X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

When industry observers think of sustainable-building standards, often the first program that comes to mind is the US Green Building Council’s LEED (Leadership in Energy and Environmental Design) initiative. The LEED rating system, widely considered the industry-sustainability standard, gives developers points toward specific steps they can take to make their projects greener, like building with recycled materials and installing efficient HVAC systems. The more points, the higher the level of certification. One organization, the National Multi Housing Council, felt that LEED and other similar standards didn’t quite meet its constituents. So the organization has come up with its own system, called National Green Building Standard, to specifically address the multi-family sector. Paula Cino, the director of energy and environment for the NMHC, recently spoke with us about what makes her organization’s program different and sustainability trends in multi-housing:

GlobeSt.com: Why did you feel that there was a need to set up an alternative to programs like LEED?

Cino: First of all, we have to recognize that the National Green Building Standards serves dual purposes. It provides multifamily firms with uniform guidance on green building practices, and it establishes the first consensus-based standards for jurisdictions considering mandatory green building requirements. Where that differs from other programs, such as LEED, is that those programs were not well suited for multifamily buildings.

GlobeSt.com: What are some specific differences between your standards and others?

Cino: The fundamental difference between the two is that no other building program was designed and written to be code compatible. That lack of code compatibility led to implementation problems, inconsistencies with existing building codes, uncertainty of enforcement as well as unnecessary costs.

GlobeSt.com: How has multi-family fared in the area of sustainable building compared with other sectors?

Cino: There are two different aspects to this. In terms of sustainability overall, multifamily has long been the most sustainable housing type and certainly one of the most sustainable real estate types. In terms of our site selection and development, we’re very smart growth. We promote density development, and transit-oriented development, and those are important characteristics. In terms of actually following these green-building programs that look at a broader range of issue areas, including water conservation and energy efficiency, we saw the biggest movement on this front from the commercial-office sector, and it spilled over into other areas. We attribute that to mere ownership structure and the way commercial transactions are financed and moved forward versus residential real estate. It’s just a different terminology. We’re seeing a lot of interest in the residential sector across the board, looking into green building and being very conscientious about energy efficiency and water conservation.

GlobeSt.com: How much interest is coming from the tenant, or is more developer driven?

Cino: Where green building goes in the multifamily sector hinges largely on questions of financing and valuation, as well as operational data that is not yet available. The consumer appetite for these things, and what green building can do in terms of consumer preference, is still an open question. It’s something that we’re closely watching, but we just don’t have any handle on where we’re going to end up in that regard.

GlobeSt.com: What are the costs of sustainable development for the multifamily sector compared to offices?

Cino: Again, we don’t have good data to support that. All we have are individualized case studies, which we really felt did not give a generalized view of the true cost of implementing these programs in our sector. Anecdotally, we’ve heard that you can implement a green-building program in a new construction program for only marginally more than what traditional construction would cost.

GlobeSt.com: Are there challenges a developer could face in a condo versus an apartment since the owner is occupying that space?

Cino: We principally represent multifamily firms engaged in rental apartments, but it’s very clear that when you’re dealing with a mixed-ownership building, such as condos, there are a lot of private-property right issues that come into play. In some programs, they really reach beyond the design and construction phase into ongoing operations and maintenance that really create a lot of problems in the condominium sector. The replacement of systems that were designed and originally installed as very high efficiency; How do you control that once an owner is in there replacing appliances to their individual preferences? We see these issues even on the rental side, where many of the green building programs out there specify something like the building being smoke free, including inside dwelling units. That raises a lot of legal issues inside the multifamily sector.

GlobeSt.com: Are there any types of developments that are more sustainable-friendly than others?

Cino: The first multifamily buildings that we saw define themselves as green were high-rise, urban properties. It’s because those types of multifamily buildings are very close in design and construction to commercial office buildings. We saw a lot of the technology coming out of that commercial sector that could be easily implemented in that kind of construction. There was definitely a lag time in seeing those practices move to low-rise garden-style multifamily communities, which in fact is the vast majority of new apartment construction in the country. That’s why this standard is important. It is specifically applicable to low-rise multifamily buildings.

GlobeSt.com: Are there a lot of developers out there looking to retrofit their projects to implement these standards?

Cino: The vast majority of apartment communities in this country are 1960s or earlier construction. There is a big interest in bringing these buildings up to date, especially in an environment of volatile energy costs and water shortages. Unfortunately, it is much more challenging in an existing building to qualify for some of these programs unless you’re doing a true gut rehab. If you’re going through and doing fairly moderate renovations, there are really limitations on what you can do, especially if the building is occupied.

GlobeSt.com: What is the biggest challenge going forward putting these standards into place?

Cino: Some of the unanswered questions. It is still an open question as to how the valuation of these properties work. Financing is an issue in those terms. Until we really figure out how to work through the financing and valuation and make these transactions happen, that’s going to be the impediment to really pushing this out into the sector.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 3 free articles* across the ALM subscription network every 30 days
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.