The Rental Premium Effect: How Certification Shapes Returns

Sep 29, 2025
2 min read

Updated: Feb 15

For years, green building certifications were perceived as symbols that landlords were “doing the right thing” in the eyes of tenants and investors. Amongst sectoral leaders, that picture could not be more different. Dominant certifications, particularly BREEAM, have achieved a wider market fluency and, where adopted, the resulting ratings are to be found front and centre of agent’s listings.

A Rapid Shift

Across Europe, the rules of the game are changing fast. Governments are tightening energy efficiency standards, investors must report under frameworks such as the EU Taxonomy and SFDR, and tenants increasingly want buildings that align with their own sustainability pledges. BREEAM In-Use (BiU) has emerged as the reference point for operational performance — translating technical details into something market participants can act upon.

The growth in BiU is striking. In 2020, just over 37,000 certificates had been issued. By 2023, that number had jumped to more than 175,000. This is not a one-time trend; it speaks to the wider institutionalisation of sustainability. The dichotomy of indices which buildings are apprised under by agents has expanded, where operational performance now carries objective weight.

Why Certified Assets Earn More

Three factors drive the premium for certified buildings:

Tenant Demand: Large occupiers actively seek certified space, aligning their own ESG objectives with the buildings they lease.
Risk Management: Uncertified assets carry growing regulatory and operational uncertainty. Certification signals compliance, giving investors and tenants confidence.
Supply Constraints: Certified assets remain comparatively scarce, allowing landlords to command higher rents.

The evidence backs this up. A 2023 meta-analysis of 70+ studies found that 77% reported statistically significant rent uplifts for certified buildings. The University of Reading found premiums of 23–26% for BREEAM-rated assets compared with uncertified stock.

Even logistics and hospitality — sectors once slow to adopt certification — are catching up. Investor interest is rising alongside regulatory scrutiny, showing that sustainability is now integral to decision-making, not optional.

BREEAM In-Use Matters

BiU’s dual structure — measuring both Asset and Management Performance — gives owners, investors, and tenants a clear window into how a building operates. Far from adding to the ever-expanding and often transient index of ESG labels, it is an institutionally and socially embedded framework for understanding performance and managing risk.

What This Means for Investors

In short, they can expect to earn higher rents, attract tenants whilst cutting friction and trade more readily on the market. In a world of tighter regulation and selective occupiers, uncertified assets risk lagging. For many, certification has become a baseline expectation.