AMERICAS NEWS: Refuting a green myth

Pitting tenants against each other is far from a typical real estate strategy. But Gerding Edlen has found success in gamifying multifamily renters’ energy use, one of many tactics the Portland, Oregon-based private equity real estate firm uses to decrease consumption and increase savings.

As part of its approach to sustainability and impact-focused investing, the firm tracks “sustainable lifestyle behaviors” through a smartphone application for residents in one of its Chicago buildings, rewarding the monthly winners of a sustainability competition with gift cards, Molly Bordonaro, the firm’s co-managing partner told PERE. The firm closed its third value-added vehicle, Gerding Edlen Green Cities III, last month on $416 million, above its $350 million target.

The gamification of tenant consumption habits fits into the firm’s wider strategy of investing in properties with a focus on sustainable efficiencies in energy, water and waste. But it is also a low-cost tactic, refuting a commonly held industry assumption that ESG strategy implementation will not benefit an asset until well after a fund sells it.

Eric Duchon, LaSalle’s first global head of sustainability, agreed a common misconception of his job is that sustainability measures require significant upfront costs. For example, little-known energy incentive programs can reduce the cost of exterior lighting for an industrial asset from an estimated $20,000 to about $1,500 from the get-go.

“Now we’re going to make the project cheaper, get a quicker payback and do this the right way,” he said. “People have no idea that this stuff is out there.”