Developers across the country are betting that educated, health-conscious, environmentally sensitive renters will pay more to live in green buildings, and they are working hard to market to these tenants.
Wood Partners believes that renters in Atlanta’s Poncey-Highland neighborhood may pay as much as “several dollars a square foot” more to live green, according to Jimmy Baugnon, a development associate with Wood Partners.
The company is planning a 300-unit green apartment project in the neighborhood that will be certified under the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) program.
The developers are well aware that they are entering an untested market for green building. But provided that Wood Partners can keep the extra cost of building green to about 3%, construction should start this fall.
The neighborhood seems promising for a green project, with a strong base of educated, urban residents that can afford to live at the project. These residents in this market have already shown that they are willing to pay for healthier, earth-sensitive products: Just a block away from the project site, there is a successful Whole Foods Market, which sells, among other things, pricey organic fruits and vegetables.
Green demographics
For the right audience of potential tenants, a green building can lease up faster and earn more money than conventionally designed buildings, according to Keith Brenan, senior vice president for the Weitzman Group, a market research firm based in New York City.
“If it’s properly done, it can absolutely help get people through the door and help them sign,” Brenan said. The premium can rise as high as 10% to 15% per unit, according to property managers in Manhattan.
These green apartment projects should attract many of the same trendy, educated consumers who now pay to live downtown in urban “smart growth” projects.
That’s not a coincidence: The checklist to earn a LEED certification favors buildings that are located in or near downtowns by offering points to projects with easy access to buses and subways.
Energy savings are also an excellent selling point: “The fact of saving money is probably what’s going to appeal to tenants,” said Heather Norwich, leasing manager for the Tower Cos. of North Bethesda, Md.
Norwich manages the green apartments at Blair Towns, in Silver Springs, Md. In the two years since Blair Towns opened, its apartments have consistently rented for more than the surrounding market, though it’s hard to tell whether that’s because the 78-unit garden apartment project is LEED-certified or because most of the apartments are desirable duplex units, Norwich said.
The rents at Blair Towns start at $1,399 a month for a 705-square-foot, one-bedroom unit and rise to $2,400 a month for a 1,322-square-foot, three-bedroom apartment. Norwich stresses features like the project’s Energy Star-rated appliances and “low-e” windows, which lessen the tenants’ utility bills at the submetered property.
But she doesn’t say much to prospective tenants about the many ways that Blair Towns is good for the planet. “I’m not going to sit there and go over the fact that the carpets are recycled,” she said.
Potential tenants also get a booklet advertising the green features of Blair Towns, starting with reduced dependence on cars, moving through energy efficiency and health and comfort, before finally getting to preservation of natural resources and reduced waste.
Air quality is another important selling point for green apartments, especially for young families that have decided to stay in town. That’s because living in a building with improved air quality can help with problems like asthma, which now afflicts nearly one in 13 school-aged children, according to the Environmental Protection Agency.
“We’ve had people with asthma and allergies tell us that their conditions have improved,” said Christopher Albanese. Albanese is a partner with the Albanese Organization, Inc. His company manages two green apartment buildings in New York City, including the Verdesian, a 253-unit high-rise opening this March.
Larger apartments that can fit families with young children are more likely to earn higher rents for being green, Albanese said.
The Albanese Organization hasn’t needed to make any special marketing effort to reach potential tenants, Albanese said. The developer plans to advertise its new green project in the same places, including the Internet and in local newspapers, that the company advertises its conventional apartment projects.
The ads will stress features like extra light from large windows and fresh air from carefully designed ventilation systems that make it a more comfortable and healthy place to live. These ads won’t concentrate on how green buildings help the planet. Instead, being green is offered to tenants as a kind of luxury amenity.
