There has been a surge in multifamily developments across the country. In October, the U.S. Commerce Department reported that housing construction starts rose 25.5% as multifamily development came roaring back, the highest pace since August 2007.
Along with that surge comes an increase in green multifamily buildings and communities. Multifamily developers like Forest City and Avalon Bay are incorporating environmental and social attributes into their portfolio to differentiate their projects from their competition and appeal to potential residents.
Does it pay off?
There is accumulating evidence demonstrating that renters will pay more for sustainable properties that match their social and environmental values. In addition to the multitude of studies that find that renters value energy and water efficiency, high walk scores, and wellness amenities, the latest Resident Preference Study conducted by the NMHC found that respondents reported that they are willing to pay an extra $32.64 per month to live in a certified green building (including LEED and others).
What makes a building green? A green building incorporates environmental and social considerations at every stage of design, construction, and occupancy. While some green features, like energy efficient appliances, and stormwater collection systems are built into the actual design of the building, others such as walking trails, smoke-free buildings, and social amenities like community rooms are implemented to promote a healthy lifestyle.
The same NMHC study found that renters value LEED certification nearly as much as they value fitness centers, and more than they value parking. Just adding a robust recycling program is worth an average of $26 a month per renter.
Case in point – The Adair in Tysons Virginia
Sustainable and green building features are especially gaining attraction with one of the biggest renting demographics today – Millennials. Millennials find value in apartment buildings that are built to green building standards and hold certifications such as ENERGY STAR, WELL, or LEED, the U.S. Green Building Council’s green building certification program.
Millennials are also a key target demographic for The Adaire.
Developed by Greystar, The Adaire is a marquee multifamily building in Northern Virginia, and is a text book example of achieving market differentiation through sustainability. Located in the booming urban center of Tysons, the 34-story, luxury high-rise apartment building is the largest building in the area, and features modern designs, sustainable strategies, and a focus on wellness. Its proximity to public transit particularly appeals to the area’s prominent Millennial demographic.
Designed by R2L:Architects, The Adaire is environmentally friendly, with a focus on site development, and energy and water conservation. Energy efficiency was the driving design criteria for the building’s envelope, heating, ventilation, and air conditioning (HVAC) systems.
To align to its wellness focus, emphasis was placed on a healthy and attractive indoor and outdoor environment. A vegetated roof was installed to reduce storm water runoff and reduce heat island effect; and irrigation system needs were reduced through the planting of native and adaptive species for the green roof. Paladino is managing the pursuit of USGBC’s LEED Gold certification for The Adaire.
With average rents in Tysons, VA at $2026 for a one bedroom, The Adaire is open now and Greystar asking up to $3,342 for one bedrooms. Units are leasing quickly, and the sustainability appeal to Millennials is working.
The Adaire in Tysons, VA. Photos by Hoachlander Davis Photography, LLC
Like Greystar, owners and developers who apply a robust green building approach across their multifamily buildings see the return on investment from ongoing operations and absorption.
Likewise, investors and partners of new developments and existing properties find an increasing benefit to having green buildings in their portfolio.
Owners of sustainable developments save money on construction costs and utilities by implementing green building practices early in every project. And once the building is occupied, operations, maintenance and repairs over the life of the building are substantially lower thanks to energy efficient and sustainable/durable building materials.
The bottom line for owners and operators
Embedding green building methodologies into multifamily properties leads to fewer vacancies and justifies a higher monthly rent. There is only upside, and there’s no doubt about the value of green.