In Manhattan -- the U.S. market with the highest rents, according to Reis Inc. -- LEED-certified buildings can command about 5 percent more on monthly leases in good times and fill vacancies with fewer concessions to tenants in bad times, said Martin Dettling, senior vice president for design and construction of Albanese Organization Inc., which developed three LEED-certified towers with 798 condos and apartments in the Battery Park City neighborhood.
"I think we're getting to that stage where it's identified as something you need to have to be in competition," Dettling said in a telephone interview from the Garden City, New York, offices of the closely held company. "If you don't, you're a thing of the past."
Tax Deductions
Related Cos., which has nine LEED-certified residential buildings with 2,075 apartments, is planning 21 more with 9,600 housing units, said Charlotte Matthews, vice president of sustainability for the closely held New York-based company that developed Time Warner Center. While trying to cut construction costs at MiMA, a 63-floor LEED tower on West 42nd Street that opened to renters in April, Related spent extra on heating, ventilation and air-conditioning systems to qualify for a tax deduction worth 60 cents a square foot, she said.
"We invested more because energy efficiency offers a good return on investment," Matthews said in a telephone interview.
UDR, which owned 60,465 multifamily homes as of Dec. 31, plans to add about 2,200 more LEED-certified units to its current 1,200, according to Harry Alcock, senior vice president for asset management with the Highlands Ranch, Colorado-based real estate investment trust.
'Expect Green'
AvalonBay, which operates 200 communities with 58,538 units, has three LEED-certified properties and is seeking certification for 11 others under development, according to Matthew Birenbaum, executive vice president for corporate strategy at the Arlington, Virginia-based REIT. The design of Avalon at Mission Bay III in San Francisco reduces energy use by 28 percent and water consumption by 26 percent through efficient lighting, plumbing and appliances, he said in an e-mail.
"In certain markets, residents are coming to expect green features in the community where they live, so we do believe that LEED certification gives us a marketing advantage over our competitors," he said. "We've found that the hard costs to achieve LEED certification are less than 1 percent and many times less than a half percent of the total project cost."
For such investors as pension funds and university endowments, LEED certification increases a property's potential resale value, said Nate Kredich, the Green Building Council's vice president of residential market development.