Will renters pay for green?
That's becoming one of the most-asked questions in the apartment industry. And so far, most apartment owners aren’t answering yes. It’s more like “I don’t know.”
There’s a simple reason for the ambiguity. “Since it’s so new, there’s no data out there that says people pay [for more energy-efficient apartments],” says Grant Montgomery, a vice president at Alexandria, Va.-based research firm Delta Associates, who spoke at last week’s Urban Land Institute's Washington Real Estate Trends Conference session on the future of multifamily.
Chicago-based REIT Equity Residential’s Chief Investment Officer Alan George doesn’t think residents will pay more for green apartments, but he does think they value it. “If all things [with the apartments they’re considering] are equal, they’ll pay for the green apartment,” George says.
But is that enough to convince owners to experiment with green features? Boston-based Berkshire Property Advisors Chief Investment Officer David Olney follows the same rule with green as he does with other decisions. “If there is a benefit as an owner, you do it,” Olney says.
Olney adds, however, that he has worked with developers that have shown the value of green projects. In fact, he thinks it’s often the “responsibility” of owners and developers to show consumers the benefit of energy-efficient apartments.
In other cases, pension funds and equity investors may push owners to make their apartments more energy-efficient, whether they want to or not. “If the capital starts to tell you to do something, you do it,” Olney says.