Real estate development in 2012 is a tricky proposition. The steep recession that has gripped the economy for the last four years has significantly reduced real estate values, and the market may never completely bounce back to those pre-2008 levels. While construction projects are still in full swing, the scale has been tempered. Both equity investors and property buyers have had to maintain a tighter hold on their finances, with consumer spending still reduced and changes to the tax rate due to the impending fiscal cliff still in flux. Add on top of all of these variables the desire to build with environmental sustainability and energy conservation in mind and you’ve got almost more than any developer can contend with. But if recent trends are any indication, eco friendly construction is still a profitable venture.
In fact, green building initiatives have actually become the standard these days. But since investors are vetting opportunities with far more care than in the free-flowing past, developers must prove that their construction methods are truly eco friendly, and not just taking advantage of a buzzword. One greet example in the Greenhouse, a new development in the UK that is drawing young, urban professionals looking for a sustainable living situation. The Greenhouse was once a hostel for the working class, and was sitting empty for decades. Now it is truly a low carbon living space.
It all starts from the very top of the structure, where dual wind turbines generate energy 24-hours-a-day. Those turbines create enough electricity to power the elevators and all of the community areas in the building, with energy left over to actually sell back to the national power grid. That generates revenue for the building that keeps costs low for the owners and the tenants alike. The entire building uses one hot water system, with the expense shared by the more than one hundred building residents. And most of that water is heated by a solar panel array on the roof. The overall energy bill is much lower than in surrounding buildings, and tenants are only charged for the water they actually use. Grey water expended from showers and bath tubs is stored and used to operate all the toilets in the building, and any other water requirements are more than satisfied through collected rain. In all, most residents are realizing a 25% discount on their utilities. That’s a huge bonus in this economy, but also proves that the building takes sustainability very seriously.
While all of these upgrades speak to a real care and consideration on the part of the developers, the turnaround on the project was incredibly quick. Sustainability was built into the plans for the structure and that total integration led to a significant time and cost savings on the project. The building was profitable for the development firm almost immediately, and tenant retention is very high. People who live there are proud of their home, spend less than most others in the area, and still enjoy a close proximity to the town center. Those trying to push Tanglewood real estate in an over packed market could certainly afford to take a step back and learn some serious lessons here. The financial situation in the UK is just as dire as it is in the United States, but eco friendly construction has proven a smart move in both the short and long term.