It used to be that “green” in an apartment development meant little more than an interior-design option. Developers dabbled in eco-friendly offices and houses in the past decade, but virtually no multi-tenant projects made it to the drawing boards, save for a few experimental college dorms.

But the landscape is changing. A handful of eco-friendly multifamily projects such as Manhattan's Solaire and Blair Towns in Silver Springs, Md., opened auspiciously in 2003, giving developers pause to wonder if green might be the shade of things to come.

Lured in part by a few new state incentives designed to buffer the costs of such green features as low-emission building materials, air-monitoring systems and rainwater-irrigated rooftop gardens, apartment developers have introduced a product they feel responds to a pent-up demand among the growing health-conscious and ecology-minded set.

Mounting evidence also suggests that green investment may pay off in the long run. An environmental report released in 2003 asserts that financial investment in a green building can pay for itself 10 times over. The report, conducted jointly by the Lawrence Berkeley Laboratory, several California state agencies and clean-energy consultant the Capital E group, used national data from 100 green buildings. It concluded that sustainable buildings lower operations and maintenance costs between $50 and $70 per sq. ft., or about 10 times the additional costs associated with green buildings.

The lead author of the report, Capital E Principal Greg Kats, says the data “should permanently lay to rest the myth that green buildings are not cost-effective and not ready for prime time.”

Lydia Haran, director of residential marketing for Long Island-based Albanese Organization, says renters also recognize the benefits. Albanese developed the new 27-story, 293-unit Solaire apartments overlooking the Hudson River in Battery Park City. “We have been able to leverage our uniqueness,” says Haran. “People are drawn by the green features.”

Solaire resident John Trautmann, a bond trader for Goldman Sachs, says living in the complex “gives you peace of mind, knowing that you won't be dealing with all the fumes in the city.”

Solaire management recently placed an individual air-testing unit in Trautmann's apartment for 24 hours to ensure its air quality. “We wanted to paint a wall but we were told there was only a certain type of environmentally safe paint we could use,” he says.

Alex Wilson, editor of “Environmental Building News,” says he is seeing an “across-the-board” increase in attention to building science and indoor-air control in all commercial construction categories, in part as a response to asthma, environmental illnesses and high energy costs.

“High-end office buildings, university buildings and municipal buildings have all been high on the green agenda in recent years, but multifamily is not far behind,” says Wilson.

Trautmann, 35, pays about $4,600 per month for a 1,100 sq. ft. unit at the Solaire, “which is about what I'd be paying anywhere near here,” he says. Although Trautmann only recently moved into the complex and had yet to receive a utility bill as of mid-December, other Solaire residents boast that they see smaller bills compared with similar-sized units they have previously occupied.

After opening in May to considerable international publicity, Solaire's occupancy rate of 95% has greatly exceeded the company's first-year projections, even with rents averaging 5% over market, according to Albanese officials.

The $120 million complex, marketed as “America's first environmentally advanced residential tower,” is one of a handful of green highrises planned for the area. It offers such features as doubly filtered water and air, round-the-clock air-quality monitoring and solar-energy panels that generate 5% of its electricity. Solaire is 35% more energy efficient than the standard complex, company officials say.

Buoyed by the success of Solaire, Albanese plans a second green apartment building in Battery Park City, says company spokeswoman Julie Gelfand.

A competing firm, The Related Cos., has signed a contract to build another green apartment building in Battery Park City, says a spokesman for the Battery Park City Authority, whose green-building guidelines must be met in all new construction planned in the neighborhood.

Sometimes Elusive Incentives

Currently, only two states offer green tax incentives for apartment development: New York and Maryland. Solaire got a $2.7 million tax credit that it's able to deduct from its state taxes. Developers can claim up to $3.75 per sq. ft. in credit for interior work and $7.50 per sq. ft. for exterior work on eligible expenses.

In Silver Springs, the Tower Cos. opened the green Blair Towns townhome complex last summer, but found Maryland's new green tax-credit formula to be a little too convoluted to utilize, says Charles Segerman, construction manager and director of green development for Tower Cos.

Using the U.S. Department of Energy's Leadership on Energy and Environmental Design (LEED) guidelines that rate green buildings in ascending order from silver to gold to platinum to denote their environmental sophistication, a tax-break-eligible building in Maryland must be rated LEED “silver,” use 35% less energy, have no light pollution (glare from interior and exterior lights) and meet other exacting requirements.

“We met the 35% mark, and we were there or almost there in other areas, but there was a lot of ambiguity in the regulations,” says Segerman. “We highly commend Maryland for coming up with an incentive, but right now it's still a winding road that always seems to turn away from you.”

In mid-December, occupancy in the 87-unit Blair Towns development was 70%, a number that already beat Tower Cos.' one-year projections. “And that's especially significant in what has been a down (apartment) market,” says Jeffrey Abramson, a partner in the Tower Cos.

“Developers are looking for ways to compete, and we decided it would pay to distinguish ourselves” even without the tax credits, Abramson says. “We wanted to be a catalyst for progressive change.”

Abramson estimates that it costs 3% more to equip the market-rate, $17 million Blair Towns project with green features, such as double low-e glass, which allows the sun's heat and light to pass through the glass while simultaneously blocking heat from leaving the room. The glass reduces heat loss considerably. Also, the project includes Energy Star-rated appliances, which are designated as energy savers by the Department of Energy. Additionally, Blair Towns offers a ride-sharing service using hybrid cars.

More Incentives Needed?

A green affordable-housing apartment project was even dedicated last summer in Seattle. The 39,000 sq. ft., 50-unit Traugott Terrace, a $4 million Catholic Archdiocesan Housing Authority project, is a LEED certified building designed by Environmental Works architects and built by RAFN Construction. It was constructed atop the Matt Talbott Service Center at 2313 Third Ave.

What's really needed to stimulate green apartment development around the country is a federal incentive program, says Tower Co.'s Abramson. “If the U.S. government gave a developer credit for fulfilling the (green) mandate, it could eventually lead to what would be the equivalent of removing 40% of VOCs (Volatile Organic Compounds) off the roads.”

VOCs, which are found in auto exhaust, power-plant emissions, paints and hundreds of other products, contribute to ozone and are said to cause or worsen respiratory ailments in some people.

Eiron Schofield, who heads Living Architecture, a Ketchum, Idaho, firm that specializes in environmental architecture, says developers are starting to recognize a marketing advantage in green “because they are competing with others who are spinning out the same designs.”

Products such as hard-surface flooring, spray-in foam insulation, low-VOC paint and low-maintenance radiant heat are slowly being integrated into multifamily units, she says. “People out there want these kinds of things but they're not easy to build themselves,” Schofield says. “Even if they add 12% to the cost, you can charge 20% more for them. We're finding that people will pay for a healthy environment.”

Green Drawing Board

One developer in Austin, Texas, plans to take the concept of green apartments a step further. Austin investor/developer Steve Bauman's planned El Nuevo Mercado mixed-use development will include such features as chilled-water air conditioning, rainwater harvesting, rooftop gardens and reconfigurable walls. Bauman believes the complex, which will include 238 residential units, will be rated the country's first “platinum” apartment development under LEED guidelines.

Bauman, president of Z Partners, has secured construction financing for the facility and plans to break ground in the second quarter of 2004. El Nuevo Mercado will feature apartments, condos and senior housing, as well as retail space, a small amphitheater, 39-room extended-stay hotel, offices, gym, grocery store and even a robotic valet system, Bauman says. About 50% of the $76.5 million highrise will be “net zero” in energy efficiency, meaning it produces as much energy as it uses, according to Bauman,

Often, private investors and real estate investment trusts (REITs) look only at the high front-end costs of going green, he says. “But we've actually shown them by spending $100,000, you can gain $325,000 in savings later,” Bauman says.

Total energy usage, including gas and electricity, amounted to $1.42 per day in a 2,400 sq. ft. condo complex Bauman built as a forerunner to his new project costs. That compares with a market-rate average of over $6 per day for the same space, he says.

Some of the features in the Austin development are modeled after Next 21 in Osaka, Japan, an experimental high-rise multifamily residential building commissioned by Osaka Gas Co. in 1994, which has substantial greenery, a wildlife habitat and the reconfigurable “open” building system.

Such building systems can give owners a product that won't become obsolete or require an energy-system overhaul every seven years or so, says Pliny Fisk III, who heads the Center for Maximum Potential Buildings Systems Inc. in Austin. “Construction can't help but go in this direction,” says Fisk. “But for the most part, we are still 50 years behind in how we are building today.”

But not all developers are sold on green apartments. Another developer of a planned green apartment complex says he's is still trying to make the numbers work before breaking ground next year. “We're running into cost-effectiveness issues in trying to be competitive with the non-green buildings,” says Tom Baum, president of Bozzuto Development, which will build the 241-unit Shirlington Village complex atop 40,000 sq. ft. of ground-floor retail in Arlington County, Va. “We're in the process of looking at our (construction-material) alternatives.”

Even with the green apartment projects launched in the last year “it's really not been proven on the development side that this is an economically viable route” in every market — particularly in states where there are no green tax incentives, he says. “There is certainly a consumer demand for the product,” he adds.

Retro Challenges

The greening of an existing apartment may present a different set of challenges. The Metropolis Apartments in Austin, the first multifamily complex in town to be retrofitted with green features, installed pitched roofs and other elements for energy efficiency about five years ago, but generally struck out in its attempt to heat its 308 units with aquathermal heat strips, says Randy Werhene of Arbor Properties, the apartment manager.

Using conventional 40-gallon water heaters, the redeveloper failed to take into account the high lime and calcium content of Austin's water, and the strips have since become clogged with the compounds, Werhene says.

“Anybody doing this kind of remodeling needs to take into account the local environment,” he warns.

Adding green atop urban buildings poses less of a challenge and may even pay off in some towns. In Portland, Ore., developers are allowed to exceed maximum multifamily density by several units if they install foliated, or “garden roofs,” on the buildings to help absorb rainfall and create new green space.

The program was instituted in 2001 as part of the city's attempt to abate runoff problems, which have caused storm-system overflow locally that sends sewage into area rivers after downpours. Anthony Roy, program manager with the Office of Sustainable Development for the City of Portland, says there are now four apartment buildings with green roofs in the area. Most combine succulent sedum foliage with man-made moisture-retention materials for optimal absorption. Germany and Scandinavia feature the most advanced green-roof infrastructures, says Roy. “In America, we're just getting going.”

Not a Fad

Sandra Leibowitz, a sustainable-design consultant based in Annapolis, Md., has overseen more than two dozen greening projects. She says green “is not a fad by any means, it's the coming standard. Developers of all kinds of buildings are getting more and more attuned to green buildings. And they are finding it makes good business sense.”

Apparently, the federal government feels the same way. The General Services Administration required that all building projects launched in its 2003 construction budget meet with LEED-certified standards.

Meanwhile, interest from builders across the country continues to widen. Last year, the national Green Building Conference in Pittsburgh attracted a record 5,200 attendees, up from 4,000 in Austin in 2002. Organizers expect another record turnout in 2004.

Blair Towns developer Abramson says a national green-building push could keep millions of tons of pollution from being released into the air from the nation's power plants. “The whole real estate industry itself could save the environment.”

Steve McLinden is an Arlington, Texas-based writer.