5 Reasons for Investors to Embrace Sustainable Apartments
Green building is one of the fastest-growing industries in the United States. From consumer demands for more energy-efficient options to the increasing availability of eco-friendly alternatives, sustainability is a critical factor in the future of building.
Sustainable properties tend to have a higher appraisal value than standard buildings. In Austin, Texas, for example, a home built to LEED standards can add up to $25,000 to its resale price — an increase of 8% compared to traditional construction. Plus, some states offer incentives, such as tax rebates, for living in a green dwelling.
This trend is more than a shift in the consumer mindset. While green buildings come with a certain aesthetic, such as light-filled spaces and eco-friendly materials, the impetus for a new kind of construction is more significant. The built environment, including a structure's lifecycle — from development to demolition — accounts for 39% of CO2 emissions across the globe.
Considering the current market, the best time to invest in sustainable design is right now. Eco-conscious apartments will save you money, increase the future value of your property and boost your brand reputation.
1. Reduce Construction Costs
Green buildings can reduce the cost of construction by requiring fewer materials and producing less waste. One case of sustainable design includes zero-net-energy buildings, those that consume the same amount of renewable power as they generate on-site.
Other examples include passive design, water conservation and the use of alternative building materials. One global survey found that 63% of construction firms have green commercial project plans in place. Integrated design from the ground up will save you money in the future by creating highly efficient spaces.
2. Boost Resale Value
Sustainable features in apartments increase resale value. Renters seek out properties that offer components such as smart thermostats, renewable energy sources, water harvesting systems, daylighting options, occupancy sensors and more.
From an investment standpoint, green initiatives increase new building values by 10.9% and existing structure worth by 6.8%. Especially in areas with tax incentives for sustainable construction, green assets pay off substantially in the long run.
3. Save Money on Utilities
Green buildings not only save you money, but they also assist tenants in cutting costs. Utilizing Energy Star-approved fixtures and appliances, integrating renewable energy for electricity and reducing water consumption make a substantial impact on overall utility fees and lowers infrastructure costs.
For example, green roofs can reduce the power required to cool a one-story building, though taller buildings can also see efficiency impacts. Green design creates long-term gains for investors and tenants alike, helping you monitor their energy spending and market the apartments as a smart rental option.
4. Improve Brand Reputation
Millennials and Generation Z hold the largest share of the target audience for apartments and other multifamily buildings. The majority of this demographic — nearly 75% of Millennials and 72% of Gen Zers — take sustainability into account when making a purchase, and are even willing to pay more. By utilizing green practices, you can advertise your building as a more eco-friendly option than your competition.
5. Raise Your Rates
Sustainable buildings are a step above the standard. Higher quality living space costs more, making it easy to charge higher rates for green apartments. People who live in eco-friendly buildings experience fewer health problems and a higher quality of life — including increased productivity, decreased absenteeism and fewer healthcare claims — making the higher cost worth the investment.
According to one survey of green home dwellers, 42% choose their property for the health benefits, even above economic and environmental reasons. With sustainable apartments that meet buyer expectations, you can ensure you're ahead of the curve in offering the best value.
Investing in Sustainable Apartments
When it comes to multifamily residential development, the building industry is looking for more sustainable alternatives. Apartment complexes, both old and new, can easily adapt to reduce their carbon footprint. Making simple changes, like installing energy-efficient appliances, using sustainable building materials and taking advantage of natural lighting, all make a difference.
With population growth and the rising cost of housing, urban areas are seeing rampant expansion. Apartment construction has experienced a 34% growth rate in the past decade. Whether you are hoping to reduce construction costs or boost resale value, implementing sustainable practices is worth the investment.
A look toward an eco-friendly future can also enhance your relationship with consumers. By taking an interest in infrastructures that benefit the environment, you seek to maintain the wellbeing of your tenants.
Holly Welles is a real estate blogger covering design, finance and market trends for apartment dwellers. You can find more of her work on her blog, The Estate Update.
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