In recent years the real estate industryhas made great strides in bringing sustainable development practices into the mainstream. And investors areincreasingly embracing the environmentally friendly approach. After all, greenbuildings have the potential to maximizeboth economic and environmental performance.
Economic advantages include reducedoperating costs and savings on utilities,maintenance and capital expenditures.Environmental benefits include the useof recycled building materials andimproved air and water quality.
“Green construction methods in multi-housing can dramatically reduce operating costs and extend the useful life ofhousing,” says Dave Lockard, first vicepresident of CB Richard Ellis’ Multi-Housing Group.
Smart Business spoke with Lockardabout green buildings, the benefits thatthey can provide and why investors aresupporting the concept.
What specific characteristics make a building green?
The U. S. Green Building Council hasestablished benchmarks for certificationof new construction and renovation ofexisting properties for Leadership inEnergy and Environmental Design(LEED). The criteria are designed tomeasure a whole-building approach tosustainability within five specific areas:sustainable site development, water savings, energy efficiency, materials selection and indoor environmental quality.
What types of benefits can be achievedfrom constructing a green multi-housingbuilding?
Savings may be realized in utilityusage, maintenance, unit turnover andcapital expenditures. Recycled and engineered building materials are demonstrating superior performance over an extended life span. The secondary benefit of green construction is an appeal toenvironmentally conscious renters whomay specifically select green buildingsfor housing as a lifestyle choice.
How can green buildings leverage the useof efficient systems to save on utilities?
Apartment owners and operators havebeen implementing green building technologies for a long time. They were notnecessarily making a conscious decisionto act green, but they were motivated bythe economic benefits of conservationon their bottom lines. For example,apartment owners were on the forefrontof implementing water-saving shower-heads and low-flow toilets. Exteriorlighting systems were upgraded fromincandescent bulbs to high-pressuresodium or halogen for better efficiencyand longer life. Also, when the city ofCincinnati eliminated free trash pickupfor apartments in the early 1990s, owners were quick to embrace recycling.
Landlords in Greater Cincinnati whosupply heat to their renters have workedhard to reduce natural gas usage by replacing inefficient boilers, upgradingwindows and adding insulation. Much ofthe insulation being used today is created from recycled wood pulp.
Once constructed, what cost savings can berealized by operating an efficient building?
Cost savings will be heaviest in theaforementioned utility areas: Water,sewer, gas, electric and waste removalcosts will all be significantly reduced.Emphasis on healthy living spaces mayresult in property and casualty insurancebenefits, as well. Environmental issuessuch as asbestos, lead paint and PCBsare nonissues.
How can real estate investors benefit frommulti-housing units that are green?
LEED buildings are just beginning tocome up for sale, and investors are paying a premium to acquire green buildingsversus traditional buildings. Investors onthe sell side have been quick to recognize these benefits and are acceleratingthe green building process for both newconstruction and renovation.
How will the marketplace for green buildings evolve over the next several years?
The demand to acquire green buildingswill expand in the future. Apartmentproperties historically classified ‘institutional-grade’ with high-grade amenitiesand high-quality construction will soonbe required to ‘go green’ in order toattract institutional capital. The primarymotivation will be the superior economic performance of a sustainable buildingversus one without green characteristics. In fact, green buildings are likely tobecome a standard versus an extravagant option.
DAVE LOCKARD is first vice president of CB Richard Ellis’Multi-Housing Group. Reach him at (513) 369-1347 email@example.com.