LEED Certification, Energy Efficiency Increase Property Values

September 23, 2015 By Carl Weinschenk

apartmentThe value of apartments is higher if they are designed with efficiency and sustainability in mind, according to National Real Estate Investor. Earlier this year, Fannie Mae lent $10.2 million to Station House, a 50-unit apartment community in Maplewood, N.J. The apartments had won a Leadership in Energy and Environmental Design (LEED) certification from the U.S. Green Building Council. The interest rate on the loan is lower than the normal 10 basis points, which will $101,000 in interest payments over the life of the loan. The loan was the first under Fannie Mae’s Multifamily Green Building Certification Pricing Break program.

Green building is seeing dramatic growth, according to the USGBC. This year it is estimated that 40% to 48% of new nonresidential construction will be green, equating to a $120-145 billion opportunity. And 62% of firms building new single-family homes report that they are doing more than 15% of their projects green. By 2018, that will increase to 84%. Strong market demand is driving growth, in large part because of a significant cost savings for businesses and tax payers. Property owners benefit from low rental vacancy rates from LEED-certified buildings and from increased property values, the USGBC says.

In 2014, the DOE reported in its Energy Efficiency & Financial Performance study that buyers pay 10 percent to 31 percent more for LEED-certified properties.

Large buildings are far more likely than small buildings to qualify as green, at 62% and 5% respectively, according to a study by CBRE Group and Maastricht University. The 2015 Green Building Adoption Index found that 62.1% of office buildings in the US greater than 500,000 square feet hold either an EPA ENERGY STAR label, US Green Building Council full-building LEED certification or both. In contrast, only 4.5% of all US office buildings less than 100,000 square feet qualified as green.

 

One comment on “LEED Certification, Energy Efficiency Increase Property Values

  1. This new Fannie Mae program for lower interest loans as a way of encouraging green buildings to be built is a phenomenal idea. It’s just too bad that more states don’t have bigger tax incentives for converting older buildings into LEED-certified ones.

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