The irony of reducing costs to charge more: A story of greenification-led gentrification
Throughout much of human history, built environments were designed and constructed in harmony with its climatic contexts. Passive strategies utilizing chimney effect, cross-ventilation, natural shading, and north-south orientation were employed to heat, cool, and ventilate indoors with outside air (for free!), as is the case for Mesa Verde cliff dwellings in Colorado. With Modernism during the early 20th century, however, cheap energy and new use of glass, steel, and concrete for the façades with inoperable windows have led to complete isolation of interior spaces from the outside environment. Since then, indoor climate relied heavily (if not exclusively) on mechanical systems, which resulted in buildings’ superfluous energy use.
Clearly, eliminating the buildings’ wastefulness through green building measures is needed. Energy is an indispensable resource, and it is becoming increasingly burdensome to use for many as its prices and environmental impacts rise faster every year. By adopting green building programs, greenhouse gas emissions from needless energy consumption are reduced, and operational costs for the buildings’ owners and occupants as well as associated socialized costs are mitigated. However, its adoption by property developers and owners have ironically led to higher prices for tenants. This raises further concerns especially among the lower income and small to medium-sized tenants with shallower pockets. Moreover, despite intimate participation in green building measure implementations, most designers, architects, and engineers are unsure how socioeconomic and environmental justice factors into their work in decarbonizing the built environment.
Today, I plan to help you draw connections between equity and decarbonization, by demystifying the complexity involved in green buildings. The subject touches on multiple disciplines, which I will group into 3 broad categories for simplicity: market forces, moral tradeoffs, and implementation barriers.
Market forces: COST-SAVING PROGRAMS → UPMARKET FEATURES = HIGHER PRICES
The most well-known green building certification program is Leadership in Energy and Environmental Design (LEED). Designed to reduce building maintenance and operation costs, LEED is well-known for being the first of its kind in approaching the built environment from diverse angles, which include occupant and community health as well as the conservation and protection of resources and ecosystem. Among the certification requirements are energy-saving measures—of which subsequent reduction in operational costs can be passed down to tenants—as well as “nice to have” measures such as outdoor patio and green roofs (which actually help reduce energy use by lowering temperatures!). These types of spaces are typically non-rentable, as renting them out will prevent open and free access to promoting occupant wellness. Likewise, their maintenance and operation costs have to be recovered through other revenue streams for the property owner. In addition, having such amenities increases the property’s appeal and value, which drive up rental rates for all tenants. Therefore, the consequent increase in revenue coupled with decrease in operational costs for the owner are often used as a justification and marketing point by real estate professionals, designers, architects, and engineers, to encourage LEED certification, while greenifying their portfolio to mitigate the buildings’ impact on climate.
Moral tradeoffs: ENVIRONMENTAL PROTECTION ≠ TENANTS AND COMMUNITIES PROTECTION
Even without pursuing LEED certification, there are plenty of other challenges in greenifying the built environment, which are especially pronounced for existing buildings. As I alluded to in my previous blog post, small changes to existing buildings can, and will, snowball into much larger issues. Newer and more efficient technologies may not play nicely with existing less-efficient ones, and new infrastructure with associated support spaces will likely be needed to retrofit cost-saving energy efficiency measures. These additional spaces are often carved out from rentable floor spaces, and thus drive up rental rates for all tenants in order to subsidize. Furthermore, in addition to large up-front capital investment needed to implement building upgrades, snowball effect creates an environment where unexpected cost-overruns are frequent.
All of these complications to greenify existing buildings generally mean two things: “renovictions” and higher prices. Due to the uninhabitable condition that retrofitting processes often facilitate, tenants will be asked to empty their premises. The building developer and/or owner may then use this clean slate opportunity to renovate the entire facility as an upscale property, to rent out at a much higher price that cover building upgrade costs (which landlords are allowed to pass down to tenants in many cities). Unfortunately, the greenification process frequently results in gentrification of surrounding communities that price-out existing tenants and community members, in addition to consequent concerns of racial and class segregation. Many cities such as New York and San Francisco have enacted rent stabilization and tenant protection regulations, but these rules have to carefully balance the difficult tasks of economic development and community needs in promoting environmental protection.
Implementation barriers: REGULATORY UNCERTAINTIES + LACK OF PRECEDENTS + CROSS-JURISDICTIONAL INCONSISTENCIES = HIGHER RISKS
Given all barriers to greenifying the building stock, its implementation faces a “chicken or the egg” dilemma. Without sound regulations that encourage market-driven building greenification, little to no examples are constructed, with which to help improve future regulations. In that vein, lack of proven precedents render the development of standardized cost-saving green-building measures difficult, with which to further cut costs and help improve building performance via research and development. This lack of standardization and legal clarity promote policy inconsistencies among different jurisdictions, which create additional risk for everyone by adding yet another challenge of having to identify and track their differences (i.e. increase project costs & subsequent rental prices).
To help address these challenges, a part of my work is in developing regional model “Reach” codes for the San Francisco Bay area, which jurisdictions can adopt with minimal modification. Similar approaches are also found at Massachusetts, New York, and British Columbia called “stretch” codes. These [building and energy] codes are locally adopted, and “reach” (or “stretch”) beyond state minimums to support their environmental protection objectives, with the added aims of achieving socioeconomic and environmental equity; providing regulatory clarity; and streamlining requirements and design approaches toward environmentally-friendly developments.
I know we have to decarbonize as soon as possible, but rushing just about anything always lead to unintended consequences. Rapid urbanization during the industrial revolution resulted in proliferation of slums, because there was not enough time to develop housing to accommodate the influx of rural population. Equity issues are, and should always be, in the center of development. However, they take time to discuss, understand, and resolve, and we should not skip this step for the sake of saving time because we will face unforeseen issues that are magnitudes greater than global warming (e.g. epidemics).
My motto used to be “if you don’t walk today, you’ll have to run tomorrow”, which I recently changed to “actions speak louder than words”. Steady progress is what we need to ensure that no stones are left unturned, while incorporating the discoveries made along the way into solutions during practice. Even if we completely decarbonize today, we will face continued rise of global temperature even with carbon capture. Therefore, we should plan for the long haul in adopting to the new reality that 1.5°C+ means for all of us, through concrete actions and incremental improvements to persistently achieve long term decarbonization objectives.