An exploration of the economic impact and project process influence of BREEAM certification on commercial properties

Abstract

The growing emphasis on environmental responsibility has prompted industries, including commercial real estate, to reassess their standards and practices. This transformation has led to sustainable properties gaining prominence in this evolving landscape, particularly in Sweden, where certifications have become an industry norm and integral to construction projects. However, these implementations of environmental certificates such as the Building Research Establishment Environmental Assessment Method (BREEAM), have led to various challenges for the project leaders in the construction process, impacting both finances and processes. Acknowledging this shift, this study therefore delves into the economic impact of BREEAM certification on commercial properties, including investigating the economic value of commercial properties, as well as exploring the potential increase in economic value from BREEAM. Moreover, the report also discusses the challenges associated with the certification process, including increased complexity and additional work, but also management strategies to manage the implementation. This was enabled through an inductive approach and a qualitative research strategy, including semi-structured interviews with key stakeholders on a large construction company which delves deeper into one of their projects. This study in the Swedish context implied that contrary to previous literature, BREEAM certification's economic benefits, such as price and rental premiums are minimal, emphasizing the predominant influence of external drivers and highlighting administrative and hidden costs as primary contributors to the overall cost of BREEAM certification on commercial properties. It was further identified that the implementation of BREEAM certification in commercial office building construction significantly increases workload and complexity, demanding early planning, effective management strategies, and leveraging the experience of project stakeholders, underscoring the importance of addressing the complexity for successful project performance