Study on the economic significance of green building certification in industrial real estate

In recent years, ESG investment has gained increasing importance and has also been applied to real estate investment, where it is visualized through green building certifications. However, because obtaining such certifications entails costs, they must have economic significance to justify their adoption. While numerous previous studies have examined the economic significance of certifications for office buildings, there is a lack of such research for industrial real estate. Against this background, this study aims to clarify the economic significance of green building certifications for industrial real estate and to discuss their appropriate role by quantitatively organizing and analyzing the current status of such certifications in the securitized real estate market. The analysis focuses on industrial real estate held by J-REITs, specifically logistics facilities, factories, data centers, and research and development facilities. Among logistics facilities, approximately 70 percent of the properties have obtained green building certifications, with CASBEE and BELS accounting for the majority. As the sample size for logistics facilities was sufficiently large, a hedonic regression was applied to properties in the Tokyo metropolitan area, using NOI per unit as the dependent variable, to test whether there is a significant difference between certified and non-certified properties. The results were not statistically significant, and thus no direct economic significance of certification was confirmed. However, certification scores were concentrated at levels of three or higher, which is consistent with the criteria required for obtaining green bonds or green loans. This indicates that certification has indirect economic significance by contributing to financing advantages for investment corporations. In contrast, factories, data centers, and research and development facilities exhibited much lower levels of certification acquisition compared with logistics facilities. This is considered to be due to the fact that, unlike overseas markets, existing certification systems in Japan are not well adapted to these asset types. Finally, the study argues that for certifications to exert more direct economic significance, it is necessary for certification systems that evaluate not only environmental (E) factors but also social (S) factors to further develop.