Renters talk with their wallets

Most consumers vote with their pocketbooks and speak with their buying habits. Multifamily developers and owners who hope to differentiate themselves from their competitors with greenbuilt communities, first should determine if renters will remain longer in a green apartment or pay more to live in one?

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Fifty-three percent of the 1,053 renters surveyed by Strata Research for HD Supply Facilities Maintenance Star said they would. Of those, eight percent said they definitely would. The survey was conducted last December among renters 18 and older, who had either moved in the past six months or planned to move in the next six months.

But are these renters merely paying lip service? Three-quarters of those surveyed said that it feels good to have a lower impact on the environment when renting an apartment with environmentally friendly features, but 84 percent said they wanted to live in a green apartment to feel good about saving on utility bills. When asked among a series of general apartment features, one-half listed the following features that must be present for an apartment complex to be considered green: Energy Star appliances, a complex-wide recycling program, energyefficient windows and lighting, Energy Star HVAC and hot-water unit and other watersaving fixtures.

Lack of affordability was the reason 57 percent of all respondents to a 2010 Rent.com survey gave for not choosing an environmentally friendly apartment. And they ranked impact on their pocketbook as even more important than impact on the Earth, or even their own health.

Renters ranked Energy Star appliances, weather stripping and other systems that directly affected the cost of their own energy consumption as most valued and ranked irrigation that uses reclaimed water and air quality monitoring, eco-friendly carpeting and paint and a salt-water pool as the least important.

Age doesn’t matter
Is there a specific demographic willing to pay more for green? According to Rent.com’s survey, renters 35 and older are more likely to pay extra to live in an environmentally friendly apartment if the green features allow them to keep more ‘green’ in their wallets by helping to reduce utility costs.

Most developers are counting on the huge echo boom wave of renters to boost occupancy levels in the years to come. Echo boomers will choose an apartment that has sustainable features over one that doesn’t, if given the choice of two apartment communities with the same rent. But that age cohort that grew up with eco-awareness and places a high value on green practices, is the least likely to pay more for a green unit. Echo boomers see sustainability as a baseline expectation.

Those findings coincide with results of focus groups conducted by Maryland-based Bozzuto Group, a full-service apartment company that has been developing, building operating and managing apartments and for-sale multifamily for 23 years.

“Today’s young buyer and probably beyond the young buyer interprets green as energy efficient. While everyone wants to feel good about sustainability, what it comes down to is, ‘That’s all great and it makes me sleep better at night, but I’m not going to pay for it. But, give me a reduced water bill and I will pay for that,'” said Tom Baum, president of Bozzuto Homes, Inc., the homebuilding arm of the Bozzuto Group.

In response to data collected during the company’s focus groups, the Bozzuto Group includes in its apartment homes and for-sale product higher energy-efficient heating systems, higher insulation values and other items that will reduce energy bills and operating costs.

Location still top green amenity
With gas prices on the rise, the energy-saving amenity most sought by renters is an apartment close to where they work. For that reason, Village Green Co. ranks location as the most critical element when considering where to build new apartments.

“Site selection relates to green in a number of ways because urban developments not only are usually infill sites, but they usually also have dense zoning requirements, so they take up less land space and are located near services people need,” said Gretchen Camp, an associate partner with architectural firm

BKV, which has designed a number of projects for Village Green over the years.BKV designed Village Green’s Mill District City Apartments, a mixed-use urban project in Minneapolis’ historic district that includes 175 apartments and a 3,500 sq. ft. specialty food market. The project is being built to NAHB Green standards.

Camp, who is responsible for coordinating project entitlements for BKV clients at the city and government level, as well as sustainable design efforts like ratings, notes that site selection is a big part of green building certifications like LEED and NAHB Green.

“In the case of Mill District, it accounted for 70 out of the 280 points needed to certify the project to NAHB Green standards. It’s not free, however. Typically you are paying more for those urban sites than you are for a suburban site. But all of our LEED projects were very heavy on site selection, and for NAHB, the section that applies to site selection is lot design and development and with Mill District, we have 70 points just in that section.

“It’s all about location to mass transit. And, if you are building on a brownfield, like Mill District, which had a lot of contaminated soil, and got a lot of points for that, reusing sites also is big one that many people don’t realize,” said Camp.

Seeing what you pay for, paying for what you use
Renters, whose utilities are not included with their rent, also place more importance on specific complex-wide, energy-saving features rather than those that affect their individual unit.

So it stands to reason that one of the biggest, but most overlooked, energy/utility saving feature for an apartment owner could be a program that has been available for years-the sub-metering of utilities and resident billing that makes every resident responsible for what they use and allows them to see exactly what they are paying for.

“Residents are increasingly ‘green-minded’ and this factors into their decision-making to consider the total cost of renting beyond the monthly rent charge and with a keen eye to their utility costs. Intrinsically they know when they use less. It costs them less, but they want to know what you are doing to help keep their costs down,” said Michael Radice, president and CEO of NWP Services Corporation, a leading provider of smart solutions to lower operating and utility costs for the multifamily housing industry.

Separating and itemizing the utility charges from rent on a statement and billing based off of actual consumption through sub-metering allows owners and operators to not only give their residents transparency to their usage and costs, but also an incentive to conserve.

This is evidenced by industry reports sponsored by the National Apartment Association and the National Multi Housing Council that indicate sub-metering water stimulates conservation. Sub-metered communities use 18 to 39 percent less, they found.

“That is a powerful message and gives a community a competitive leasing edge. It demonstrates that you share your residents’ goal of keeping their costs low and your communities have a commitment to being green,” said Radice.

“As an added bonus, sub-metering provides the valuable utility consumption data, which can be further analyzed and used to benchmark your communities’ performance against the competition. This delivers another key point of differentiation for your communities, at the same time giving you line-of-sight to additional efficiency projects where utility cost savings can be achieved,” he said.