Weighing the Costs, Benefits of Green Building

Weighing the Costs, Benefits of Green Building
Jul 10, 2009
By: Erika Schnitzer, Associate Editor, Multi-Housing News

Sustainability is a buzzword for today's consumers and likely a requirement for them tomorrow, noted Bobby Bowling, president of Tropicana Building Corp. and moderator for a National Association of Home Builders multifamily webinar, entitled “Green Building: A Cost/Benefit Analysis.”

Speakers Sanford Steinberg, AIA, principal of Steinberg Design Collaborative LLP, and Patrick Dennis, regional construction manager at Wood Partners, discussed ANSI's (American National Standards Institute) new National Green Building Standard (NGBS) and its application to the multifamily industry, as well as the cost of going green.

“What's unique is that it gives an even playing field across the country,” Steinberg noted. NGBS is the first and only consensus-based green building standard for residential properties, and the standard is compatible with existing building codes.

NGBS has four levels of compliance--Bronze, Silver, Gold and Emerald--and is based on points in six areas: site sustainability, water conservation, material resource efficiency, energy conservation, indoor air quality and education regarding building maintenance and operation.

As Steinberg explained, there are various areas in the standard where multifamily would achieve points, simply due to the nature of multifamily, particularly in terms of the water efficiency category, “if you are building a multifamily community, you have pretty much been close to meeting Bronze,” he said.

In terms of added cost, the speakers noted that the Bronze level will cost 2 percent more, while Silver, Gold and Emerald will cost 4 percent, 8 percent and 17 percent more, respectively.

Despite Steinberg's assertion that multifamily communities can easily achieve the Bronze level in the new green standard, Dennis found that residents are not necessarily willing to pay more for green features, as his company previously assumed.

In a survey of current Wood Partners residents, 80 percent said that they expect green features, noted Dennis. The survey also found that 37.7 percent would pay 5 percent more for green features, while 28 percent responded that they would be willing to pay 10 percent more.

In addition to the survey, Dennis reported his findings on the cost, per unit, of several green standards. For a LEED (Leadership in Energy and Environmental Design) NC certification for a high-rise community, the cost was 0.75 to 1 percent more; for LEED for Homes certification on a garden-style community, the cost was $1,500 to $2,000 more--in California, the cost was $1,000 to $1,500 more--and for Energy Star, the cost was $600 to $800 more.

Based on these findings, “we set out to study all the programs available on a national basis to figure out which was the best for us,” said Dennis. “To make a choice on which program to pick, we wanted a national standard. On one of the survey questions we asked…62 percent of residents understood what Energy Star was about.” To that end, Dennis pointed out the importance of implementing features that residents would understand.

In a market study on a LEED-compliant community in Dallas, Wood Partners discovered, however, that residents were, in actuality, unwilling to pay a premium for green features. In fact, noted Dennis, “we are seeing premiums for views more so than green finishes.”

Consequently, said Dennis, Wood Partners revised its thinking, recognizing that while green building is, in fact, gaining traction as thought, the focus on these features is greater in good economic times. And while residents will, in theory, pay a premium for these features, they are not doing so in practice. As a result, said Dennis, multifamily needs to “get smart” about green marketing and educate management groups on how to best sell a green property.

“We want to do a good job to make sure we build quality projects with a sustainable element, but how do we do it for the best value?” asked Dennis, reminding the audience that the question remains open for many.

SOURCE: Multi-Housing News