(Bloomberg News) The 22-story apartment tower in Portland, Oregon, has a roof garden that funnels rainwater to its public toilets. Because the water isn't treated, state law requires "Do Not Drink" warning signs.
"Just in case your dog can read," said Dennis Wilde, chief sustainability officer for Gerding Edlen, the Portland-based builder of the development called Indigo @ Twelve|West.
Green features, such as reusing rainwater and generating about 1 percent of the tower's electricity with four rooftop windmills, help the Indigo's bottom line by saving energy and attracting tenants who pay a premium to live an eco-friendly urban lifestyle, said Mark Edlen, chief executive officer of the closely held company that's developed $5 billion of residential and commercial real estate since 1996.
As Gerding Edlen takes its Portland experiments to other cities, some of the largest U.S. multifamily owners are stepping up green development, deciding that the extra construction costs will save money on operations and give them a competitive edge. AvalonBay Communities Inc., Equity Residential, UDR Inc. and Related Cos. are among companies building projects with energy-saving insulation, solar-heated water and ventilation to improve indoor air quality as a growing number of people opt to rent rather than own homes.
Last year, developers of 23,000 U.S. multifamily housing units applied for Leadership in Energy and Environmental Design, or LEED, certification, according to the U.S. Green Building Council, which developed the standards. That's equivalent to 14 percent of the new apartments and condos that started construction last year and almost double the 11,825 multifamily units certified from 2008 through 2011.
'Apartments' Moment'
LEED certification awards points for energy and water efficiency, recycled construction materials, transportation access, preservation of outdoor space and indoor light and air quality.
"This is apartments' moment and it's a moment that's not likely to go away quickly," Susan Wachter, professor of real estate and finance at the University of Pennsylvania's Wharton School, said in a telephone interview from Philadelphia. "The green label is attractive to investors. But it's also attractive to high-end apartment renters who are increasingly looking to quality of life and to green investments as a statement."
Multifamily housing starts climbed to an annual pace of 233,000 in February, more than double the 112,000 rate a year earlier, the Commerce Department reported yesterday.
Multifamily Increase
Construction of buildings with at least five dwellings is expected to increase 61 percent to 270,000 units this year, according to a March 6 report by Paul Diggle and Paul Dales, analysts at Capital Economics Ltd. in London. Rents will rise 3 percent both this year and next, while single-family home prices are expected to be little changed for the two-year period, the analysts estimate.