The good news is that those in multifamily construction seem to understand the threat, and are doing something about it. The concerning news is that far more needs to be done.
Alexandra Ciuntu, writing for RentCafe.com, noted that the number of new Leadership in Energy and Environmental Design (LEED)-certified apartments built in the U.S., while showing a year-over-year decrease in 2017 and ‘18, rose by a staggering 283 percent from 2008 to ‘18 -- i.e., there were 11,200 LEED-certified apartments built in 2008, 42,900 in 2018.
Ciuntu goes on to write that Chicago has the most LEED units (20,600), enabling the Windy City to reduce emissions by nearly 20 percent. Seattle (19,800), Washington, D.C. (13,200), New York City (12,800) and Portland (11,500) are other cities with a substantial number of such units, but it is smaller cities, like McLean, Va. (47 percent), Evanston, Ill. (30 percent) and Cambridge, Mass. (29 percent) that have the largest ratios of LEED-approved apartments.
Illinois is also the state with the most LEED-approved square footage (68.13 million), though that includes non-residential buildings. It is fifth in residential units (24,600), behind California (55,100), Texas (47,500), Washington (26,700) and Maryland (26,100).
The significance of numbers like these cannot be overstated. In a piece for Metropolismag.com entitled “Why the Building Sector May Be Humanity’s Best Hope for Averting Catastrophic Climate Change,” Audrey Gray notes that building operations, as well as the materials and energy used during construction, account for an astounding 40 percent of the carbon emissions across the globe.
Gray further noted that that led 80 leaders from the construction and political worlds to draft a letter to California governor Gavin Newsom in March of this year, urging change. Newsom appears to have taken heed, as his state now has a goal of electric and carbon neutrality by 2045, as well as regulations mandating that beginning next year, all multifamily properties of three stories or fewer, as well as single-family homes, be equipped with solar panels.
New York City and Washington, D.C., have launched initiatives of their own. The latter became the first city in the country to mandate that apartment buildings make upgrades over the next five years that will improve their energy efficiency by 20 percent, while the former is aiming to slice emissions by 40 percent by 2030, and 80 percent by 2050.
All of this feeds into the work of organizations like the World Green Building Council, which through its Advancing Net Zero Project is striving to have every new building operate at net zero carbon -- which according to the WGBC’s website is a property “highly efficient and fully powered from on-site and/or off-site renewable energy sources” -- by 2030 and have every building operate in that fashion by 2050. That will require, among other things, improved oversight, but the WGBC lists several countries, including the U.S., that are on board with the plan.
Along those same lines, House Democrat Donald McEachin introduced in November a bill aimed at bringing the nation to net-zero emissions by 2050 -- which would, in fact, require all federal agencies to work in that direction. Many of the details are still to be worked out, and the bill is viewed as a non-starter in the Senate and Oval Office. But if nothing else, it reinforces how seriously some in government view the topic, as indeed those in real estate already do.
Consider, for example, the nation’s largest net-zero multifamily community, Solara, in Rotterdam, NY (near Schenectady). The property, which gets its name from the fact that it is solar-powered (i.e., the panels actually form the carport), features 248 units and is considered an example of Ecoluxury, since it provides amenity-rich accommodations without leaving a large carbon footprint. The NOI is another positive, as David Bruns, president of Bruns Realty Group LLC, told Builderonline.com:
“This project proves that a low carbon development is not only commercially viable but profitable and hugely popular with our customers. This success should convince other builders to join the low carbon movement.”
Consider also a property known as Project Open, in Salt Lake City. Consisting of 112 one-bedroom units, the six-story, all-electric building has been hailed not only for its sustainability but also its affordability. Chris Parker, executive director of the Giv Group, which developed the property, told BDCnetwork.com that the place stands as “a bulwark against the population being pushed out as the property values continue to rise,” as some of the units rent for as little as $375 a month.
And as far as environmental friendliness goes, residents purchase their electricity from a solar-subscriber program, because there wasn’t adequate roof space for solar panels.
Giv has plans to expand the property further, and in all hopes to build some 1,200 carbon-neutral units in and around Salt Lake City.
And finally, consider the Georgia-based Southface Institute, which in October was honored by the United States Green Building Council for promoting sustainable building practices over four decades. According to a USGBC news release, Southface’s efforts have resulted in the LEED certification of some 5,600 properties, including multifamily units.
The bottom line is, strides are being made in the face of the climate crisis. Multifamily developers are well aware of what is at stake, and how they can be part of the solution.
Michael Zaransky is the founder and managing principal of MZ Capital Partners, a private equity real estate investment firm based in Northbrook, IL. A licensed real estate broker since 1979, Michael also boasts vast experience in the banking and financial fields. He is a member of the Young Presidents’ Organization (YPO-Gold), the National Apartment Association, the National Multifamily Housing Council and the Urban Land Institute.
