Green is the 'it' color in multifamily housing; no, not for color schemes or foliage, but for 'green' sustainability efforts and cash.  While this is no big surprise, the question remains how multifamily investors can turn green sustainability into green-backs, or profit.    One reason that sustainability continues to be a key item of interest is due to increasing regulation.   Knowing that the trend will continue to shift further towards stronger conventions, investors are looking for green properties that they will not need to update a few years down the road.  A second reason sustainability continues to be on the rise is because renters are increasingly taking environmental cautiousness into consideration, a trend that is turning into a tangible selling point.  The two separate directional interests must eventually meet somewhere in the middle.

Sustainability, or Green Building, in the multifamily housing framework can be a broad term.  We can understand the term as referring to a practice of reducing a building and community's environmental impact.  Some popular examples that we see in multifamily communities are: energy and water efficient appliances, recycling, community gardening, energy efficient windows, low energy lighting and native landscaping.  Once communities establish their green efforts, they can go as far as having their efforts certified by various councils.  One easy test of a building's sustainability is to see if it has been certified by the Leadership in Energy and Environmental Design (LEED) council).  LEED is a voluntary, consensus-based, market­-driven program that provides third-party verification of green buildings.

The Obama Administration's ardent preference for green energy, green buildings and green job creation should continue to influence state policy throughout the second term.  While most policymakers can agree on the benefit of green initiatives, not all agree on the same path forward. Trying to predict where regulation will lead is more difficult that realizing that consumer support is already a factor. Knowing this, the trick for investors is being able to find ways of providing sustainable housing at costs the consumer is willing to pay.

While pressure to retrofit Multifamily housing to new green standards is undoubtedly coming from the top down, it is also coming from the bottom up.  New renters are joining the possible tenant pool every day.  These are not renters who have lived through the boom of sustainability awareness.  They have been conscience of environmental issues their entire life and the market has responded.  One way an increased demand for green housing can be seen is through search requisites.  In Orlando, FL, for example, renters can manipulate search parameters to find apartment housing that offers green efforts.  The consumer is now able to easily identify multifamily communities that align with their own values.

While sustainability issues and requirements are nothing new, finding a profitable middle ground has remained elusive.  Investors can turn green initiatives into profit by finding where the top down pressure and the bottom up pressure meet.  It may be too early to know where that ground is, or if it will even be a steady location.   However, it is safe to say that both the regulatory environment and the consumers’ voice will continue to advocate for the same end.