Green certification programs have come a long way from where they were when Carl Seville began getting involved about eight years ago.
Seville was working as a contractor when he recognized the value a green certification could add to a building.
He even worked with the Greater Atlanta Home Builders Association to help develop the EarthCraft Multifamily certification program.
Nowadays, Seville works as a consultant and has worked on building and certifying more than 80 buildings, both multifamily and single family. He obviously believes certification is worth every penny.
“But I have heard that there are developers that are doing green practices in their buildings and not paying for the certification because they’re cost conscious,” Seville says.
The team at Pinnacle is that company.
Rick Graf, the company’s president, isn’t convinced certification is worth it and doesn’t see the value in getting a certification.
While Pinnacle still implements many green building practices such as replacing light bulbs with more energy-efficient ones and installing low flow fixtures, it doesn’t need a certification to dictate how to do it, Graf says.
“We do a lot of things in the apartment space that are green-type things---recycling, always look at ways to reduce energy, low flow toilets and so on,” he says. “But it’s been driven mostly on the expense side. So, for me to have to go through that process (of getting a certification), I just don’t know that it's something we need to do.”
Renters Won't Support Green?
Graf believes pursuing a green certification makes sense to save money in common areas and on the operational end, but isn’t convinced that the renter will pay more in rent for a green-certified building.
“While they may want it,” he says, “they aren’t willing to pay for it.”
Michelle Desiderio agrees. She doesn’t believe the value will come from residents since they won’t want to pay more for rent for a sustainable building.
Desiderio, vice president of Home Innovation Research Labs, says much of the reason residents aren’t willing to pay more rent is because many times they’re responsible for their own utilities. And although the renter may see about $20 off their water and energy costs, they aren’t willing to pay more upfront to possibly save down the road, she says.
However, a survey conducted by Strata Research earlier this year found that 77 percent of renters felt green apartments were important. The survey also found that ENERGY STAR appliances were the No. 1 green feature tenants were looking for and that 64 percent of respondents said they would maybe pay more for green features.
Meanwhile, tenants with rents of less than $700 are considerably less likely to pay extra for green features compared to those who pay more than $700 a month, according to the survey.
Desiderio, who also works as the director of green building programs for the National Association of Home Builders, believes market differentiation is the No. 1 reason builders choose to obtain a certification. “Developers feel the renter, particularly the Millenials, are interested in being in a green building,” she says.
Many investors also prefer to be involved in communities that have a green certification, she says. “Will they invest? Yes,” she says. “But they would prefer to see investments in projects that are going to get a green certification.”
Seville says while Gen Y renters may want it, it’s hard to quantify how much they really want it, and if they are willing to pay it, it's difficult to determine how much.
Renters may want to live in the comfort of a green environment but they may not know that the certification is what makes it feel better.
“It’s just a better place to live,” he says. “I think what we will see is the demand will continue to increase in them from a health standpoint.”
Air quality and sound quality are two features that may increase the quality of life in a green building but residents may not necessarily be able to put their finger on it.
And while the residents may have a better living experience, owners can also find value in sustainability because it creates a more efficient building.
Meanwhile, owners should find inherent value in the durability of certifiable building, Seville says.
“It’s a good long-term thing for owners to have,” he says.
Lindsay Machak is an Assistant Editor for Multifamily Executive. Connect with her on Twitter @LMachak.