Implementing change in the apartment development business is a tall order. Contractors introducing new techniques or materials fear costly delays, call backs, or even building failures. What’s more, renters are extremely price-sensitive and tend to chase lower rents. So additional costs, whether related to learning curves or more expensive materials and equipment, are difficult to pass through to customers.
There are really only three reasons why change happens at all: legislation, value creation, or market demand. Governments – whether local, state or federal – may mandate change in building practices or equipment efficiency standards, such as the steady increase in minimum SEER ratings required by code. Developers may begin to introduce new features incrementally in the hopes of squeezing out higher rents or stealing customers from existing competitors; granite countertops and stainless steel appliances found their way into apartments throughout the last decade in this way. And when upgrades become standard features, new developments must meet the market demand by providing these features, if they hope to capture even baseline market rents.
When we first started dipping our toes into green building, it was motivated by the anticipation of legislation. The memory of costs and headaches brought about by the accessibility requirements of the Americans with Disabilities Act was still fresh in our minds, and in early 2007, we decided to try to get ahead of it. However, what our “Green Team” discovered is that green, when done right, can represent a low-cost opportunity for differentiation in a crowded, commoditized business.
In our next “Getting Green Right” blog post, we’ll give you our thoughts on “How green is green enough?”