The spatial dynamics of energy efficiency
EPC impact on retail property values
Jia Jasmine Zhang (TU Delft - Real Estate Management)
Hauke Ward (Universiteit Leiden)
K. Qian (TU Delft - Design & Construction Management)
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Abstract
This paper systematically analyzes the effect of energy efficiency on transacted rental and capital values of Dutch retail property assets from 2015–2021. Prior research on Energy Performance Certification (EPC) and energy premiums consistently showed a pricing effect, but recent investigations reveal inconclusive results, particularly when considering non-residential properties. Leveraging a unique dataset of 1015 lease transactions and 478 sale transactions, this study provides one of the first estimates of how EPC labels impact retail value. We utilize ordinary least squares (OLS) regression, considering characteristic retail determinants such as footfall, catchment area type, and retail type, among others. This study finds a premium of 11 percent for rental transactions with Label C or higher on a price per square meter basis. Capital premiums for energy-efficient transactions are more marginal and complex, particularly when accounting for data limitations such as geographic distribution. The nexus between sustainability and financial benefits incentivizes investors and policymakers to embrace energy-efficient measures. Pioneering spatial analyses of EPCs in the retail sector, this paper offers insights for informed policy-making amid geographic variations. In the era of transparency, this research provides empirical evidence to drive responsible investments in energy-efficient retail, shifting from risk management to stakeholder benefits and improved capital efficiency.
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