PERSON OF THE WEEK: Over the past few years, the real estate world has embraced an ecological shade of green. From the push for Leadership in Energy and Environmental Design (LEED) certification to the efforts to maintain the Property Accessed Clean Energy program in the face of Federal Housing Finance Agency opposition, the industry is eager to maintain and expand its green hue.
This week, MortgageOrb discusses the green real estate movement with Jim Simcoe, founder and president of San Diego-based Simcoe Consulting, a developer of green strategies for real estate investment companies throughout North America.
Q: The expression ‘green real estate’ is becoming more prevalent. In your professional opinion, what exactly is ‘green real estate’?
Simcoe: Green real estate is the practice of building and/or remodeling existing properties to transform them into high-performance, healthy living and working environments. These are properties that cost less to operate and have less impact on the environment.
Q: What is the overall state of today's U.S. green real estate market? And how did the housing market crisis impact green real estate?
Simcoe: It is growing. People are becoming more interested and knowledgeable about how best to approach green real estate methods. The connection between health and monetary savings and ‘green’ has gone more mainstream and is becoming clearer to the average consumer.
Q: Many commercial properties are seeking out LEED certification. What benefits does the certification provide to the buildings' owners?
Simcoe: Certified LEED buildings are built to the specific green standards of the U.S. Green Building Council. For the owners of the buildings, there should be some cost savings in operating a LEED building.Â
Personally, I believe that the LEED program is not as effective as the ENERGY STAR certification program. LEED is all about how a property is built, while ENERGY STAR is all about how a property is operated.
Q: Energy-efficient mortgages were designed to facilitate green lending, but they never quite caught on. Why hasn't this product been more popular?
Simcoe: Energy-efficient mortgages require a specialized loan officer to manage the program. It's more work for the loan officer and there is little education around it, so it's not really worth the loan officer's time. If the loan officer has to work harder to make the same amount of money, they won't do it. It's sad, but true.
Q: How can the green real estate approach benefit real estate developers of multifamily properties?
Simcoe: Developers can receive higher rents and enjoy lower vacancies in a green multifamily housing complex. Developers can maximize the green value of multifamily housing complexes by using a number of federal, state and local grants, rebates and incentives to reduce the cost of remodels. They can also use green building to reduce energy usage, which reduces operational expenses.
Green multifamily housing is also healthier for tenants, and the developments have lower utility bills – a boon to consumers. So, developers can enjoy fewer vacancies, better tenants, and they can also put a premium on their rents.