Climate Conscious Consumers

It’s no secret that living in modern society has environmental consequences, however, it is only relatively recently that these consequences, and their causes, have come to the forefront. The first published academic reference to ‘ecological footprints’ was less than 30 years ago, and has become a concept embraced and championed by millennials and generation z. It comes as no surprise to me therefore when a 2019 survey conducted by the National Association of Home Buyers (NAHB) found that nearly 50% of millennials said they would want an environmentally friendly home, with 16% indicating a willingness to incur additional financial costs to attain one.

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Our home has a footprint

In Canada, the average household has a large environmental impact, even when compared to our peers in other G20 nations. This is, to a degree, understandable, as our widely varying climate and vast geographic territory require increased fuel usage for heating, cooling, and transportation. According to the Canada Green Building Council, “buildings generate nearly 30 percent of all greenhouse gases, 35 percent of landfill waste comes from construction and demolition activities, and up to 70 percent of municipal water is consumed in and around buildings”. When looking to lead a greener lifestyle, the kinds of infrastructure that you have access to and use weigh heavily into the equation.Thankfully, there is much that can be done to offset this, and increasingly, people have been showing their commitment to a greener lifestyle by voting with their wallets for technologies and developments that facilitate reductions in their overall carbon footprint. Just look at certifications such as Leadership in Energy and Environmental Design (LEED), and ENERGY STAR which have become highly valued badges amongst the environmentally conscious.

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A trend toward greener buildings

In a poll of building owners, architects, and contractors, conducted by McGraw Hill Construction on behalf of the Canada Green Buildings Council, the trend towards increasing levels of Green Building Activity has been clear.In 2011 37 percent of those surveyed indicated that 31 percent or more of their active projects could be classified as green projects; by 2017 that total had jumped to 70 percent of respondents, with 50 percent indicating that more than 60 percent of their projects were now green developments.When considering whether or not to build green there are certainly economic considerations to factor in, with 74% of surveyed owners and architects believing that new Green Buildings cost more than their non-green counterparts. Thankfully these increased costs can be offset over time by reduced operating costs with water, energy, and heating efficiencies, though this can be challenging with multi-residential developments as today most developers don’t have a long-term stake in the infrastructure they develop. This means that they’ll incur all of the up-front costs associated with developing a Green Building (such as LED light bulbs and better window insulation), without being able to recoup the costs through long term operational efficiency.

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A Key Opportunity

One of the most exciting opportunities presented by the Key model is its ability to reconcile this misalignment in the development process. Until this point, developers have been disincentivized from creating multi-residential Green Buildings at scale because of the increased up-front cost, and their inability to make the most from the long-term benefits provided by Green Buildings.The Key model will allow us to treat multi-residential like a commercial asset class for the first time. Key's long-term ownership stake in the infrastructure will enable us to invest in creating the best possible Green Buildings by amortizing the increased up-front costs over the total lifespan of our buildings in a manner not possible with the current status quo.

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