On July 11 the Green Building Initiative launched the Green Globes Multifamily for New Construction and Green Globes Multifamily for Existing Buildings.
While certainly there is a market in developers of newly constructed multifamily buildings, spending on multifamily construction was more than $61 Billion in 2017, being 18% of all new residential construction spending, up from just 7% in 1993; the sweet spot of these new green building rating systems is anyone looking for a green building discount on a new loan for an existing multifamily building, where Fannie Mae and Freddie Mac held 37% of all mortgages on multifamily properties in 2017, being more than $467 Billion, according to Federal Reserve data.
These new rating systems will wield a positive force in the world responding to the large multifamily market.
Much of that market opportunity is driven by Fannie Mae and Freddie Mac green financing programs. For example, Fannie Mae offers a lower all-in interest rate on a loan secured by a new purchase or refinancing of a multifamily property with a Fannie Mae recognized green building certification.
We are closing a loan for a client this week and the pricing with Fannie Mae has a discounted interest rate spread from 174 basis points to 158 basis points, which will be, literally, Millions of dollars of savings for that multifamily property owner over the life of the loan.
The two new rating systems are likely best characterized as new multi-family “modules” within the existing Green Globes programs. The Green Globes Multifamily for New Construction rating system is modified from Green Globes for New Construction to take into account the specific and unique needs and sustainability goals of multifamily project types and will be uniquely assessed using the existing 1,000 point scale of seven categories: Project Management, Site, Energy, Water, Materials & Resources, Emissions, and Indoor Environment.
The new rating systems are very broad in eligibility (.. more so than other comparable green building rating systems) when a project must be a building or property with a minimum of 5 units.
GBI is known for swiftness n third party certification. There are two timeframes for certification, non-expedited (i.e., normal) and expedited. Expedited Certification for existing building is 30 to 45 days and new construction is 45 to 60 days. Non-expedited certification for existing building is 90 days and new construction is 4 to 6 months.
The program details are in newly published Technical Reference Manuals available on the GBI website. Of import both Green Globes multifamily programs have energy and water-based requirements in addition to the standard Green Globes requirement of achieving a minimum 35% total score out of all applicable points. The purpose of Minimum Requirements is to realize ‘either’ energy or water consumption savings of 15%. Projects pursuing a Green Globes multifamily certification must identify whether they are targeting energy water, each of which have their own requirements. To see the Minimum Requirements for Green Globes Multifamily New Construction and Existing Buildings, click here.
The Existing Building program will not only be a significant driver of new projects to GBI, but those in the know have described it as having the potential to wield a positive force in the world moving the large multifamily existing building market toward green, something current green building standards have not accomplished.
While this post has highlighted (.. the very large) dollar savings available with Green Globes Multifamily for New Construction and Green Globes Multifamily for Existing Buildings, of course the real aim is more sustainable building and in this first month of the programs a surprising number of the inquiries we have received are from property owners seeking to comply with existing laws and mandatory green building requirements, the sweet spot of these new rating systems is a green building discount on a new loan for an existing (refinancing or new purchase) of a multifamily building.