It’s hard to say exactly why a project like Loftworks on Michigan sells out in just three months, but you can be sure that pricing and location were important reasons. Another less obvious edge in a quick closeout for the 40-unit condo project might have been the developer’s promotion of Loftworks as a “green” building that’s healthy for residents and the environment.
“Buyers are really responding,” said Roby Frankel, of Frankel & Giles Real Estate, developer of Loftworks and another new green project, Lakeside Lofts. “When people are in the sales center, it’s not number one. Price and location are number one and then views, but after that, the fact that it’s a green building is the icing on the cake for them.”
What does it mean to be green?
At Lakeside Lofts, a 100-unit new-construction building planned for the 2000 block of South Indiana, Frankel divides the green approach into two categories: “healthy living” features and environmentally-friendly features. The first category includes things like low-VOC (volatile organic compounds) paints, formaldehyde-free insulation, water-based floor finishes, built-in water filters and other items that provide a healthier living environment, especially for buyers with allergies. The second category includes solar panels, special solar shades, top-notch insulation, and other energy-savers, as well as carpeting and other elements that are made from recycled materials.
Why bother building green?
“It’s the wave of the future,” Frankel said. “Buyers want it, the city wants it, and it helps the environment.”
But are buyers willing to pay more for green?
“I would say buyers won’t pay substantially more,” Frankel said. “They want the most unit for the best price.” Studies support his observation. More than 60 percent of people would like a green-built home, according to the National Association of Home Builders, but only 17 percent are willing to pay more for one.
And that explains why green building has not caught on in the city’s for-sale residential market. While some items, such as the low-VOC paints, are similar in price to traditional materials, others such as solar panels and solar shades add to construction costs, sometimes significantly. The savings such items provide aren’t realized for years, and the builder, who can’t charge higher prices for his condos, is long gone by then. Developers of rental apartments or offices, who may hold their buildings for years, have more incentive to build green because they reap the benefits.
Green building seems to be catching on nonetheless. From 1990 to 2001, 18,887 green homes were built in the U.S., according to the NAHB, but in 2002 alone, 13,224 green homes were built.
At Lakeside Lofts, where condos with one or two bedrooms are priced from the $200s to the $400s, Frankel said he hoped quick sales would compensate for the higher construction costs of green features. It’s a formula that worked at Loftworks on Michigan, and according to Frankel, it’s one he’ll continue to use.