Do Sustainable ("Green") Features Matter to Developers?

Question

I am curious for those who have done single family new construction whether or not you chose to invest in any sustainable design or construction strategies for your projects, or if you specifically chose not to. Why or why not? Does anyone have experience doing a LEED-certified home or development for their investment projects?

I know a lot of it is based on location and the requirements of your state or municipality.

Looking to understand some of the pros or cons from a developer perspective as to why you chose or chose not to pursue this type of strategy, and what the benefits where either way.

Thanks!

Nik Moushon · Answer

This is a fun topic for me, since I'm an architect and this is a hot topic for discussions it gets brought up fairly often by clients. A couple things I'm going to clarify, more for everyones knowledge not that you necessarily got it wrong or dont know.

Building Green and building LEED cert. buildings (any type) are two different things as well as building to LEED standards is different from either of those. All three of those are different from each other but all try to achieve the same end goal.

We will start with the term "Green". This standard or type really has not solid definition to it. You could ask a dozen different professionals and they would all give you a different answer and mostly it is based on opinion. But the end goal is basically to be as sustainable and eco friendly as possible, both in the building of the building and the materials its built from and the life span of the building. As you can probably tell its a very loose term and is thrown around A LOT to describe everything from houses to everyday products like shampoo and cars. So if all you are looking for is a product sales pitch this is the definition you want to set you builds too. BUT this also leaves it up to interpretation by the buyers as to if its really "Green" or even "Green enough".

Next is LEED certification for buildings. This applies to all buildings but residential and commercial building have different standards. There are different "levels" of LEED; Bronze, Silver, Gold & Platinum. Each will have more and more requirements to be met and get substantially hard to achieve as you go higher. There is also a lot of documentations that needs to be done for pretty much EVERYTHING. With a requirement that all this documentation be reviewed by a third party, adding to the costs of the project. All of which needs to be started at the very beginning of the project, including initial designs. This is a HUGE under taking and should not be taken lightly. Not that its not worth it the end. Its end goal is similar to that of being "Green" but its actually put to a very long list of things with very specific requirements.

Then there is building to LEED standards. Basically its the same as LEEF cert but you actually dont get the building officially certified by LEED. That means not 3rd party review and you get to choose how closely you follow the LEED criteria for each level. You can follow it to a "T" or do a couple req. from Bronze and a couple from Gold. This is similar to saying your building is "Green" but you just have an actual standard you compare yourself too. Be careful here though because you could cross into false advertising if you don't say things correctly. Claiming your building LEED cert, when its not, is illegal since LEED is an actual entity.

So as for whether you should build SFH to any one of these three is purely up to you. Whether you will appeal to more buyers really depends on your market. If your market is a much of millennial's looking to buy houses next to a bunch of tech company head quarters or big branch offices, then ya it might be worth it, heck you might even get to charge more. But if you are out in the middle of the mid-west with blue-collar workers, I seriously doubt it would be worth it. With that said you can easily build in more "green" materials or equipment and call your house "Green". Setting a standard for yourself, whether it costs more or less or break even, is something you have to decide. Again though, your market is going to be the determining factor here, and probably even more of a micro-market even.

Greg Dickerson · Answer

Yes some buyers will pay a premium for LEED homes but others will not. Again it was all custom for me. It really depends on your market. You can check out new homes for sale in your area to see what the trends are and what buyers are looking for.

As far as helping you as a designer, Absolutely. That will can you a differentiation and competitive advantage depending on your market depending on how many others are certified.

Danny Kay · Answer

I had clients go the Designed to Earn the Energy Star route over LEED a bunch. Its an energy focused certification opposed to LEEDs more holistic approach. Did many building to DEES, its a much easier approach. Nice part of this cert is that Energy Star is a well recognized logo, and you get to use the logo on you CDs, the building, and any project specific marketing materials. I would argue that the general public would recognize and appreciate the Energy Star logo over the LEED/USGBC logo the majority of the times (public perception is a big part of a corporation choosing a 'green' certification).

I went though LEED design professional stuff along time ago, when it was really hot. It was interesting back then, but only very select clients will ever pursue it.

Jason Turgeon · Answer

There are different ways to be green. My neighborhood in Boston was designated as a test neighborhood for passive-house/zero-energy designs a few years ago. There were a few vacant city-owned lots that the city elected to sell only to developers who built to this standard. Seems like it worked, because now we have about 30-40 units of passive housing (generates as much energy as it uses, super-insulated, etc., etc.) in the neighborhood, about half built by a local firm that builds nothing but passive houses. Note that most of these homes have anything to do with LEED, but if they did they would all likely be LEED Platinum.

I've been watching the progress and all of these houses sell (except for one developer who went nuts on both design and pricing, but that's a different story). Generally they are priced a little high and they tend not to move as fast as other properties but they aren't getting hit too hard with price reductions, they just have longer carrying times. Almost none of them have come back on the market so there's no real info on resale values. Granted, we haven't gone through a down cycle since they started this, but I expect that if there is another downturn these houses may have a small advantage in a crowded market.

I've been inside some of these units and besides the green features, they are very comfortable - lots of insulation means the temp doesn't swing up and down. They are also almost silent inside (again, lots of insulation), with no noise from outside or from other units and no noise from HVAC. And because they have dispensed with HVAC (some will have a single ductless mini-split), there is more usable floor and wall space - no vents, no radiators, no baseboards. Also, these are all-electric homes with no gas lines. Given the recent explosions north of town and the huge number of leaks our old neighborhoods deal with (gas company is always out ripping up the street), many people are beginning to question the safety and efficiency of gas. These are all selling points if you choose to market them correctly.

Check out some of the homes:

https://www.placetailor.com/

http://www.epositiveboston.org/

http://www.sebastianmariscal.com/notabuildingapark

http://www.epositiveboston.org/marcella-street/

Chris K. · Answer

@Joshua Stewart

My company works on fairly large projects all over the northeast. For these bigger projects, qualifying for LEED certification can become important depending on all the grants, tax benefits, and other "funding" factors. Incidentally, we like those jobs because glass/glazing items can have a big impact on that process. They typically need to order "higher spec" products to meet the requirement. In turn, that typically means bigger contracts for us and our vendors.

Now for residential homes, I suppose it depends on the market. In the area that I live, I would guess that 99% of the potential buyers won't care about it. In more "hip" areas, I can see it being an attraction.

Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it for legal advice. Always consult with your attorney before you rely on the above information.

Greg Dickerson · Answer

@Joshua Stewart it basically comes down to cost. LEED can add enough to a project to make it prohibitive for a spec unless price is not an issue. Green is a relative term and doesn't require much to meet those standards. I have built LEED certified homes for custom clients in the past but not spec. All new homes have some green elements and most meet energy efficiency standards. LEED and Green are selling points you just need to make sure you can get the return for dollars invested.

Joshua Stewart · Answer

@Nik Moushon Thanks for the input.

Building to a LEED standard, or Living Building Challenge, is something I try to do as much as I can in my non-development projects. I appreciate your feedback on possible ideal buyers and locations for this kind of development, as well as wording things carefully when not pursuing certification.

Joshua Stewart · Answer

@Jason Turgeon thanks, that is very helpful!

Joshua Stewart · Answer

Chris, thanks for that perspective. I hadn't looked at the benefit to the vendors of getting these type of projects.

Joshua Stewart · Answer

@Greg Dickerson Do you think a LEED-certified home can be a selling point that sets you apart from the competition in the real estate market? For instance are home buyers willing to pay more for a house like that knowing their maintenance costs will be lower and return on investment higher (generally)?

Asking from the perspective of a designer pursuing professional LEED certification and also looking to doing future development projects as LEED-certified homes or communities. Trying to see if there is a market for this!

Do Sustainable ("Green") Features Matter to Developers?

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