The Green Premium in NYC Rental Market Heads Towards Zero
A really fun discussion on Twitter with Robin Greenbaum (@cobrokenation) led me to just do a very quick, very back-of-napkin, and likely very inaccurate comparison between two rental units. As Robin pointed out, since comparisons are very difficult, depends on many factors, and the like, no matter what I come up with, this is likely to be wrong.
Nonetheless, I’m curious to see if we might see any interesting bits of data.
One unit is a 1BR at 22 River Terrace, a luxury rental building constructed in 2001:
Detailed info can be found here, but the vitals of the unit are:
725 sq. ft., monthly rent of $2,880, 23rd floor but facing east (aka, no river views). I know the floorplan is hard as heck to see, but it’s pretty standard fare for NYC apartments.
The Verdesian is a newer building, built in 2006, and LEED Platinum is not given to just about anybody with a solar panel or two. There was quite a lot of thought and technology devoted to the building.
The unit here is a 1BR as well:
The vitals here are:
750 sq. ft, $3,065 per month, and east-facing on the 13th floor. Clearly, the little alcovey “Den” area means a smaller living room, but the floorplan might be better for some, worse for others. Who can say?
On a straight $$/sq.ft. basis, however, the difference is only $0.12 between the newer, eco-friendly unit and the older, non-green unit: $3.97/sq. ft. for 22 River Terrace vs. $4.09/sq. ft. for The Verdesian. If we hold the square footage equal at 725, that means a monthly rental difference of $87.00.
To my untrained, unpracticed, and non-realtor eyes, this seems rather insignificant and would tilt the decision towards the Verdesian. According to GreenbuildingsNYC.com, the Verdesian’s advanced systems, EnergyStar appliances, and various other design & architectural choices, means a 40% savings on electric bills for residents.
According to ConEdison, the average NYC resident can expect to pay $104.97 per month in electric bills. A 40% savings on electricity alone is $41.99 per month. Nearly half of the “green premium” (if that’s what it is) is taken care of simply from savings in electric bills.
Now add in the fact that The Verdesian is five years newer, and offers “Fresh filtered air, continuously humidified or dehumidified, depending on climate conditions” to every unit, and it isn’t clear to me that the green premium starts to head towards zero.
Again, comparing different units, different buildings, with slightly different amenities and the like is hazarding error. But it does seem significant to me that the actual cost difference may be as low as $45 or so per month — less than the cost of a cup of Starbucks latte per day.
If this is true, then the green premium at least in the NYC rental market is heading towards zero, and renters really have to ask why they would go to a non-green building vs. a green building.
I for one would love to see some real comparisons by real professionals — realtors, appraisers, I summon thee!
PS: Note that I am a heretic when it comes to anthropogenic global warming hype, so this has nothing to do with religious views on carbon footprints and such nonsense.