Article by:
Austin Young
August 3, 2021
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Why a Profitable Green Building is Best For Tenants | Ivy Energy

Why a Profitable Green Building Is More Attractive to Tenants

With the world going towards a more sustainable future, it's important to take steps to reduce emissions from power plants and provide clean electricity for people all over the world or at least offer alternatives that reduce their dependence on traditional sources of power. Buildings that help in conserving non-renewable resources and incorporate green initiatives like solar-powered housing help improve the curb appeal of the properties.

What is Green Housing?

Green housing is defined as a property that utilizes renewable energy sources to produce electricity or heat. It aims at creating a better quality of life for those residing while making sure that the resources like energy and water are used judiciously. The benefits from such green buildings percolate right to the grassroots level and offer something for all the parties involved.

Why should Developers Go Green?

Sustainability is now at the very top of renters concerns. Economic, governmental, and public opinion around the world is committed to making a multilateral, unequivocal response to curb climate change. It's estimated that by 2045 there will be 2.3 billion apartments and condos built throughout the world. As rents and real estate prices rise, developers are finding new ways to keep their properties from sitting vacant. One way is by implementing sustainable green energy systems into the buildings they build as home-buyers, especially in the millennial demographics, actively seek out homes that are eco-friendly. Green building developers can enjoy special benefits in financing like free energy audits and other substantial savings in the beginning as well as in the long run.

Why are homebuyers and renters attracted to green buildings?

There are many benefits of living or investing in a green building including lower monthly utility bills and being able to help make the environment cleaner for future generations. With flood and fire stories dominating the news, business leaders must act collectively to show they’re making real change happen, implementing viable, comprehensive sustainability strategies, right now. Lowering utility cost and using innovative split incentive technology such as Virtual Grid combined with a onsite solar asset can allow you to realize a new net operating income outside of increasing rent.

As a property owner, you may find that leasing such apartments can be quite profitable. Landlords of multi-family properties are starting to take advantage of the fact that green-certified apartments require less money for upkeep and maintenance than traditional apartment units. In addition, green units allow large-scale green projects to become reality on a much larger scale than they would be possible with traditional apartment buildings. 

Further, with policies like virtual net metering, traditional multi-family units can be easily turned into a more eco-friendly option without even requiring the tenants or landlords to invest in any kind of hardware.

However, there are several factors you may need to be considered when incorporating green initiatives:

  • Although green initiatives have been around for a while, there are still markets where these developments are still in their nascency. Understand your market fully well before incorporating any new changes.
  • The immediate costs of appliances and other fittings for green homes can be higher as compared to the other alternatives. There is no denying that the long-term benefits make up for the cost but it is important that investors have the resources or accessibility to green financing to switch to green buildings.
  • Evaluate every green initiative you add to your building as some of them, say like a rooftop garden, may end up nullifying other efforts. In this case, a rooftop garden can negate your water conservation programs.
  • Work with a certified solar installer and Ivy to make sure you maximize the most of your space and build an optimized system to get the best ROI.

At the simplest level, it's about the environment. While their is a huge pressure to create a sustainable organization, it can be turned into significant business benefits and opportunities. Low carbon transition will lead to beneficial business shifts when critical goals are translated into positive actions .Green multi-family units are extremely lucrative as there is a vast market to capture and hence jumping on to the bandwagon at the earliest can prove beneficial. Historically, landlords and developers were not incentivized to provide clean energy benefits to their tenants due to the split incentive problem. Also, tenants did not have options in the marketplace to choose which energy provider they wanted. Now in the 21st century property owners have the opportunity to offer solar energy to tenants at a discounted rate in comparison to local utility rates. Learn how Ivy’s Virtual Grid Software can help you turn green housing investments into a new line item of revenue while also increasing the market appeal of your community.