Buildings with BOMA BEST or LEED certification appeared to outperform the total REALpac/IPD Canada property index in the second quarter of 2016, but particularly strong retail sector results could be skewing the picture somewhat. Results from index producer, MSCI, reveal an average total return of 8.7 per cent for participating green properties versus an average return of 8.1 per cent across all 2,442 assets in the database.
As in Q1, retail properties with BOMA BEST certification were the top performers with an average one-year total return of 10 per cent. This represents 93 properties with a cumulative value of $31.3 billion or 22.6 per cent of the capital value of the index. The average total return was lower for other property types, at 7.5 per cent for offices with BOMA BEST certification and 7.8 per cent for industrial buildings with BOMA BEST certification.
Just 22 of the 534 green properties are LEED certified, and they recorded a Q2 average total return of 7.4 per cent. Although making up less than 1 per cent of the assets in the property index database, they represent 2.4 per cent of its capital value.
Green properties account for slightly less than 29 per cent of assets in the total Canada property index, but, with a value of $67.3 billion, equate to 48.6 per cent of its capital value. The 289 BOMA BEST certified office buildings make up the largest component of green rated properties, valued at $29.7 billion. BOMA BEST industrial buildings are the smallest sliver with 83 properties representing 3.4 per cent of total assets and 1.2 per cent of the total capital value of the index.
