gb&d: What’s your elevator speech for what GRESB is and does?
Nils Kok: GRESB provides information on the sustainability performance of real estate portfolios. It thereby allows large investors—pension funds, endowments—to integrate sustainability into their real estate investment decisions. GRESB is based on an annual assessment, designed in collaboration with the industry and investors, along with a Web portal to provide data analytics. It is to real estate portfolios—owners of multiple buildings—what LEED is to buildings.
gb&d: What drove you to develop GRESB?
Kok: As part of my Ph.D., I did economic research looking at building sustainability factors. What we found was simply that green buildings perform better: they net higher rents, higher occupancy rates, and higher prices when sold. Investors were somewhat aware of this and knew about LEED and other certifications, but they had no tools to address sustainability performance at the portfolio level for private equity funds and REITs. GRESB fills that information gap.
gb&d: As an economist, how do you think your science factors into environmental sustainability?
Kok: Sustainability is often viewed as an altruistic issue, but it needs to be more of a valuation discussion. At the end of the day it’s all about economics. The market wants to reduce energy costs and to improve asset performance; information needs to be visible to the markets.
gb&d: Pure economics assumes rational thought. Does that hold in real estate?
Kok: It does in highest-valued, downtown, Class-A buildings. But less so in lower-priced suburban and industrial properties. And there is far less rationality on the residential side.
gb&d: What’s missing in building design today?
Kok: Designers and architects often find the financial angle to be boring, complicated, or distracting. If they can adopt more of a value perspective, it will be very helpful in driving the sector forward.