Sustainable Real Estate Development: The Future Is Now

Sustainable real estate development has carved out its own niche in recent years, and those that have adopted the trend are already reaping the rewards. It’s worth noting, however, that it’s not to late to jump on the bandwagon. In fact, those residential redevelopers intent on commencing sustainable practices may place themselves in a position to benefit for the next decade — if not more so. Sustainable real estate development is being heralded as the next step in investor evolution, and is something everyone in the housing market needs to consider if they want to remain at the forefront of their industry.

“Green” real estate development projects, otherwise known as “greenhabbing,” are the sustainable equivalent to your standard flip, but with a substantial caveat: an emphasis on sustainable practices and materials. Outside of the obvious, the two strategies are indistinguishable from one another. You could very easily argue that both exit strategies share the same goal, which begs the question: how can sustainable real estate development set your business apart from the competition?

THE BENEFITS OF SUSTAINABLE REAL ESTATE DEVELOPMENT

With an inherent focus on sustainable practices and reducing their carbon footprint, residential redevelopers (and even commercial redevelopers) are awarded a wide array of benefits, many of which offer improved investment results. Let’s take a look at some of the reasons you will defiantly want to implement sustainable real estate development practices into your business sooner rather than later:

Future-Proof Your Business

There is no doubt about it; sustainability is the future of nearly every industry, and residential redevelopers are no exception. The consumption of natural resources are at an all time high, and authorities around the globe are doing their best to reduce the use of those resources that are otherwise limited while simultaneously decreasing our carbon footprint. Environmental awareness has prompted a universal response, and initiations are being put in place — as we speak — to limit the consumption of natural resources. The U.S. government, in addition to local municipalities on nearly every level, has taken it upon themselves to be proactive and address the situation from a housing perspective. That means homes are going to be expected to meet industry standards that are otherwise sustainable and energy-conscious. Those investors that start implementing the idea of sustainable real estate development into their current exit strategies should not only remain at the forefront of their industry, but at the top of buyers’ wish lists as well — for now and well into the future. In doing today what many will expect in the future, your current prospects should realize their full potential.

Increase Your Income Potential

Shortly after the recovery started to gain traction and U.S. real estate started to crawl out of the doldrums of the recession, buildings certified under the LEED rating system initiated a trend that would stand the test of time: sustainable building practice and those home that implement them demand a premium. Quite simply, green homes tend to sell for more than that of their non-sustainable counterparts. In fact, studies have shown that sustainable homes can sell for as much as nine percent more than those that are less energy efficient.

What’s more, the U.S. Department of Energy acknowledged “researchers at the University of California, Berkeley, and the University of California, Los Angeles, studied 1.6 million homes in California to see if those rated with ENERGY STAR, LEED, or GreenPoint Rated labels sold for a higher price than those without energy-efficient labels.”

While the study conducted by the U.S. Department of Energy didn’t extend beyond the boarders of California, their results mimicked those of other states. Similar fundamentals were witnessed in cities like Seattle, Washington, where GreenWorks Realty identified an encouraging trend: energy efficient homes sold for more money than their less efficient counterparts. Taking it a step further, the Earth Advantage Institute in Portland, Oregon revealed that energy efficient homes sold for as much as 30 percent more than those that aren’t in 2011. With the way energy consumption has been trending, it’s safe to assume those numbers have increased.

Create More Demand

Energy costs have risen year-over-year for more than a decade, and 2016 is no exception. While the retail price of electricity has dipped modestly in the last year, the U.S. Energy Information Administration (EIA) expects residential electricity prices to rise by as much as three percent in 2017. It shouldn’t surprise anyone to learn that electricity isn’t the only resource expected to increase in price as early as next year. The EIA has also forecasted additional increases to crude oil, coal and natural gas. If that wasn’t enough, energy consumption is expected to increase across the board in every resource including, but not limited to liquid fuels, natural gas, coal, electricity and renewables.

There is an obvious trend, and homeowners are looking to get ahead of increasing prices. As a residential redeveloper it is in your best interest to meet their needs; only then will demand follow suit. The next time you set out to flip a home, consider adding energy efficient upgrades to offset the increasing price of resources.

While contingent on the specific upgrades residential redevelopers decide to place in a home, they can save their buyers approximately $8,000 (in the form of rebates) and as much as $2,000 for being awarded a GreenPoint Rated label. The homeowners profiled in the studies above managed to reduce their energy costs somewhere in the neighborhood of $1,600 to $2,237 a year.

Sustainable real estate development isn’t a fad, nor should those interested in flipping properties relegate it to the garbage bin. If for nothing else, it’s the future of the industry, and something every residential redeveloper needs to consider in at least some capacity. Those that do will not only realize their full potential to do more business, but also increase their bottom line. I maintain that sustainable real estate development is the next step in investor evolution, and those that adopt the latest trends will surely reap the rewards.