Written by Jim Adair

“Green” certified condos sell for five to 14 per cent more on the resale market in Toronto, says a report by TD Economics.

Economist Brian DePratto says his research was unable to determine if “green” buildings spend less time on the market than standard buildings. But he says that with about one in 15 new condo developments in Toronto now being certified, there’s enough data to conclude that they command higher resale prices.

“The relatively recent development of this market means that there is a dearth of research regarding buyer attitudes towards these projects and their impact on sales price and other variables of interest,” says DePratto in the report. His research used a dataset of selected Toronto LEED-certified and non-certified developments.

During the last five years, Toronto has built more high-rise condominiums than any other city in North America.

Leadership in Energy and Environmental Design (LEED) is a third-party rating system that is the internationally accepted benchmark for the design, construction and operation of “green” buildings. The system promotes five major categories of building design: sustainable sites, water efficiency, energy and atmosphere, materials and resources and indoor air quality. In Canada it is administered by the non-profit Canada Green Building Council, which has a membership of 1,650 industry organizations.

Canada has the second-largest number of certified buildings in the world, after the United States.

There are currently 29 cities and municipalities across Canada that have a green building policy with LEED certification as their target.

DePratto cites research that says LEED-certified buildings use 11 per cent less energy and 16 less water on average than non-certified buildings.

“Buyers may be willing to pay more to live in a ‘greener’ building and take advantage of the monthly cost savings associated with energy efficiency,” says the report. “Conversely, they may be worried that the new technology used in some developments could fail sooner and be more costly to fix, and thus be less willing to pay a premium.”

The research concluded that resale units in LEED-certified buildings sell for 5.7 per cent to 6.2 per cent more than in non-certified buildings. In LEED-gold certified buildings (the highest standard), the resale price is between 12.2 per cent and 14.9 per cent more.

“Due to limited data availability, we are unable to state whether the estimated premium for LEED units is accruing to re-sellers of condos, or if it is captured by the condo developer during the initial sales period, as we do not currently have data on the initial selling price of the units,” says the report. This means developers are charging more for LEED units when they are sold and the higher premium for resale units may just reflect the higher initial cost.

It would seem that a building that is more energy-efficient and conserves water should have lower maintenance fees than a non-certified building, but DePratto’s research on fees proved to be inconclusive. He found that fees for LEED buildings are not much lower than they are in standard buildings.


“The estimated impact of LEED status on fees is somewhat surprising,” he says. A possible explanation: “Maintenance fees are used to pay building utility costs, day-to-day operations such as snow removal and cleaning, and contribute to the condo reserve fund to cover long-term replacement costs. A condo board may choose to keep fees low initially, which could lead to significant repair charges later due to an underfunded reserve fund, regardless of the efficiency characteristics of the building. These characteristics are more difficult to capture in the data. Thus, a low maintenance fee may not necessarily be an indicator of a better performing building — more research along this avenue is clearly warranted,” says DePratto in the report.

The Canada Green Building Council (CaGBC) says buildings generate about 35 per cent of all greenhouse gasses. Thirty-five per cent of landfill waste comes from construction and demolition activities and 70 per cent of municipal water is consumed in and around buildings.

The council says since it certified its first project in 2005, LEED buildings have saved enough energy to power 89,271 homes in Canada for a full year. It has saved enough water to fill 2,252 Olympic-sized swimming pools and recycled construction waste that would fill 841,126 garbage trucks. LEED buildings also have 121,309 square metres of green roofs, an area the size of 80 NHL hockey rinks.

CaGBC says if you are buying a new condo, LEED certified or not, look to see if the water, hydro and gas are individually metered and controlled so you can monitor your own energy use. Look for buildings that use cabinets, floors and furniture made from renewable resources, and finishes with non-toxic, low volatile organic compounds. Find out if the walls and windows of the building are high-efficiency. CaGBC says in most buildings, 40 per cent window and 60 per cent wall provides the best balance of insulation, daylight and views.

“With LEED projects remaining popular, and Energy Star for Buildings certification (similar to LEED in requiring an increased level of energy performance relative to the building code) coming to Canada, the effect these projects have on real estate markets is likely to remain a topic of interest,” says DePratto.