May 23, 2014
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Good Earthquake-Resistant Buildings Generate Higher Income:Statistical Study Explains
Based on the analysis of correlation between environmental performance and income

The real estate market is increasingly focusing on the environmental performance of properties. Various
recently-started environmental certification programs also show such trends. However, howenvironmental performances influence the income had remained unclear. The income from the property
is generally estimated based on factors such as location, size and building age.
Xymax Real Estate Institute therefore collaborated with the laboratory of Dr. Naoki Katoh, Professor at
Graduate School of Engineering, Kyoto University, to analyze the correlation between the environmental
performance and income of office buildings based on the statistical method. We used the data oftenant-occupied office buildings in Tokyo and its income obtained from Xymax Group’s real estateservices.
Key Points
1) This study aims to examine the correlation between each environmental factor and income. Theenvironmental analysis is based on the scores derived from the CASBEE for Market Promotion.
2) In order to reflect the actual real estate market conditions in our analysis to the extent possible, wehave included not only large-size buildings but also small- and medium-size buildings.
3) Two types of data are applied as indicator of the income: “Rent of New Lease” and “RentalIncome”
Key Findings

Earthquake Resistance (one of the environmental performance factors) has a
Positive Influence to the Income.

Before/after comparison proved that Correlation between Earthquake Resistanceand Income became more evident after Great East Japan Earthquake.

This report is prepared by Xymax Real Estate Institute based on “Analysis of Correlation between Environmental Performance andIncome of Office Buildings in Tokyo” by the laboratory of Dr. Naoki Katoh, Professor at Graduate School of Engineering, Kyoto University.

The information contained in this report is as of the date of preparation. XYMAX accepts no liability for any inaccuracies or omissions in this report.
No copying, quoting, forwarding, distributing, reprinting or any other use of this report is allowed.
Copyright © 2014 XYMAX Corporation. All rights reserved.

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Evaluation of Environmental Performance
We used CASBEE for Market Promotion as our tool to evaluate the environmental performance ofproperties. CASBEE, which stands for Comprehensive Assessment System for Built Environment Efficiency,
is an evaluation system co-developed by an industry-government-academia collaboration group headed by
the Ministry of Land, Infrastructure, Transport and Tourism. CASBEE for Market Promotion is a tool based on
CASBEE and was developed in 2012 to promote the use of the system by real estate market participants. For
this study, we have scored each of the environmental factors based on this tool and used the scores in theanalysis.
The list of evaluation items is provided at the end of this report.
Method of Analysis
A combination of various factors including location, size and age of the building is considered to influence theincome generated from tenant-occupied properties. To make clear the relation between such factors andincome, we have developed a statistical model by using the multi-regression analysis, generalized linear
model and structure equation model.
Please refer to Figure 1 for the details of subject properties and data used in the analysis.

Figure 1: Outline of Analysis
Subject Property
176 buildings with valid data from typical tenant-occupied office buildings in Tokyo under management by Xymax Group
Location: Tokyo
Average Gross Floor Area: 2,422 tsubo (approx. 8,000 sqm) (1 tsubo = approx. 3.3 sqm)
Average Building Age: 22.5 years
Subject Data
Income Data
Rent of New Lease (Jan. 2009 – May 2013)
Estimated by dividing the rent by the floor area of newly-agreed contract.
Rental Income (Jan. 2009 – Aug. 2013)
Estimated by dividing the rental income (incl. CAM charge, excl. storage/parking area) by the net rentable area.
Occupancy Rate & Occupied Floor Area in Tsubo (Jan. 2009 – Dec. 2012)
Average Market Rent (Jan. 2009 – Mar. 2013)Market Vacancy Rate (Jan. 2009 – Mar. 2013)
Building Data
Number of Floors (above/below ground, total), Ceiling Height, Gross Floor Area, Typical Floor Area, Years Passed
Since Building Completion, Electrical Power Capacity, with or without Optical Cable, with or without Raised Floor,
conducted or not conducted Overall Renovation, Air Conditioning System (central/individual/floor-by-floor), Number ofParking Lots, Size of Elevator Car, Distance from Station (in minutes on foot)Environmental Performance Data
Scores derived from CASBEE for Market Promotion, Primary Energy Consumption (basic unit), Water Supply
Consumption (basic unit)
Identity of Tenants
Type of Business of the tenant based on industry classification in Japan, Type of Use (as office or other purpose),
Number of Office Workers per tsubo.
Analysis Method
Multi-regression Analysis, Generalized Linear Model, Structure Equation Model

The information contained in this report is as of the date of preparation. XYMAX accepts no liability for any inaccuracies or omissions in this report.
No copying, quoting, forwarding, distributing, reprinting or any other use of this report is allowed.
Copyright © 2014 XYMAX Corporation. All rights reserved.

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Analysis Results
The model we obtained from the analysis methods shows relations between income and several other data
including environmental performance. Figure 2 is one of the typical models obtained in our analysis.
Of the environmental factors, a positive correlation between income and scores related to earthquake
resistance of the building and a negative correlation between income and scores related to water supply
consumption were observed.

Figure 2: New Lease Rent Estimation Model

The CASBEE evaluation gives high marks to buildings with seismic mitigation system or seismic isolation
system or to buildings that satisfy the above-standard seismic capacity (estimated by multiplying the levelstated in the Building Standards Acts by the relevant rate). Our analysis made it clear that the buildings withhigh marks on earthquake resistance achieved higher rent than the buildings with low marks. This correlation
has also been observed in Rental Income Estimation Model, but New Lease Rent Estimation Model shows astronger correlation between income and earthquake resistance.
The CASBEE evaluation of water supply consumption tends to give relatively low marks to buildings with ahigh occupancy level because actual water supply consumption increases along with the volume of activities
operated in the building. However, we have included the occupancy rate in our model shown in Figure 2, anddifferences in the occupancy rate are considered. Nevertheless, the model still shows a negative correlation,indicating there are apparently some other factor, which is not covered in our analysis, influencing thecorrelation.
In order to obtain an accurate model, we have excluded some factors that are considered not necessary forthe purpose of our study.

The information contained in this report is as of the date of preparation. XYMAX accepts no liability for any inaccuracies or omissions in this report.
No copying, quoting, forwarding, distributing, reprinting or any other use of this report is allowed.
Copyright © 2014 XYMAX Corporation. All rights reserved.

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Furthermore, we compared the average rental income of good earthquake-resistance buildings and otherbuildings before and after the Great East Japan Earthquake and found a distinct difference as shown in
Figure 3. During the analysis period (2009-2012), the overall real estate market suffered falling income
affected by the uncertainty after the fund bubble, but good earthquake-resistance buildings experienced onlya small decline.

Figure 3: Rental Income Before & After Great East Japan Earthquake
Rental Income Index

Our research report “Office Disaster Prevention Survey 2013” released last year based on the tenant survey
conducted by Xymax Real Estate Institute also shows over 90 percent of office tenants think seismic
capability of the building is important when choosing office space.
Office Disaster Prevention Survey 2013
http://www.xymax.co.jp/english/research/release/131011.html

Conclusion
Our analysis based on quantitative data confirmed the correlation between income generated fromtenant-occupied office buildings and one of the environmental performances, earthquake resistance. Thiscorrelation turned stronger after the Great East Japan Earthquake, reflecting the change of mind of officeoccupiers. In contrast, not much correlation between income and other environmental performances wasobserved so far from this study. The impact of environmental performances of buildings on income may
become more apparent as more evaluation systems are introduced and occupiers gain more interests inenvironmental aspects of the building they use.
Xymax Real Estate Institute will continue to study and analyze a wide range of factors influencing the income
generated from tenant-occupied properties.
The information contained in this report is as of the date of preparation. XYMAX accepts no liability for any inaccuracies or omissions in this report.
No copying, quoting, forwarding, distributing, reprinting or any other use of this report is allowed.
Copyright © 2014 XYMAX Corporation. All rights reserved.

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Reference: List of CASBEE for Market Promotion Evaluation
Category 1: Energy and greenhouse gases
Required item
Compliance with the energy-saving standards, target setting, monitoring,management/operation system
1.1. Estimated consumption/emission Comparison with the estimated annual primary energy consumption for a(basic unit)
typical building
1.2.
Actualconsumption/emission Level of actual annual primary energy consumption for a typical building(basic unit)
1.3. Natural energy
Ratio of use of green energy
Category 2: Water
Required item
Target setting, monitoring
2.1. Estimated water consumption
Level of estimated amount based on water volume capacity of the water supply
equipment
2.2. Actual water consumption
Level of annual actual water supply consumption (basic unit)
Category 3: Use of resources and safety
Required item
Building constructed under new seismic standards, or, buildings after
reinforcement to achieve IS 0.6+ (current seismic capacity), or buildings withreinforced columns to achieve below IF 1.0 (risk of building collapse).
3.1. Earthquake resistance, etc.
Percentage of addition to the requirements stated by Building Standards Act
With or without seismic mitigation/isolation system
3.2. Ratio of use of recycled materials
Use of recycled materials in the building structure and other construction
materials
3.3. Useful life of building structure Durability of building structure materials
materials
3.4. Replacement cycle of main Replacement cycle of main equipment, number of projects to improveequipment, increase self-sufficiency, self-sufficiency (electric power, etc.), number of projects related to environment
equipment
management
and in management and maintenance of equipment
maintenanceCategory 4: Biodiversity and land
Required item
Specified foreign species, undetermined foreign species and suspicious
foreign species shall not be used in the building.
4.1. Improve biodiversity
Number of effective projects to improve biodiversity.
4.2. Soil environment
Dealing with the soil contamination countermeasure law
Redevelopment of brownfield
4.3. Proximity to public transportation
Distance from public transportation (train station or bus stop) in minutes onfoot.
4.4. Measures to prevent risk of natural Number of risk of natural disasters based on hazard map. Countermeasures.
disasterCategory 5: Indoor environment
Required item
Building environmental and sanitary management standards
5.1. Use of daylight
Size of windows/entrance to let in natural light
Installment of daylight devices
5.2. Natural ventilation system
Openable/closable windows for natural ventilation
5.3. View
Ceiling height, with/without windows that can provide enough information fromoutside.
Source: Prepared by Xymax Real Estate Institute based on “CASBEE for Market Promotion: Point of View and Guideline”(Institute for Building Environment and Energy Conservation)

The information contained in this report is as of the date of preparation. XYMAX accepts no liability for any inaccuracies or omissions in this report.
No copying, quoting, forwarding, distributing, reprinting or any other use of this report is allowed.
Copyright © 2014 XYMAX Corporation. All rights reserved.

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