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Sustainable Real Estate: Analysis and Investment

2-0-4 units · Graduate

Offers insight into tension and synergy between sustainability and the real estate industry. Considers why sustainability matters for real estate, how real estate can contribute to sustainability and remain profitable, and what investment and market opportunities exist for sustainable real estate products and how they vary across asset classes. Lectures combine economic and business insights and tools to understand the challenges and opportunities of sustainable real estate. Provides a framework to understand issues in sustainability in real estate and examine economic mechanisms, technological advances, business models, and investment and financing strategies available to promote sustainability. Discusses buildings as basic physical assets; cities as the context where buildings interact with the built environment, policies, and urban systems; and portfolios as sustainable real estate investment vehicles in capital markets. Enrollment for MSRED, MCP, and MBA students is prioritized.

Spring 2023 · Sustainable Real Estate

The course provides a systematic framework to understand the most challenging issues in sustainability in the real estate industry. It examines economic mechanisms, technological advances, business models, building design, and investment and financing strategies available for the different market players to promote sustainability in the building sector. Prof. {{% resource_link "b367cb15-105d-417c-9999-1acc7722acfc" "Siqi Zheng" %}} is the faculty director of the MIT Center for Real Estate and founder and director of the MIT Sustainable Urbanization Lab. She specializes in urban and environmental economics, with a special focus on sustainable cities and real estate. {{% resource_link "7c9d2add-b1ad-4453-88ac-cfe11d047335" "Zhengzhen Tan" %}} is a lecturer and researcher with MIT Center for Real Estate and MIT Asia Real Estate Initiative, specializing in real estate sustainability, healthy buildings, and digital technology innovation. Prof. {{% resource_link "335bd69f-1e33-4f0f-9353-4a9d40e70365" "Juan Palacios" %}} is a visiting professor from Maastricht University whose research focuses on environmental economics, sustainable real estate, and health economics.

Readings

  • World Green Building Council. (2013). The business case for green building: a review of the costs and benefits for developers, investors and occupants. WGBC.
    Listed reading
  • (If no real estate finance background) Chapter 10 of: Geltner, D., Miller, N. G., Clayton, J., & Eichholtz, P. Commercial real estate analysis and investments (Version 3e).
    Listed reading
  • IMT (2018). Green lease leaders: using the lease to drive innovation and clean energy.
    Listed reading
  • Winthrop Center
    Listed reading
  • Allen, J.G. and Macomber, J.D., 2020. Chapter 4 and 5. Healthy buildings: How indoor spaces drive performance and productivity. Harvard University Press
    Listed reading
  • World GBC, 2016. Building the Business Case: Health, Wellbeing and Productivity in Green Offices (link)
    Listed reading
  • A Tower for the People: 425 Park Avenue.
    Listed reading
  • Zheng, S., & Kahn, M. E. (2008). Land and residential property markets in a booming economy: New evidence from Beijing. Journal of Urban Economics, 63(2), 743-757.
    Listed reading
  • Eichholtz, P., Kok, N., & Quigley, J. M. (2013). The economics of green building. Review of Economics and Statistics, 95(1), 50-63.
    Listed reading
  • Hsiang, S. and Kopp, R.E., 2018. An economist’s guide to climate change science. Journal of Economic Perspectives, 32(4), pp.3-32
    Listed reading
  • ULI and Heitman, 2019. Climate Risk and Real Estate Investment Decision-Making. Link report here
    Listed reading
  • Ortega, F., & Taṣpınar, S. (2018). Rising sea levels and sinking property values: Hurricane Sandy and New York’s housing market. Journal of Urban Economics, 106, 81-100.
    Listed reading
  • Clayton, J., van de Wetering, J., Sayce, S., & Devaney, S. (2021). Climate Risk and commercial property values: a review and analysis of the literature. (link)
    Listed reading
  • Matisoff, D. C., Noonan, D. S., & Flowers, M. E. (2016). Policy monitor—Green buildings: Economics and policies. Review of Environmental Economics and Policy, 10(2), 329-346.
    Listed reading
  • Optional: How Smart, Connected Products Are Transforming Competition, 2014, Harvard Business Review, Michael Porter, James Heppelmann (link)
    Listed reading
  • Kaza, N., Quercia, R. G., & Tian, C. Y. (2014). Home energy efficiency and mortgage risks. Cityscape, 16(1), 279-298.
    Listed reading
  • FreddieMac (2020) Unravelling Perceptions of Flood Risk: Examining Changes in Home Prices in Harris County, Texas in the Aftermath of Hurricane Harvey. (link)
    Listed reading
  • Economist (2019). Changing weather could put insurance firms out of business. (link)
    Listed reading
  • Eichholtz, P., Kok, N., & Yonder, E. (2012). Portfolio greenness and the financial performance of REITs. Journal of International Money and Finance, 31(7), 1911-1929.
    Listed reading
  • Devine, A., Sanderford, A., & Wang, C. (2022). Sustainability and Private Equity Real Estate Returns. Journal of Real Estate Finance and Economics.
    Listed reading
  • Taurus Investment Holdings: Decarbonization Venture
    Listed reading
  • Boston Properties: Measuring and Implementing Portfolio Sustainability
    Listed reading
  • Krueger, P., Sautner, Z., & Starks, L. T. (2020). The importance of climate risks for institutional investors. The Review of Financial Studies, 33(3), 1067-1111.
    Listed reading

Prerequisites & course information

Prereq: None G (Spring; first half of term) 2-0-4 units

Sources