers who indicated that they have some clients who felt that way,but that they were the distinct minority. A tenant broker relayed a story that theleasing representative for a large nationally recognized company was unfamiliarwith the LEED Existing Building (LEED EB) designation, suggesting a potentialdisparity in company priorities for green.12

Multiple tenants indicated that they believe productivity increased subsequent tomoving into a green building. One tenant said, they ‘‘achieved things we didn’texpect to,’’ regarding a surprising reduction in sick days and perceived increasein productivity.

A couple of focus groups define trends as changing. Participants argued that itwas more common to espouse green attributes in 2006–2007, in a more robusteconomy. Conversely, because of tighter budgets, companies are less willing topay for green features today (2014).

The idea that leasing decisions ‘‘will just come down to dollars’’ or ‘‘cost is alwaysthe driver’’ was echoed throughout the sessions. Developers said that tenants oftendo not realize the up-front costs of building infrastructure.

Regionally, some distinct differences appear to be evident. For example, Chicagoparticipants, adjacent to one of the Great Lakes, seemed largely unconcerned withwater savings. Although all the urban-based focus groups express value on masstransit, the Denver groups placed a relatively higher import on access to transitstops. In the Bay Area, public transit was less important, while electric carcharging stations were raised as a desired attribute. In Washington D.C., thecurrent building standard for all new buildings is LEED Silver, simultaneouslyimpressing a regional importance for green buildings, while diluting a potentialmarket premium for green buildings.

Distilling judgments from 48 focus group participants (seven focus groups in allfour cities), Exhibit 6 shows the final list of green office building attributes withcounts (frequencies) and average rankings.


Exhibit 6 u Combined Focus Group Results from 48 Participants

Green Office Building Attribute Count (Frequency) Ave. Ranking

Access to natural light in work space 42 2.5

Public transportation (within 5 min. walk) 31 2.5

Indoor air quality 36 3.0

Temperature control/comfort 31 3.1

Efficient lighting system 26 3.5

Efficient electrical and gas use for heating and cooling 30 2.7

Open space layout 11 2.8

Lease structure rewards green behavior 10 1.6

Shower on-site 10 4.0

Water conservation 8 3.0

LEED designation 8 3.4

Recycling provided on-site 12 3.8

Outdoor amenities 5 3.6

Green cleaning 6 3.8

Floor plate size/depth 3 3.0

New/fresh/young/cool 2 2.0

Green roof 2 4.0

Column spacing 1 3.0

Bike racks 1 4.0

Notes: The maximum count number is 48, and a higher number means the attribute is more important.Ranks range from 1 (most important) to 5 (least important), so a lower number means that attribute is rankedas more important. This exhibit takes only the top five selections from the Bay Area to maintain attributefeature compatibility between groups.

The four most popular green office building features were people-oriented: naturallight, convenient public transportation, good indoor air quality, and temperaturecontrol (which may not necessarily be green if it raises heating and cooling costs).Efficiency items were next: cost-effective HVAC and lighting, with a leasestructure that rewards green tenant behavior (e.g., a triple net lease). Other itemswere lower-ranked, reflecting less universal support of common items like bikeracks, recycling, and water conservation. A LEED certification itself was in themiddle of the pack, with an ENERGY STAR designation not making the list atall.

u C o n c l u s i o n

In this paper, we attempt to fill a research gap by identifying specific green officebuilding attributes that are important to tenants rather than existing market


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bundles. Mixed-industry focus groups are used to identify the relative importanceof various attributes and the qualitative reasons for those rankings. The researchteam conducted seven focus groups in four cities: Chicago, Denver, WashingtonD.C., and virtually in the San Francisco Bay Area.

The focus groups reveal both regional differences and the similarity ofparticipants’ perspectives on green building features. With respect to differences,participants from D.C. express a preference for access to public transportation asthe most important green building feature, whereas in the Bay Area, this is a lowpriority. Indoor air quality and access to natural light in a building are highlyvalued by the Denver and Washington D.C. participants. On the other hand,efficient HVAC systems and triple net tenant lease structure receive the highestscore from the Chicago participants.

In terms of the regional similarities, most focus groups agree that green buildingsare most important for people. Although the first Chicago focus group participantsdiscuss that green building attributes are more important for the category ofeconomic ‘‘profits,’’ compared to ‘‘people,’’ there is only a slight differencebetween the two categories: the category ‘‘profit’’ received a score of 1.0 while‘‘people’’ received a score of 0.9.

The finding that ‘‘People’’ take precedence over ‘‘Profit’’ in green buildingqualitative value measures may demonstrate an increased understanding regardingthe potential productivity benefits of green buildings. Much of the extant researchfocuses on the expense or revenue at the building level, while this finding suggestsmore research should be considered at an employee productivity level. Continuingresearch into tenant preferences should examine whether measures oftenassociated with productivity, like natural light, dominate willingness-to-paymeasures of rent.

Summarizing the attribute preferences of the national focus groups into the finallist of green office building attributes, the top features (benefiting mostly people/employees, and then cost savings for the tenant firm) are as follows: natural light,convenient public transportation, good indoor air quality, temperature control,cost-effective HVAC, cost-effective lighting, and lease structure that rewards greentenant behavior. Surprisingly, LEED certification itself was in the middle of thepack, with an ENERGY STAR designation not making the list at all.

A caveat on the research design: the results are based on a non-random sample,and contain a mix of tenants, building managers, leasing agents, and other realestate professionals. Although all participants were specifically directed to focustheir statements on what tenants would want, our findings may not necessarily begeneralized to a population of real estate professionals or tenants. Nevertheless,the focus group participants’ collective insights as presented provide texture intothe preferences of office tenants and real estate professionals about green officebuilding features. A list of prioritized items for further study and future researchcan also be extrapolated from these results.

Our list of green office building attributes and accompanying definitions andterminology is being used for more extensive survey research that we are


administering to a population of over more than 3,000 office building tenants in400 buildings in 17 major U.S. markets during 2014. After collecting the surveydata on office building tenants, the survey results will be merged with the actualbuilding lease data from the same tenants, from CBRE. Finally, both the demand-side and the supply-side data on green office buildings will be compared todevelop a green office building scoring system. The subject research guides theterminology used to address tenant priorities in this future tenant demand study.

This paper presents the ranked building attributes from a series of national focusgroups, revealing both regional and national preferences. It shows that participantsbelieve people to be the most important aspect of the triple bottom line in thecontext of green building benefits. As future researchers explore the directeconomic benefits and the perceived qualitative benefits of green buildings, thisresearch may serve as a launching point for attribute discussion and qualitativeassessments.


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u A p p e n d i x 1uu C o m p r e h e n s i v e R e s u l t s o f T r i p l e B o t t o m L i n euu ( P P P ) A n a l y s i s

Green Building Attribute City-Session Ave. Score Profit People Planet

Public transportation (within 5 min) DC-am 2.0 1 2 1Natural light DC-am 3.0 1 2 1Temperature control/comfort DC-am 4.5 1 2 0Efficient HVAC DC-am 2.8 2 1 1Efficient lighting DC-am 2.3 2 1 1Floor plate size/depth DC-am 3.0 0 2 0Open space layout DC-am 2.3 2 2 1Bike racks DC-am 4.0 0 2 1Column spacing DC-am 3.0 1 2 0Green roof DC-am 5.0 0 2 1Lease structure rewards green behavior DC-am 4.0 2 0 1LEED designation DC-am 1.0 1 1 2Recycling provided on-site DC-am 5.0 0 1 2Average (DC-am) 1.0 1.5 0.9

Public transportation (within 5 min) DC-pm 1.3 0 2 2Lease structure rewards green behavior DC-pm 1.5 2 0 1Efficient HVAC DC-pm 3.0 1 2 1Natural light DC-pm 3.5 1 2 0Efficient lighting DC-pm 4.0 1 2 1Green roof DC-pm 3.0 0 2 2Outdoor amenities DC-pm 4.0 0 2 0Efficient water use DC-pm 5.0 1 0 2Temperature control/comfort DC-pm 5.0 1 2 0Average (DC-pm) 0.8 1.6 1.0

Green cleaning Denver-am 5.0 0 1 2Efficient HVAC Denver-am 3.3 0 2 0Indoor air quality Denver-am 2.7 21 2 1LEED designation Denver-am 4.5 1 0 2Efficient lighting Denver-am 2.8 0 2 0Natural light Denver-am 2.5 1 2 1Open space layout Denver-am 2.3 2 1 0Public transportation (within 5 min) Denver-am 3.1 0 2 1Recycling provided on-site Denver-am 3.7 21 1 2Temperature control/comfort Denver-am 3.0 1 2 0Efficient water use Denver-am 3.5 1 0 2Average (Denver-am) 0.4 1.4 1.0


u A p p e n d i x 1 ( c o n t i n u e d )uu C o m p r e h e n s i v e R e s u l t s o f T r i p l e B o t t o m L i n euu ( P P P ) A n a l y s i s

Green Building Attribute City-Session Ave. Score Profit People Planet

Green cleaning Denver-pm 3.0 1 1 2Indoor air quality Denver-pm 4.0 0 2 0Efficient HVAC Denver-pm 2.0 2 0 1LEED designation Denver-pm 4.0 2 1 1Efficient lighting Denver-pm 4.0 1 2 0Natural light Denver-pm 1.3 1 2 0New/fresh/young/cool Denver-pm 3.0 0 2 0Public transportation (within 5 min) Denver-pm 4.3 1 2 1Temperature control/comfort Denver-pm 1.7 1 2 0Outdoor amenities Denver-pm 3.7 1 2 0Workout/showers Denver-pm 3.6 1 2 0Average (Denver-pm) 1.0 1.6 0.5

Lease structure rewards green behavior Chicago-am 1.3 2 1 1Efficient HVAC Chicago-am 3.3 1 0 2Natural light Chicago-am 3.4 0 1 0Interior air quality Chicago-am 3.8 0 1 0Efficient water use Chicago-am 1.5 1 0 2Public transportation (within 5 min) Chicago-am 2.0 1 2 1Recycling provided on-site Chicago-am 3.0 2 1 1Efficient lighting Chicago-am 4.0 0 1 0Open space layout Chicago-am 4.5 2 1 0Average (Denver-pm) 1.0 0.9 0.7

Public transportation (within 5 min) Chicago-pm 2.0 1 2 1Natural light Chicago-pm 2.8 1 2 0Lease structure rewards green behavior Chicago-pm 1.3 1 0 0Indoor air quality Chicago-pm 3.3 1 2 1Efficient lighting Chicago-pm 4.6 1 2 0Open space layout Chicago-pm 3.0 1 2 0Workout/showers/bike racks Chicago-pm 4.0 0 2 1Temperature control/comfort Chicago-pm 2.0 1 2 1Efficient HVAC Chicago-pm 3.0 2 0 1Efficient water use Chicago-pm 4.0 2 0 1Average (Denver-pm) 1.1 1.4 0.6

Public transportation (within 5 min) Bay Area 4.0 0.6 1.9 1.1Natural light Bay Area 1.6 0.7 1.9 0.3Temperature control/comfort Bay Area 3.0 1.0 2.0 0.2LEED designation Bay Area 4.0 1.3 0.8 1.5Efficient HVAC Bay Area 3.0 1.4 0.7 0.9Efficient lighting Bay Area 3.7 0.7 1.3 0.8Recycling provided on-site Bay Area 4.0 0.7 0.7 1.7Indoor air quality Bay Area 2.0 0.2 1.8 0.4Efficient water use Bay Area 2.0 1.2 0.0 1.6Average (Bay Area) 0.9 1.2 0.9Average (Combined) 0.9 1.2 1.0

Note: Some Denver respondents felt two attributes, recycling and indoor air quality, may have negative utility(e.g., costs more), hence the negative values above.


J O S R E u V o l . 6 u N o . 1 – 2 0 1 4

u A p p e n d i x 2uu F o c u s G r o u p R e s u l t s f r o m D . C . G r o u p 2

Green Attribute A B C Count Ave. Rank

Public transportation (within 5 min) 2 1 1 3 1.3

Lease structure rewards green behavior 1 2 2 1.5

Efficient HVAC 3 3 2 3.0

Natural light 2 5 2 3.5

Efficient lighting 4 4 2 4.0

Green roof 3 1 3.0

Outdoor amenities 4 1 4.0

Water conservation 5 1 5.0

Temperature control/comfort 5 1 5.0

Notes: This focus group also discussed 12 more green building attributes, but all the participants did notscore the 12 attributes. (The 12 attributes are bike racks, captured runoff, green cleaning products, greenfurnishings, green materials in construction, indoor air quality, insulation and windows, LEED designation,open space layout, operable windows, recycling of bulbs, paper, toners, and solid waste, and windowshades.) Ranks ranges from 1 (most important green attribute) to 5 (least important green attribute).

u A p p e n d i x 3uu F o c u s G r o u p R e s u l t s f r o m D e n v e r G r o u p 1

Green Attribute A B C D E F G H I J Count Ave. Rank

Indoor air quality 2 1 4 4 5 5 1 1 1 9 2.7

Temperature control/comfort 5 1 5 3 3 2 2 7 3.0

Public transportation (within 5 min) 4 5 2 1 2 4 4 7 3.1

Natural light 3 1 2 1 3 5 6 2.5

Efficient lighting 2 2 4 3 3 5 2.8

Open space layout 1 3 4 1 4 2.3

Efficient HVAC 5 2 4 2 4 3.3

Recycling (bulbs, paper, toner, solid waste) 3 3 5 3 3.7

Water conservation 4 3 2 3.5

LEED designation 5 4 2 4.5

Green cleaning 5 1 5.0

Note: Ranks range from 1 (most important green attribute) to 5 (least important green attribute).


u A p p e n d i x 4uu F o c u s G r o u p R e s u l t s f r o m D e n v e r G r o u p 2

Green Attribute A B C D E F G H Count Ave. Rank

Natural light 1 1 1 1 1 3 6 1.3

Temperature control/comfort 2 1 2 2 2 1 6 1.7

Shower on-site 4 3 3 4 4 5 6 3.8

Indoor air quality 5 5 4 2 4 5 4.0

Outdoor amenities 4 2 5 3 4 3.5

Public transportation (within 5 min) 4 5 4 3 4 4.0

Green cleaning 3 5 1 3 3.0

LEED designation 3 5 2 3 3.3

Efficient lighting 3 5 2 3 3.3

Efficient HVAC 2 1 2 1.5

New/fresh/young/cool 3 1 2 2.0


u A p p e n d i x 5uu F o c u s G r o u p R e s u l t s f r o m C h i c a g o G r o u p 1

Green Attribute A B C D E F Count Ave. Rank

Efficient HVAC 5 3 2 1 2 5 2.6

Natural light 2 2 4 5 4 5 3.4

Lease structure rewards green behavior 1 2 1 1 4 1.3

Interior air quality 4 3 5 3 4 3.8

Efficient water use 1 2 2 1.5

Public transportation (within 5 min) 1 3 2 2.0

Recycling (bulbs, paper, toner, solid waste) 2 4 2 3.0

Efficient lighting 3 5 2 4.0

Open space layout 5 4 2 4.5



J O S R E u V o l . 6 u N o . 1 – 2 0 1 4

u A p p e n d i x 6uu F o c u s G r o u p R e s u l t s f r o m C h i c a g o G r o u p 2

Green Attribute A B C D E F Count Ave. Rank

Natural light 2 3 4 4 2 2 6 2.8

Public transportation (within 5 min) 3 1 1 1 4 5 2.0

Efficient lighting 5 4 5 5 4 5 4.6

Indoor air quality 1 5 2 5 4 3.3

Lease structure rewards green behavior 2 1 1 3 1.3

Open space layout 3 3 2 3.0

Workout/Shower on-site/bike racks 3 5 2 4.0

Temperature control/comfort 2 1 2.0

Efficient HVAC 3 1 3.0

Efficient water use 4 1 4.0

Note: Ranks ranges from 1 (most important green attribute) to 5 (least important green attribute).


u A p p e n d i x 7uu F o c u s G r o u p R e s u l t s f r o m B a y A r e a

8-2. Please rank these 8 green building attributes you selected as most importantin the previous question from 1 to 8, with 1 as the most important

Note: Although the format is slightly different from the other six focus groups, this is what appeared on screen forthe respondents to comment on. This set of focus group results is sorted by the top ranked feature, rather thancount. The resulting order of attributes would be almost identical, with only natural light and efficient lightingmoving around two positions at the top of the order.

u E n d n o t e s1 This research project is sponsored by CBRE, Inc. as part of their Real Green Research

Challenge.2 Per legislative overview document from USGBC provided to researchers, the states are:

Arkansas, Colorado, Connecticut, Florida, Hawaii, Illinois, Indiana, Iowa, Kentucky,Louisiana, Maryland, Massachusetts, Nevada, New Jersey, New York, North Carolina,Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota,Tennessee, Utah, Virginia, Washington, and Wisconsin.

3 See Alabama Executive Order 39, April 11, 2013. Georgia Executive Order August 10,2012. Maine Executive Order No 27 FY 11/12, December 7, 2011.

4 See http: / /www.cbre.com/o/ international /RGRCEN/Pages/Home.aspx.5 Representatives were primarily from San Francisco, Palo Alto, and San Jose.

http://www.cbre.com/o/international/RGRCEN/Pages/Home.aspx


J O S R E u V o l . 6 u N o . 1 – 2 0 1 4

6 The survey went over ten sets of changes and refinements, and was approved by theauthors’ University Institutional Review Boards.

7 For future research, we plan to break the profit component into landlord profit and tenantcompany profit to examine more closely the incidence issues of who benefits frominstallation of green features. This came after the Bay Area session, where we askedthe question separately. For the purpose of this paper, both these categories are reportedas ‘‘Profit.’’

8 While focus groups were repeatedly asked to answer questions from a tenant perspective,the researchers recognize that the answers likely include some mix of personalrespondent perspective, along with the tenant perspective. Also, participants suggestedthat office managers could effectively represent tenant decisions makers; this finding islately corroborated in a large national survey where no statistical difference is foundbetween decision maker responses and other staff responses (Robinson, Simons, Lee,and Kern presented at the African Real Estate Society Conference, 2014).

9 The Bay Area group was asked to rank attributes from 1 to 8. This was done in orderto see how far we could stretch the participants to make judgments. They were all ableto satisfactorily provide the data.

10 The participants in the first D.C. group also discussed three additional green attributesthat are important for building tenants’ decision making: green building education,shower on-site, and water conservation.

11 The Bay Area focus group had a few more people, but not all were able to successfullycomplete the online survey in advance.

12 Alternatively, it may suggest an inability of the broker/ tenant /owner to understand howto communicate a LEED EB designation, rather than being indicative of a company’spriorities.

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We acknowledge support from CBRE, Inc., as part of the Real Green Research

Challenge funding program, directed by David Pogue This paper was presented at

the 30 th Annual Meeting of the American Real Estate Society in San Diego, CA, in

April 2014.

Robert A. Simons, Cleveland State University, Cleveland, OH 44115 [email protected].

Spenser Robinson, Central Michigan University, Mt. Pleasant, MI 48859 [email protected].

Eunkyu Lee, Cleveland State University, Cleveland, OH 44115 or [email protected].

http://buildingsdatabook.eren.doe.gov/docs/DataBooks/2011�BEDB.pdf

http://buildingsdatabook.eren.doe.gov/docs/DataBooks/2011�BEDB.pdf

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