Magazine article Journal of Property Management

IREM Study: Multifamily + Green Certification = Higher NOI

Magazine article Journal of Property Management

IREM Study: Multifamily + Green Certification = Higher NOI

Article excerpt

Research sponsored by IREM has found that green-certified multifamily communities have higher net operating incomes (NOI) than conventional properties. Analysis shows that NOI is higher by $4.61 per square foot and $4,260 per apartment unit in certified communities compared to non-certified ones.

For the average-sized apartment community in the study, this translates to an NOI increase of approximately $1.1 million. The net present value (NPV) of this increased NOI over the building cycle is approximately $13.2 million, assuming a 7 percent discount rate.

The Analysis

Erin Hopkins, Ph.D., assistant professor of property management at Virginia Tech, conducted statistical analysis on financial data for over 1,100 multifamily communities submitted by two large AMO companies to the IREM Income/Expense Analysis® program.

IREM worked with the companies and through certification databases to verify green certification status of their communities. Certifications represented in the study include LEED®, ENERGY STAR®, Green Globes®, GreenPoint Rated, National Green Building Standard™, Austin Energy Green Building® (AEGB) Rating System, and Florida Green Building Coalition (FGBC).

Hopkins worked with IREM to establish the parameters of the study and identify variables of interest on both the income and expense sides of the income statement. Based on the data available, she applied several control variables, including age, building type, building mix and average apartment size. …

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