LEED Certifications Build Value for Real Estate Investors Beyond Operational Costs

— by Dominique Hargreaves

An edited version of this appears on the USGBC National website.

Extensive research has been conducted on costs, savings, and performance regarding LEED buildings—overall showcasing that LEED properties save energy and water and therefore decrease overall operating costs. But beyond operational costs, research is also beginning to show a link between LEED certification and occupancy, as well as rent and market price.

ARA’s Managing Director of Research and Strategy Sabrina Unger analyzed data to better understand the bifurcation of Class A office space: what attributes contributed to buildings maintaining high occupancy in a COVID-era environment? Ms. Unger looked at Class A buildings in several California metropolitan areas to determine whether attributes like amenities, building age, and LEED certifications could contribute to occupancy levels.

Her research showed that LEED-certification is arguably the most critical characteristic from an additive occupancy perspective, adding 340 bps worth of occupancy to a modern (built 2000-Q4 2021) Class A office building.

Further, a recent study conducted by Cushman & Wakefield, showed that LEED-certified Class A office buildings are delivering increased value to investors. The research analyzed LEED-certified office buildings delivered between 2010-2020 and found that compared to non-LEED counterparts, they were more profitable in terms of rent (achieving 11% higher during the most recent five years) and had reduced vacancy. LEED-certified properties achieved a higher average market sales price over non-LEED properties, and tenant demand has accelerated during the pandemic.

Where Should Investors Focus LEED-Certification Initiatives?

In the last two decades, LEED has adapted to address the needs of different building types, different geographies, and new ways of thinking about the intersection of design and social impacts as well as resiliency. It is a framework that continues to evolve as the industry changes over time and new technologies are introduced.

ARA has implemented LEED certification for property types including industrial, office, mixed-use, retail, and multifamily housing. In 2020, the firm earned certification on three properties: MODA Tower, in Portland, Oregon, achieved LEED Platinum O+M certification. 5 MLK, also in Portland, achieved LEED Gold BD+C certification. In Denver, Colorado, ALARA Union Station achieved LEED Gold O+M certification. These achievements and the 8 million square feet of floor area certified across the portfolios managed by ARA has greatly influenced ARA’s core fund’s Global Real Estate Sustainability Benchmark (GRESB) score for performance. GRESB awards credit for building design and operation certifications including LEED, IREM CSP, Fitwel, and ENERGY Star—all of which ARA also pursues. GRESB also awards credit for reduction of energy, water, waste, and greenhouse gas that can be associated with performance-based certifications.

Key takeaway:

LEED certification is a tried-and-true strategy for delivering high-performance buildings across the portfolios managed by ARA. It’s not just about checking a box on an ESG report or earning a plaque. ARA aims to create sustainable and durable value by demonstrating leadership in design and operations as recognized by LEED and the USGBC.

Case Study: LEED Certification in Action at ALARA Union Station

ALARA Union Station is a mixed-use multifamily residential property in the trendy Lower Downtown (LoDo) neighborhood of Denver, Colorado. Completed in 2015, the 376,907 square foot property has studio, one-, two-, and three-bedroom apartments, a resort-style swimming pool and lounge, yoga/barre studio, bocce ball court, fitness studio, coffee shop, restaurant, bar, and a pet-washing station. It achieved LEED Gold O+M certification in 2020.

ALARA Union Station. (Photo credit: Show My Property TV)


  • Between 2018 and 2019, the property reduced its overall electricity consumption by 2.6%.
  • Lighting was replaced with LEDs on the exterior and in 85% of the residences.
  • Nest® programmable thermostats are used in residences.
  • An ASHRAE audit was conducted to identify additional energy savings opportunities.


  • Native landscaping has been incorporated throughout the property.
  • Drip irrigation, the most water-efficient form of irrigation, is utilized in all outdoor vegetated areas, as needed.


  • A 24-hour waste audit covering the residential areas and several of the ground-floor retail areas demonstrated that the property diverts approximately 33.86% of waste from landfills.
  • An Environmentally Preferable Purchasing Policy has been implemented.


  • Over 49% of building occupants commute to work using a form of transportation other than a gasoline-powered single-occupant vehicle.
  • The property is located within a half-mile of Union Station and multiple BCycle® bike-share docks.
  • Electric vehicle charging stations as well as a bicycle and ski repair shop are also available on-site.

Tags: greenbuildingleedcommercial realtyoperational costsmarket priceoccupancybuildingscase study

About the Author

Dominique Hargreaves

Dominique Hargreaves is ARA’s Director, Sustainability and Corporate Social Responsibility, leading firm-wide environmental, social, and governance plus resiliency (ESG+R) initiatives. Prior to joining ARA, Ms. Hargreaves worked for the Los Angeles Mayor’s Office where she was the Deputy Chief Sustainability Officer as well as the U.S. Green Building Council-Los Angeles Chapter where she served as the executive director.

American Realty Advisors, LLC (“ARA”), headquartered in Los Angeles, CA, is a private equity real estate investment manager working on behalf of institutional capital and has over $11.4 billion in assets under management as of December 31, 2021. Through a series of offerings of core, core-plus, and value-add strategies, including equity, debt, preferred equity, and mezzanine and hybrid debt, ARA invests in a wide range of opportunities in industrial, residential, office, retail, and other property types nationwide. More information regarding ARA can be found at www.aracapital.com.

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