Tenants' leasing motivators and decisions about the greenness of office buildings and their rental

Increasing concerns about environmental sustainability in the real estate sector have resulted in a growing number of office buildings being certified by green building certifications to reflect their levels of greenness. In Australia, the number of National Australian Built Environment Rating System (NABERS) and Green Star certified office buildings in major Central Business Districts has been increased rapidly over the last 20 years. Studies in this field show that office buildings with higher levels of greenness can fetch higher rental, and the tangible aspects of office buildings often play a role. Nonetheless, the impacts of tenants' leasing behaviours on rental, especially in regard to office buildings' symbolic aspects, has not been fully explored.As such, this research aims to investigate the determinants of rental of the Australian office buildings. Under this aim, the four objectives are to (i) develop and test a conceptual framework of tenants' office leasing behaviours; (ii) examine the key leasing motivators driving tenants' decisions about the greenness of their office buildings; (iii) examine the collective effects of tangible and symbolic aspects of office buildings on rental; and (iv) explore the moderating effects of market and regulatory forces on the relationships between tenants' key leasing motivators and their decisions about the greenness of their office buildings.To achieve the research aim, a conceptual framework is developed by integrating the three behavioural theories of (i) symbolic self-completion theory; (ii) expectancy-value theory; and (iii) push-pull theory. In this study, it is postulated that tenants' leasing motivators are multi-dimensional and that they could affect the tenants' decisions about the greenness of their office buildings; then, in turn, collectively determine the rental. Moreover, the relationship between tenants' leasing motivators and their decisions about the greenness of office buildings could be moderated by market and regulatory forces.This research adopts a survey research design and was built on a post-positivist research paradigm. Preliminary interviews were conducted with nine key informants of relevant organisations to identify potential determinants of tenants' leasing decisions. These findings were used to inform the development of the structured survey questionnaire. Overall, an online survey of 51 Sydney CBD office tenants was undertaken and the data were analysed using both the first- and second-generation multivariate methods, including Exploratory Factor Analysis (EFA) and Partial Least Square – Structural Equation Modelling (PLS-SEM) techniques. The results of the EFA reveal that tenants' leasing motivators are multi-dimensional, comprising of eleven constructs related to their organisational identity, expectations and both tangible and symbolic aspects of office buildings. The results of PLS-SEM further show that organisations that possess a sustainability-focused identity tend to put more emphasis on building quality than building sustainability. Building quality is found to be a determinant of office rental whereas, building sustainability contributes to the creation of symbolic values of office buildings for organisations and employees. Additionally, the results demonstrate that the level of greenness represented by NABERS and Green Star ratings is of interest to organisations with people-focused identity, while the ratings did not significantly affect rental. Finally, no significant moderating effects of market and regulatory forces were detected on the relationship between tenants' leasing motivators and their decisions about the greenness of office buildings.It is concluded that the identified relationships between tenants' leasing behaviours and rental provides good insights about the impact of tenants' leasing motivators. As such, it is recommended that landlords understand tenants' office leasing behaviours and, thereafter, establish a targeted strategy for attracting appropriate tenants. Tenants are also recommended to make strategic office leasing decisions, so they can provide their employees with psychological ownership of their workplace.