Page 24
— Multifamily Properties Quarterly — October 2015
Sustainability
S
ustainability is now a buzzword
in the world of multifamily
development. In Colorado, more
than 4,800 residential units are
registered to receive LEED cer-
tification, according to the U.S. Green
Building Council, which developed the
certification program.The council esti-
mates that Colorado is among the top
15 states for green residential building.
Pursuing LEED certification might be
a popular practice now, but there was
a time when it wasn’t so easy being
green.When we embarked on our first
LEED-certified multifamily project in
2007, sustainable apartments and con-
dominiums were few and far between.
The development, River Clay Condo-
miniums, was the first LEED-certified
multifamily project in the Rocky
Mountain Region. Even nationally,
residential green building was in its
infancy, with only 36 multiunit projects
achieving LEED certification by January
2008, and that number included col-
lege dormitories and group homes.
As early local adapters in this emerg-
ing realm of LEED multifamily devel-
opment, often we were asked why
we spent the time and money to seek
such a high standard of sustainability.
What was the “value” in chasing LEED
certification?
Though we couldn’t quantify the
potential return on our investment,
LEED appealed to us because it
required so much rigor and would set
a standard to separate us from devel-
opers who weren’t as committed to
true sustainable business practices.
Nearly a decade later, we’re proud
to report that our decision to build to
LEED specifications has served as an
important differentiator in attract-
ing residents and investors. RiverClay,
which received LEED Silver certifica-
tion, sold out months after it was com-
pleted – in the worst
economic downturn
in recent history –
and delivered a 29
percent internal rate
of return for our
investors.
Solera, an 11-story
apartment com-
munity in Denver’s
Ballpark neighbor-
hood completed in
2010, was the only
apartment project
our equity partner,
Principal Real Estate
Investors, supported
that year (in the
midst of the recession), using its Green
Property Fund to finance the project.
The building sold in October 2011 for
$37 million, which was a record price
per unit at the time.
Investors also flocked to Cadence,
the first high-rise, LEED-certified apart-
ment project built in the Union Station
neighborhood. Zocalo sold Cadence
to Invesco Advisers Inc. last year for
$70 million, again setting a Colorado
sales record in terms of price per unit
and per square foot at the time it was
purchased.There’s no question that
the LEED certifications were factors for
receiving substantial prices for those
properties.
Even for a rental market in which
developers are struggling to keep
pace with demand, we’re finding that
LEED certification is a key attribute in
helping lure the upscale renters we
target. After location, residents indi-
cate sustainability as one of the most
important reasons for leasing in our
properties. A 2013 study conducted
by CoStar’s Property and Portfolio
Research unit found that renters are
willing to pay a 24 percent premium to
lease in a LEED-certified property.
Of course, marketing LEED effectively
involves more than placing a reference
to LEED on a property’s brochure or
website.We train on-site employees
about how the building they’re mar-
keting achieved LEED status and what
features demonstrate how the proper-
ty garnered Gold status.That way they
are well versed to show those features
to potential tenants and explain how
they relate to the LEED process.
Also, we take a practical approach
to implementing LEED.There is an
approximate 2 percent incremental
cost increase involved in building LEED
versus non-LEED, so those figures fac-
tor into our budgeting process.The
costs have declined as we’ve gotten
more experienced with LEED and more
efficient at meeting the requirements.
LEED has a different management pro-
cess, so we’re careful about educating
our subcontractors about the right pro-
cedures and monitoring those efforts
throughout the entire construction
process.
While being a pioneer provided a
competitive advantage in the market,
at the end of the day, it’s simply one
tactic toward building a larger com-
munity of sustainability.The goal
with any development is to create a
positive impact within the community
in which we are developing. Provid-
ing healthier communities through
energy-efficient buildings and creating
communities that are connected, by
bike and foot, to their neighborhoods is
not only the right thing to do, but also
creates stickier residents who have an
investment in their neighborhoods.
LEED can and should be so much
more than seeing a plaque as you walk
into a building; it should make us feel
as if belonging to this particular com-
munity means something.
s
David Zucker,
LEED AP
Co-founder and
principal, Zolaco
Community
Development,
Denver
Cadence, in the Union Station neighborhood, credits its LEED certification as a major
factor in its sale to Invesco Advisers Inc. last year for $70 million.
a three-story walk-up; a four-story
surface parked building; a wrap – or
some call it a “Texas doughnut” –
with four or five stories; and a podi-
um with either four stories over one
or five stories over one level of podi-
um above grade. When looking at
land value and desired density, often
it is obvious which of the four design
types are economically appropriate
for any given site.
Through advancements in wood
construction and new codes, we now
have additional ways to evaluate
a site. For instance, a seven-story,
wood-frame, above-grade podium
building is now a possibility. This
new option could take a site that
was not previously feasible and,
through either reduced construction
cost or increased density, the project
becomes viable. This could create
opportunities for sites that previ-
ously may have required a seven- or
eight-story steel or concrete building
in order to justify land value. With
new codes, that same site can be
feasible using a wood-frame building
with equal density and a less expen-
sive structural system option than
steel or concrete.
KTGY recently received approval to
move forward on its first seven-story
wood-frame apartment community
in Denver. The project, which is
located on Speer Boulevard, between
13th and 14th streets, will consist
of 322 units in five stories of wood-
frame construction over two levels
of concrete.
Local zoning will continue to be
one of the biggest challenges for
wood-frame construction. For exam-
ple, if zoning still limits the building
height to five stories, the four-over-
one podium will continue to be the
building of choice. In addition, as
some of the new zoning require-
ments are adopted, the need for
steps in the exterior façade, which
are easily achieved in a concrete
building, become more challenging
to achieve in wood construction.
Also there will be the unavoidable
learning curve for building and fire
departments as they review designs
of this nature and start inspections
in the field. Pushing the limits and
doing things a little differently will
not be without bumps in the road,
but the wood-frame apartment
industry will be much better for it.
As apartment designers, engineers,
general contractors and develop-
ers, it is important to stay at the
forefront of what is new, while con-
tinuing to push the limits of design,
building systems and processes,
striving for better and not just more.
The changes that are taking place
will not only allow for greater den-
sity and lower costs, but also open
the door for greater flexibility to
enhance the quality of the design
and improve the negative image
that wood-frame apartment building
construction recently received in the
Denver metro area.
s
Design
Photography © John Bare
Birkhill on Main is an example of a wrap or Texas Doughnut design. This project is five
levels of Type III wood construction surrounding a four-story Type II concrete parking
garage.
Photography © Grand Peaks
Elevation at County Line Station represents a four-story Type V wood-frame building,
surface parked.
