Mid-rise apartment building
Courtesy SK Collaborative Alliance Residential's 935M apartments, in the West Midtown section of Atlanta, was certified Silver under the National Green Building Standard (NGBS)—a fact the luxury development's website proudly cites among the project's many amenities.

Developers make important decisions about projects based on the financial return they think a given community will bring them—long term, short term, or both. The building’s design, location, and amenities, among other features and benefits, contribute to this financial success. Green building certification is one such benefit worth considering for any multifamily project.

There are many excellent reasons to certify your project as green, some of which will make sense in your market and others that may not yet but will likely sometime soon. Two of the most notable are utility and construction cost savings.

Mid-rise apartments
Courtesy SK Collaborative The Brady apartments, also in West Midtown Atlanta and certified Silver under the NGBS, features studios and one- to three-bedroom plans. Locally based Perennial Properties is the developer.

Utility Savings
Energy and water savings are perhaps the most obvious, and easiest to comprehend, benefits of green certification. You don’t necessarily need to have your building certified to save energy, but it can simplify the process. Common-area utilities can constitute a significant portion of a property’s operating expenses, so lowering them provides an immediate return as well as a measure of insurance against rising energy and water rates in the future.

Improving energy and water efficiency doesn’t need to increase construction costs, either. In fact, in most cases these savings are achieved through a combination of following building and energy codes, using careful design, and making smart purchasing and construction decisions. The same techniques can lead to lower utility costs for your tenants, too, providing an opportunity to increase rents compared with noncertified competitors’ projects.

Some developers are so confident in their green buildings’ performance that they’re offering guaranteed utility bills or including utilities in the rent.

Reduced Construction Costs
In addition to operating costs, you can reduce construction costs while improving a building’s performance through green certification. Integrated design, the concept of bringing the entire team together early in the design process, is encouraged and incentivized in all green building programs and can lead to higher performance and construction cost savings.

With integrated design, instead of each team working independently—the architect sends plans to the mechanical and structural engineers and then to the contractor, for example—everyone works together from the very beginning to collaboratively determine the easiest path to high-performance construction.

Integrated design requires the design and construction teams to meet frequently throughout the design and construction phases, but the step is well worth it. Early-on decisions about a structure as it relates to insulation and mechanical systems, for example, can help cut costs during construction, lower utility bills, and reduce maintenance and repair costs, in addition to simplifying the green certification process. Having the certifying consultant, too, involved early on helps you make the right decisions up front, avoiding last-minute changes that cost time and money.

Finding the Right Incentives
Several local, regional, and national incentives for green multifamily buildings are available. For example, Fannie Mae offers a 10 basis-point reduction in permanent financing for new and existing multifamily buildings that achieve green certification, and HUD provides discounts on mortgage insurance premiums for certified projects. In many cases, the cost of meeting certification requirements is more than offset by the savings such incentives afford. Many utility companies, as well, offer rebates for high-performance buildings, and local, state, and federal incentives can allow developers to “double-dip” on such improvements.

Tenant Acquisition and Retention
Marketing a building as green can attract new tenants and help retain existing ones. Studies have shown that consumers, particularly millennials, are willing to pay a premium for products or services that foster their personal environmental goals and avoid purchasing those that don’t.

In addition to the lower utility costs green buildings can boast, certified properties are more comfortable, have better indoor air quality, and are quieter than conventional apartments. Residents who are comfortable in their green apartments are less likely to leave when their lease expires.

Quality Control
One less-noticed benefit of green certification is quality control during construction. Architects’ and builders’ respective areas of expertise typically don’t extend to insulation, air sealing, moisture management, and HVAC installations. Yet green building certification programs require inspections before drywall is installed to confirm that all such work is done properly. This typically means following building and energy codes, manufacturer installation instructions, and high-quality building practices. Green certification professionals identify deficient work and confirm that any corrections are made properly.

Construction is a messy, cost- and time-driven process that often leads to mistakes being missed in the rush to complete the project. Making the effort to have a third party on-site to check trade contractors’ work provides assurance that it’s being done correctly and that the building will perform as expected. Poorly installed insulation, ductwork, and weatherproofing can be avoided, leading to a better-performing building while reducing the risk of defects such as water intrusion, mold and mildew, and occupant complaints.

It All Adds Up
There’s a misperception in much of the industry that green building comes with a high price tag. With many programs, however, this is simply not true. Meeting basic green certification takes little more than adopting thoughtful design, following codes and instructions, and implementing careful construction practices—just good building. Multifamily projects can easily meet certification requirements as they benefit from high density, small unit size, and locations in walkable neighborhoods, all of which gain significant credit towards certification.

In the National Green Building Standard, any project that meets the 2012 IECC (Energy Code) automatically meets all requirements for Bronze certification in the energy-efficiency category. Combined with the inherent features of multifamily projects noted above, certification often involves no added construction costs.

Considering the benefits—financial incentives, improved performance, tenant comfort, marketing advantages, and limited added cost, to name a few—there isn’t much of a case to be made for not considering certification for your project. Andrew Yule, vice president of development at Village Green, puts it this way: “Green building certification has helped our newly created assets sustain the lowest-cost utilities in the industry. It’s a cost-effective program that’s proven to satisfy our prospects and residents, from a leasing perspective, while benefiting the owners of each asset, from a utility-consumption and expense standpoint. It also has ensured that the general contractor and its subcontractors have performed a certain standard and quality of work throughout the project.”

Reviewing the green building program checklist early in the design phase takes little effort and can lead to a smooth certification process as well as both short- and long-term financial benefits that more than offset any potential additional costs. Exploring green certification options for your next project just makes “cents.”