Sustainability Complements Affordability In Multifamily
California faces the convergent crises of the lack of affordable housing and worsening natural disasters like wildfires, which have been exacerbated by climate change. In recent years, the latter has diminished the housing supply by destroying homes and, in some cases, entire neighborhoods.
The state and Bay Area cities continue to intensify efforts to curb greenhouse gas emissions to tackle climate change with measures such as San Francisco’s recent ban on natural gas in new construction. That, along with the state phasing out gas-powered vehicles by 2035, will require sweeping changes like the full electrification of buildings and making electric vehicle charging stations ubiquitous. As commercial real estate firms rise to the occasion of meeting these new standards, some view incorporating green features as a means to achieve economic sustainability for affordable housing developments.
“The Bay Area is one of the most diverse geographical areas in the country, spurring an abundance of challenges and opportunities,” said Bakari Adams, director of Environmental, Social and Governance for Interstate Equities Corp. “We are experiencing the warmest weather on record, rising sea levels and unprecedented wildfires. The wildfires in 2020 were over two times greater than the wildfires California had in 2019. This isn’t changing, so the Bay Area has to be at the forefront of sustainability, and there are a lot of companies and organizations that support this.”
Companies like IEC consider the push toward sustainability an opportunity to do something positive for the environment and society and drive profits. IEC recently appointed Adams, who is also the director of asset management, as the director of its ESG program, leading the effort to imbue the company’s portfolio with eco-friendly measures, social accountability and diversity initiatives.
The firm is assessing its portfolio’s environmental impact and looking for ways to create cost savings that increase profits, which ultimately benefits its investors and the environment, Adams said.
“It’s not just about embedding ESG; we have to have a quantifiable return on investment,” Adams said. “We believe what gets measured gets done. We will measure the effectiveness of what we’re doing, what we’ve done and pursue the initiatives that are accretive to our portfolio. We execute the initiatives that produce a return on cost positively impacting our investors, our company and the environment.”
IEC’s strategy is to acquire Class-B multifamily assets in areas just outside core markets like San Francisco and transform them into modern affordable housing developments. Adams said the company has been able to reach the dual purpose of protecting the environment and cutting costs by using recycled materials for renovations.
“For our interior renovations, we started using recycled carpet,” he said. “We found recycled carpet is not only the same quality, but it is less expensive and better for the environment. This is a measurable return on cost that we discovered by focusing on the environmental component of ESG.”
IEC also educates tenants about the benefits of water and energy conservation, resulting in cost savings for its residents, according to Adams. One way he said that the social accountability component manifests is in the form of holding appreciation weeks for maintenance workers of properties, which results in greater worker and resident satisfaction.
Other Bay Area organizations are also focusing on sustainability measures in affordable housing. The city of Emeryville selected EAH Housing, a nonprofit that develops and manages affordable housing, and KTGY Architecture + Planning to build 68 intergenerational affordable housing apartments for seniors, youth leaving foster care and those who have previously experienced homelessness.
The project at 4300 San Pablo Ave. will be built through a flexible approach that relies on mass timber to reduce carbon emissions, traditional stick-framing and manufactured modular units, according to a press release. Other features include stormwater control, drought-tolerant landscaping, low-VOC paints, water-saving plumbing fixtures and EV charging stations.
KTGY also designed an affordable housing project under construction at 2233 Calle Del Mundo in Santa Clara, developed by St. Anton Communities with financial assistance from The Irvine Co., according to a press release. The 100% affordable housing project will provide 153 studios and 43 one-bedroom units with amenities and services such as health and wellness and skill-building educational classes. The transit-oriented development located in the Tasman East Specific Plan Area is within walking distance to the Lick Mill Light Rail Station, which will help reduce vehicle miles traveled and thus carbon emissions and boost mobility for lower-income residents.
“Affordable housing and transportation are top priorities for the City of Santa Clara,” Mayor Lisa M. Gillmor said in the press release. “The cost of housing in the Bay Area is very high, and we need to take steps to make sure our workforce can live and thrive in our City.”