Renting Energy Efficient Apartments: 2012 Concept Community Part 1

Here is a good article shared by a colleague this morning that points out an opportunity of interest to multifamily housing owners and builders. It was written by John K. McIlwain who is the Senior Resident Fellow and J. Ronald Terwilliger Chair for Housing at the Urban Land Institute.

If you saw the video from an earlier post you might recall that there are mixed views on whether anyone is willing to pay for energy efficiency these days. My bet is that the tide is already turning and one of the big selling points for Gen Y will be energy efficiency. The article is called "How Home Builders Are Selling Green"

Here is the key takeaway from the full article:

This is a trend that the apartment industry in particular needs to watch. Its market is far younger than the homebuying market, a differentiation that will continue to grow as the young members of generation Y defer homebuying into their early and middle 30s. This, the largest generation ever, is also the one most committed and sensitive to the cost and use of energy. They are, by and large, an increasingly values-driven group, and climate considerations, sustainability, and reducing the use of energy are at the heart of their values. In short, the prime market for apartments is the greenest market in U.S. history.


We are about to formally announce a new project that will dig deeper into this debate called the 2012 Concept Community. More to come...soon! Rendering courtesy of KTGY Architects.  

990 Polk

Affordable Housing Finance's Donna Kimura and Tom Borsellino attended the ‘first look’ of 990 Polk, a newly constructed energy-sustainable apartment complex for low-income and formerly homeless seniors, located in the Tenderloin neighborhood. The event incorporated an awards presentation to TNDC and Citizens Housing for their green building efforts in San Francisco and a tour of the new property. Bank of America joins the celebration by announcing a three-year national grant to Enterprise for its work in community development and green building, nationwide.

Featured speakers included Gavin Newsom, Mayor, city of San Francisco, Doris Koo, President and CEO, Enterprise Community Partners, Janet Lamkin, California State President, Bank of America, James Buckley, President, Citizens Housing Corporation and Don Falk, Executive Director, Tenderloin Neighborhood Development Corporation.

Obviously it was cool to see important and much needed projects getting completed, but the fact that the project was "affordable", "seniors", "environmentally (and economically) sustainable" made it particularly noteworthy.

And this project needed appliances, products and services no different from any other. Here is a shot of the laundry facility.

(SAN FRANCISCO, December 2, 2008) – Leading nonprofit affordable housing organization Enterprise Community Partners honored Citizens Housing Corporation and the Tenderloin Neighborhood Development Corporation (TNDC) today to celebrate the developers' work in building environmentally sustainable housing for low-income communities in San Francisco. Joined by Mayor Gavin Newsom and Bank of America, the awards ceremony took place at 990 Polk Street, a newly constructed low-income senior housing property in the Tenderloin neighborhood.

Click here for the Affordable Housing Finance Story.

Green Building Conversions

We are currently working on a project with the NMHC that addresses "Green Practices in Multifamily Housing." In light of that my attention has been drawn to Green Conversions and Retrofits. We talk about Green Building often but the biggest opportunity is in Green Conversions.

Here is an article of interest even though it relates to office buildings:

Existing buildings get new lease on life with green conversions- Houston Business Journal

"Never doubt that existing buildings can become more green -- even without substantial renovations," Taylor says. "With the right tools and the right attitude, any office can be transformed into a more comfortable, healthful, and sustainable space."

The NMHC Supplement will cover both new construction and retrofits as relates specifically to multifamily housing. Here is a brief summary on the contents:

* How the apartment industry can use the green movement to its advantage

* NMHC research identifying ways to maximize energy efficiency

* The multifamily elements of the new NGBS

* Best practices for new construction and existing properties

* What consumers want (and are willing to pay for)

Our resident Green Expert, Alison Rice is heading up this project for us and we expect to publish the product in the August Issue of MFE.

Multifamily is Green: Part 2

Rather than answer my own post I will provide a follow-up. Alameda County has a great website called stopwaste.org. Under this site is a wealth of information on Green Building and more specifically, a set of Multifamily Green Building Guidelines.

I wish I could say that this is breaking news but it was published back in 2004 and I managed to remain in the dark about it for awhile now.

There are interesting case studies that support the guidelines as well. My advice applies to myself first and foremost...we all need to dig deeper.

Multifamily Executive Insight: Vendor Selection

Here is additional insight on product specification when it comes to renovations in multifamily housing.

Steve Heimler states the following:
"When looking for the right supplier we look to integrated ordering methods that sync to our construction module software so that data is only entered once from ordering, inventory tracking, to completion and loan draw. The vendors that understand these processes are the same who bring other added value suggestions and products. Ease of communication and technological 'bridges' are vital to reducing human capital expenditures and manual entry errors. Frankly, the product is not as critical as the partner."

If there is anyone who is widely known as an expert on this topic it would be Steve. Prior to selling his portfolio of more than 22,000 managed multifamily units to Riverstone Residential Group he was the founder and CEO of Stratus Real Estate, Inc. He quickly developed a reputation as a reposition specialist in "C" to "B" quality apartments.

Since 2000 he has been responsible for more than $200,000,000 in renovations. As Steve puts it: "We buy a ton of appliances, cabinets, lighting, hardware, flooring, etc."

Steve is a regular at the major industry events (MFE Conference, MFE Leadership Summit, NMHC etc.) and has been an active contributor to Multifamily Executive over the years. With multifamily investment looking solid for the long haul, and the average apartment property being more than 37 years old, it makes sense to get engaged with this industry and get to know folks like Steve.

We wish him all the best with his new company.

Multifamily Renovation & Construction Roundtable

In light of the recent renewed interest in multifamily housing I thought I would re-visit a focus group that we conducted a few years ago in Washington, DC. The editorial staff gathered a group of prominent multifamily owners and developers to learn more about the factors that drive decisions for building products.

Even though the market conditions have changed some since this video was first produced, the insight is still extremely valuable and relevant today.

Click Here for Video



An extensive readership study for Multifamily Executive was also conducted that validates much of the anecdotal information you will see in the video. The fundamentals remain strong, and rents are on the rise in most markets. The key takeaway is that product decisions are made by different people and for unique reasons in this market. Having a better understanding of these factors can open up a new growth market for your firm.

Multifamily Conversion & Capital Improvements

My last post featured 2 small renovation projects. This morning I received a press release from my friends at HFF featuring a conversion project in Newark, NJ that required quite a bit more capital expenditure.

FLORHAM PARK, NJ – The New Jersey office of HFF (Holliday Fenoglio Fowler, L.P.) has secured $65 million in financing for Eleven 80, a former office building that has been converted into 317 residential units in Newark, New Jersey. Working exclusively on behalf of Cogswell Realty Group, HFF senior managing director Jon Mikula and managing director Jim Cadranell placed a long-term, fixed-rate loan with Bear Stearns Commercial Mortgage, Inc. The financing, which will be serviced by HFF, will retire existing debt used to renovate and convert the property into a luxury residential tower. Originally built in 1930, Eleven 80 recently underwent an extensive gut renovation turning the long vacant office building into a state-of-the-art luxury apartment building. Community amenities include a bowling alley, half-court indoor basketball, spa, fitness club, and valet parking and doorman service.

Both Multifamily Executive and Apartment Finance Today cover deals like this one regularly. If you are a service provider, there are some interesting opportunities that can easily be overlooked if you don't read past the headline announcing the transaction. Most interesting: this isn't the first deal of its kind for CRG.

Case Study: Lighting & Window Replacement

If you are a product manufacturer it might be useful to investigate the local incentive programs that are being offered to multifamily developers and owners. Oregon is certainly one of the more progressive-minded states when it comes to encouraging high performance building but the case studies offered here can be a lesson to any building product manufacturer looking to understand what drives product decisions in multifamily housing. Lighting, windows, doors, HVAC, insulation, washers and dryers seem to be the primary targets for practical "green" renovation and construction.

Let owners and developers know what your product can mean to their NOI and how to market the green benefits to residents.
"Energy Upgrades Give Properties a Marketing Edge"
"Energy Efficiency Makes Tenants Comfortable"

Click through the links above to see the programs offered by Energy Trust of Oregon, Inc. These are 2 small projects that realized a big financial upside for owners and tenants alike.