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Many of you have asked for resources to help educate your clients, particularly property developers, on why it makes sense to continue building green even after initial up-front incentives, such as the HUD Green MIP program, are no longer available. We think there is still a strong case for doing so, and we wanted to share some data-driven points to help make that case clear.
The conversation around sustainable development has evolved. No longer just about capturing early financial incentives, green building certifications and high-performance design have proven to be a solid financial strategy when projects are evaluated across their entire life cycle, from preconstruction through construction and long-term operations. While the payoff may not always be obvious at the outset, the evidence shows that sustainable, holistic development delivers real and lasting value.
Certified multifamily properties consistently outperform peers on revenue metrics. Studies show rental premiums averaging 3-7% depending on location and certification type [1][6]. While green-certified properties sometimes experience slightly lower occupancy, faster lease-ups and higher effective rents more than compensate. Surveys also reveal that a strong majority of renters, particularly younger generations, express a willingness to pay more for sustainable features [2]. The takeaway: sustainability creates market demand and supports long-term revenue growth.
The operational savings are just as powerful. Energy-efficient and electrified systems can cut energy use by 40–50% compared to baseline code buildings [3]. Water strategies such as reuse and harvesting further reduce costs and long-term risk. Importantly, these savings apply across market-rate and affordable housing, as well as both rental and for-sale properties. Buyers are increasingly aware of the value of better construction, healthier indoor air quality, and low operational costs, even if those attributes are harder to quantify [4]. Beyond bills, a well-built green property carries “brand value” and reputation benefits that resonate in competitive markets.
Green-certified and high-performance buildings are favored not only by public programs but also by private lenders. Fannie Mae and Freddie Mac have already demonstrated that green lending programs deliver lower interest rates and higher loan proceeds [5]. Similarly, private capital sources are increasingly underwriting sustainable buildings more favorably, recognizing the reduced risks and stronger long-term performance [4]. Lenders view resilient buildings, those that can withstand climate risk, meet stricter codes, and avoid obsolescence, as lower-risk assets. This preference for reduced exposure to climate and regulatory risks means that green buildings not only qualify for cheaper debt today, but they are also better positioned to maintain financing advantages in the future.
Evidence also points to consistent sale premiums for green multifamily assets. Research indicates that certified apartments achieve per-unit sale premiums of around 9% [1]. Moreover, these buildings are better positioned against tightening energy codes and carbon reduction mandates, mitigating future compliance risks [3]. Enhanced resiliency also translates to reduced insurance risk and greater long-term stability, both of which are highly valued in capital markets.
These financial, operational, and market advantages tell only part of the story. Equally important is the quality and resilience of what gets built, factors that drive long-term value far beyond immediate returns.
Taken together, the return on investment (ROI) levers are compelling: higher rents, faster lease-up, lower expenses, cheaper debt, stronger resale pricing, and reduced risk exposure. That is why more developers and investors now view sustainability not as a luxury, but as a necessity.
Beyond cost, resilient construction that withstands hazards (e.g. wildfires) creates durable benefits. Stronger, safer buildings reduce repair and insurance costs while reinforcing developer reputation and brand equity. In today’s competitive market, resilience and quality serve as powerful differentiators, attracting tenants, capital, and long-term returns that extend well beyond initial financial incentives.
The question is no longer “Will green pay off?” but rather, “Can we afford not to build green?”
We would love to hear from you, especially if you have a project that has demonstrated increased valuation due to green building. As always, we’re here to talk!
References
1. Cushman & Wakefield (2022). Green Is Good: Sustainability’s Impact on Multifamily Performance. Link
2. Gabe, J., McGrath, K., Robinson, S., & Sanderford, A. (2023). An Analysis of U.S. Multi-Family Housing, Eco-Certifications, & Walkability. Link
3. Runberg Architecture Group & Ecotope (2023). The Sustainable Multifamily Housing Opportunity. Link
4. World Green Building Council (2013). The Business Case for Green Building: A Review of Costs and Benefits. Link
5. Bible, D.S. & Chikeleze, M.C. (2018). Leadership in Sustainability: A Case Study on Green Globes Certification and Financing. Link
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