Are LEED certified buildings as cool as they used to be? According to a recent report from RENTCafe.com, “In 2008, only 5% of multifamily units were green-certified and, up until 2014, there was a continuous upward streak of green construction that culminated with 19% of the new apartments completed that year getting certified. Since then, the percentage of sustainable housing units has dropped, hitting 14% in 2017 and slowly recovering in 2018 at 15%.”
Adrian Rosenberg, communications specialist for the firm, attributes the fall-off derived from their findings to a slowdown in the number of new apartments delivered, the extra paperwork necessary for obtaining the LEED certification and the extra costs associated with it.
Building green and getting certified has never been cheap but has the concept of certification really cooled? Not according to the U.S. Green Building Council (USGBC). “When looking at our certification data in particular, each year the certified residential units in the U.S. has gone up. 2018 was the best year in terms of certified units,” says Asa Foss, director of LEED residential at USGBC. Foss believes the discrepancy in the Yardi Matrix numbers and the USGBC’s figure may come from mixing the oranges in with the apples. “We don’t break apart for-rent vs. for-sale buildings,” he says.
In their recent World Green Building Trends 2018 Report, USGBC comments on domestic green growth by saying, “a moderate level of growth in green activity is expected in the U.S by 2021 with those doing the majority of their projects green increasing from 32% to 45%.”
Although LEED is the go-to standard for assessing greenness, it is not the only one. The U.S. EPA lists six sets of green standards including LEED but not including the very strict set of rules laid out by Passive house (Passivhaus), which was developed in Europe.
“We really love Passive house standards,” says Foss. “We think Passive house and LEED really complement each other. Passive house looks at the energy performance of a house exclusively. In particular looking at the envelope predominantly and on top of that, really good mechanical systems.”
Good mechanical systems and tight building envelopes cost more money and developers working on tight margins may not be able to rationalize spending more in hard costs to get a favorable rating as well as the extra soft costs of filing the paperwork. But in many places developers don’t have a choice as green standards are pre-baked into the local building codes.
According to USGBC, 50 different cities in the US including Washington DC., St. Paul Minn., Miami Fla., and Taos, N.M. have various requirements and incentives in place that involve LEED certification.
Big money has also stepped onto the green certification train in the form of investors and lenders favoring green projects. “A lot of the lenders are offering competitive products because their underwriters are preferring green mortgages that they can resell,” says Foss. “The underwriter is looking at green as a proxy for higher quality. There are studies that confirm they are higher performing loans with lower default rates and present a better risk profile. If your lender is going to ask for it because the underwriter is, that’s real money on the table.”
