Unlock Hidden Value: How Building Certifications Can Boost Your Multifamily Property
In today’s competitive rental market, multifamily property owners and managers are constantly looking for ways to attract high-quality tenants, command premium rents, and streamline operations. One strategy that delivers on all fronts? Building certifications. More than just a plaque on the wall, these credentials can significantly impact your bottom line and elevate your property's appeal. Let's explore how you can leverage building certifications to drive value.
What are Building Certifications?
Building certifications are third-party verifications that recognize buildings designed, constructed, and operated to meet specific sustainability, energy efficiency, or well-being standards. Some of the most recognized certifications in the multifamily sector include:
LEED (Leadership in Energy and Environmental Design)
Developed by the U.S. Green Building Council (USGBC), LEED addresses various aspects of sustainability, giving a holistic understanding of the impact of a building. Different levels of certification (Certified, Silver, Gold, Platinum) reflect increasing levels of achievement.
ENERGY STAR
ENERGY STAR was created by the U.S. Environmental Protection Agency (EPA) to focus primarily on energy performance. Certified buildings demonstrate superior energy efficiency compared to their peers.
National Green Building Standard (NGBS)
NGBS was developed by the National Association of Home Builders (NAHB) and provides a benchmark for six areas: Lot Design and Development, Resource Efficiency, Water Efficiency, Energy Efficiency, Indoor Environmental Quality, and Operation & Maintenance.
How Certifications Create Real Value for Your Property
Investing in building certifications can unlock a multitude of benefits that directly translate to increased value:
Stand Out in a Crowded Market
Sustainability matters more than ever—especially to Millennial and Gen Z renters. Certified buildings appeal to these environmentally conscious residents, improving your property’s brand and boosting occupancy rates. A LEED Emblem on your leasing materials tells prospects: this building is healthier, greener, and better maintained.
Command Higher Rents
Studies have shown that certified green buildings can command higher rental rates compared to conventional properties. A Cushman and Wakefield study found LEED-certified multifamily assets had a 3.1% higher rent on average compared to non LEED-certified assets. Residents are often willing to pay a premium for the benefits associated with these buildings, such as lower utility bills, improved indoor air quality, and lower carbon footprints. This translates directly to increased revenue for your property.
Lower Operating Costs
Many certifications emphasize energy and water efficiency. Implementing the strategies required for certification often leads to significant reductions in utility consumption, resulting in lower operating expenses and a healthier bottom line. Think about the long-term savings from high-efficiency HVAC systems, water-saving fixtures, efficient lighting, and optimized building insulation. For example, LEDs use 75% less energy than incandescent lighting. This can lead to substantial savings.
Improve Resident Health & Satisfaction
Some certifications focus on creating healthier indoor environments. Features such as natural light, improved ventilation, access to fitness amenities, and smoke-free policies contribute to the well-being of your residents. Healthier residents are often happier, more engaged, and are willing to pay premium prices.
Attract ESG-Focused Investors
As ESG (Environmental, Social, and Governance) investing gains momentum, certified green buildings become more attractive to investors who prioritize sustainability and are looking for more resilient buildings. Holding a recognized certification can enhance your property's appeal to this growing pool of capital and potentially lead to better financing terms or higher resale value. In 2024, GRESB introduced a time factor into its scoring methodology for building certifications, recognizing that older certifications may not be as relevant as newer ones according to GRESB. This means that portfolios with more recent certifications will receive higher scores, and older certifications will have their value discounted over time. By using Certifications like LEED O&M and EnergyStar, you can improve your GRESB Score
Stay Ahead of Regulations
Building certifications may align with or exceed local building codes and regulations related to energy efficiency and sustainability. Pursuing certification can help you proactively address potential future regulatory changes and mitigate risks associated with environmental performance.
Enhance Community Reputation
Demonstrating a commitment to sustainability and resident well-being through building certifications enhances your property's reputation within the community. This can lead to positive media coverage, stronger relationships with local stakeholders, and increased goodwill.
Getting Started: A Strategic Approach to Certification
Implementing a building certification strategy doesn't have to be daunting. Here are some steps to consider:
Evaluate Your Portfolio: Review your existing properties and identify opportunities for pursuing certification. Consider factors like building age, existing infrastructure, and potential for upgrades. If you have a property currently budgeted for major Capital Improvement, it might be prudent to review the scope of work to see if a certification would be feasible based on the scope.
Set Clear Objectives: Determine which certifications align best with your property's characteristics and your business objectives. Are you primarily focused on energy savings, resident well-being, or overall sustainability?
Bring in Experts: Partner with sustainability consultants or architects experienced in building certifications. They can guide you through the process, help identify cost-effective strategies, and manage the certification application. It is a good idea to bring in these partners prior to setting the scope of work for the project.
Focus on Cost-Effective Improvements: Many certification requirements can be met through relatively simple and cost-effective upgrades. Focus on maximizing energy efficiency through lighting upgrades, insulation improvements, and water-saving fixtures.
Promote Your Achievements: Once certified, actively promote your achievement in your marketing materials, resident communications, and investor reports. Highlight the tangible benefits residents and investors can expect.
Conclusion
Building certifications are no longer a niche trend; they are becoming a fundamental aspect of successful multifamily property management. By embracing these standards, you can enhance your property's market appeal, reduce operating costs, improve resident satisfaction, and attract environmentally conscious investors.
Green Climate Software: Your Partner in Achieving Certification and Driving Value
At Green Climate Software, we understand the unique challenges and opportunities in managing multifamily properties. Our innovative solutions are designed to help you track energy and water consumption, monitor indoor environmental quality, and streamline the data collection and reporting required for various building certifications.
By integrating Green Climate Software into your operations, you gain a powerful tool to navigate the complexities of building certifications and unlock the significant value they offer. Contact us to learn how our solutions can support your certification journey.
