Why Sustainable Buildings Are the Future of Real Estate

Last modified on July 19th, 2021

Sustainable building infrastructure and green technologies have been gaining traction in recent years, and now they are leading an entirely new era of real estate. More and more developers, property management businesses, and property owners are seeing the value sustainable buildings can bring, not just for the environment, but for their residents and bottom-line. 

In addition, global initiatives are further accelerating the implementation of green infrastructure and energy efficient technologies. Recently, President Biden announced a new target for the United States to achieve a 50-52% reduction from the 2005 labels in economy-wide net greenhouse gas pollution by 2030, and cities are following suit, as New York passed Local Law 97, which requires large buildings to reduce their carbon emissions by 40% by 2030 and 80% by 2050. 

But what does all of this mean for property management businesses and property owners? To explore this topic in more detail, we recently heard from James Scott, lead researcher of MIT’s real estate innovation lab, at the AppFolio Wave Summit. During his session he talked about some of the emerging technologies and innovations that are being implemented in today’s buildings to promote sustainability, efficiency, and productivity. 

Below we’ll recap some of the key highlights and take a deep dive into how the learnings can be leveraged to help multifamily and single-family property management operators and owners prepare for the future.

What Makes a Sustainable Building?

When it comes to what makes a sustainable building, it’s so much more than just the property itself. As James explains:

“A sustainable building is the property’s overall ability to provide a comfortable, healthy, and productive environment over the long term, without really negatively impacting the environment.” 

For a building to be sustainable it also must take into account all three pillars of sustainability: the planet, people, and profit — and to be truly sustainable this ideology must be built into the foundation of every stage of the building’s life cycle. In other words, “You have to take into account the planning, the design, construction, the operation expense, the maintenance, and even the demolition of the building,” says James.

This manifests in the materials and techniques used to construct the building and to support the natural environment, along with the technologies used to manage the building’s utilities, such as heating and cooling.

To be deemed a “sustainable building,” a property must also meet a set of standards through various certifications, depending on the property and region. Some of the most notable certifications include LEED, BREEAM, Energy Star, Green Globes, Living Building Challenge, Gree Guard, and WELL.

Benefits of Sustainable Buildings

The benefits of sustainable buildings extend far beyond just having a lower carbon footprint. Here are just a few of the additional ways they provide value:

  • Better for the environment: By reducing usage of energy sources that pollute the environment, sustainable buildings contribute to keeping the planet clean and reducing carbon monoxide in the atmosphere. 
  • Lower maintenance & operation costs: Sustainable buildings incorporate unique features that really ensure efficient use of resources, such as water and electricity, which drives down utility costs. 
  • Healthier: From lighting to thermal conditions and air quality, sustainable buildings enhance indoor environments and are better for our health.
  • Reduce water usage: The installation of efficient plumbing fixtures can reduce water waste. In addition, alternative water sources such as rainwater can cut back on overall water usage.
  • Attract prospective residents: Today’s renters prioritize sustainability and are interested in green home technologies. Based on a report by RENTCafé, 69% of renters said they were interested in living in an energy-efficient or green building and were willing to pay more to do so. If you have a sustainable building or are using green technologies, then you’ll have the competitive advantage to market your properties with this information.

The Role Sustainability Plays in Health & Wellness

Health and wellness have become a major part of the conversation when it comes to real estate, especially in response to the pandemic. As buildings reopen, James says health and wellness will continue to be a top priority for not just residents, but property management businesses, too:

“Even pre-COVID, health and wellness were seen as key drivers to productivity,” explains James, “As we work our way through the pandemic and really start to reopen our buildings, and create reopening strategies, wellness has become a crucial priority for a lot of people.”

Sustainable buildings directly impact health and wellness for both employees and residents in that they provide a better quality indoor environment. Essentially, a good indoor environment protects the health and wellbeing of the building’s occupants, which reduces stress, increases productivity, and improves the quality of life for everyone inside.

Technologies Paving the Way for Sustainable Buildings

New innovations and automation technology have made it possible for property management businesses and owners to revolutionize the way they operate their properties. Here are a few of the technologies you could incorporate in your multifamily properties or single-family rental homes to maximize your net operating income and create a better environment for your residents.

  • Predictive maintenance systems: Uses the building’s data to forecast when and where maintenance issues may arise in the future — such as pipes bursting due to water leakages or heat escaping in winter — so you can prevent them before they happen. 
  • Utility management software:  Solutions like AppFolio Utility Management use real-time data to quickly detect abnormal usage spikes and leaks, so you can fix issues fast. It can also benchmark your building’s usage against others and identify savings opportunities.
  • IoT sensors: Monitors the energy and environmental conditions of a building to provide valuable insight into operations, so you can make better-informed decisions. 
  • Digital twin: A virtual copy of a building, a digital twin allows you to add in all past and present data that you have available, which the system uses to find opportunities for energy savings and improvements.
  • Smart meters: Records data on utility use within the building or single-family home that allows property managers to gain visibility into utility usage patterns and how they can modify behavior to reduce their energy and water consumption.
  • Individual smart thermostat controls: Allows for flexible programming of the building’s HVAC system through geo-fencing technology, so users can easily adjust the temperature for specific areas. This kind of technology is available for both large-scale multifamily apartment complexes and single-family homes.
  • Smart dispatch elevator: For buildings with multiple elevators, a smart dispatch system can group passengers for the same destination into the same elevator reducing wait time and energy consumption.
  • Rainwater harvesting systems: Collects and stores rainwater on the roof of the building, which can be redirected to use for other purposes, such as landscaping and cleaning to cut back on water usage. For single-family homes, a rain water harvesting system could be placed in the backyard to be used for gardening or lawn care.
  • Living walls: Plants embedded on the side of a wall can provide oxygen and remove pollutants within the air whether they’re inside the building or on the exterior, greatly improving the air quality.
  • Solar panels: While this technology has been around for a while, new improvements are driving down the cost and increasing the amount of energy each panel can collect from the sun in a given period of time. 
  • Solar hot water heater: Ideal for single-family rental properties in sunny locations, solar hot water heaters use the sun’s energy to heat a home’s water supply, greatly reducing energy consumption and cost.
  • Dual flush toilets: Toilets can account for up to 27% of the water use in a single-family home. By switching to a dual flush toilet you can reduce the amount of water your residents use and cut back on utility costs.

The more technologies you package together and use in tandem, the more you’ll be able to increase energy efficiency and reduce long-term operating costs. As James explains, “All of these technologies make a difference, but when combined they can make a far bigger difference, and a truly smart, sustainable building.” Many of the innovations listed above are now more affordable and widely available, not to mention, there are numerous tax incentives for implementing them.

Prepare now for the future

By embracing sustainable building technologies, you can unlock the power of data and drive down your utility costs, while improving your properties’ carbon footprint and residents’ quality of life. New green technologies are being created every day to enhance multifamily properties and single-family homes, and if you implement them you will be able to uncover the most insights and see the most return on your investment in the long run. 

“When sustainable, smart building systems are up and running, they can deliver priceless data that will really help you gain a better understanding of how systems are operating across your portfolio,” says James. “Ultimately what you want to end up doing is producing far greater efficiencies, providing a better experience, and reducing the costs for your operation.”

To watch James Scott’s full AppFolio Wave Summit session on-demand, register here for free. You’ll have access to 30+ additional sessions featuring more industry experts in property management, association management, and investment management.



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