New Building Codes Spur Creativity Among Multifamily Developers

CNY Group President & CEO Ken Colao explores eco-conscious multifamily construction trends and how developers can take advantage of cost-effective modifications.

Since its founding in 2003, construction and development services firm CNY Group has delivered more than 40 million square feet of completed construction across 754 projects, including 122 historical projects, 17,400 residential units and 14,600 hotel rooms. Notable projects in New York include the conversion of the historic Woolworth Building’s top 30 floors into 32 luxury residences, and 21 East 12—a 24-story new building featuring luxury residences in Greenwich Village.

Recently, CNY Group provided construction management services for The Crossing at Jamaica Station, a 30-story, 659-unit mixed-use project in Queens, completed in 2021 as part of Greater Jamaica’s revitalization. The fully affordable development is targeting LEED Silver certification.

In the past few years, CNY Group has been increasingly focusing on green building and sustainable practices, so Multi-Housing News asked President & CEO Ken Colao—a professional with more than 40 years of experience in the industry—to talk about how things evolved in multifamily construction since New York passed ambitious climate laws in 2019.

Is building sustainably still perceived by people as luxury living?

Ken Colao, President & CEO, CNY Group

Ken Colao, President & CEO, CNY Group. Image courtesy of CNY Group

Colao: No. In fact, many of the progressive solutions in sustainable housing such as Passive House are more prominently featured in workforce and affordable housing developments. The previous stigma that sustainability is exclusive to the upper class no longer exists.

How much attention do your clients pay to risks associated with climate change? 

Colao: It really depends on the client, and we have some on both sides of the equation. Our team is pushing for more education on the benefits and need for green building and sustainable practices, and we believe that as more information is shared about the long-term return on the investment, we’ll begin to see more interest.

As the topic of sustainability further enters the mainstream conversation, I think there will be ways to force change, as well. For example, if banks start to offer incentives—such as better interest rates on loans—to companies that maintain a level of sustainability standards, companies will begin to take these practices more seriously. Those incentives can be a key driver in what will ultimately encourage companies to change.

That said, we are also starting to see it emerge at a more grassroots level, with employees bringing up and motivating leadership to pay closer attention to green practices. The pandemic motivated this, with employees taking their health and safety more seriously and expecting a level of safety to be upheld in their place of work.

Are climate laws and new building codes still regarded as challenges or have developers gotten creative and turned the requirements into a positive building experience?

Colao: Developers are absolutely getting creative with new requirements, that’s one of the things they do best. Institutional REITs who receive their money from Wall Street investors are pushing more for sustainability because the funds are demanding as such, and that trickles down into more positive experiences for the tenants.

Developers who are not REITs have a bit more flexibility, but they’re using the opportunity to dial into tenant interests—so we’re beginning to see more developers lean into outdoor spaces, rooftop terraces and healthier materials.

There’s also greater interest in rating systems and certifications because it’s something that appeals to the investment and the tenant side. As education increases on this subject, especially with regards to how much more cost-effective sustainable building practices are in the long term, we anticipate even greater creativity.

READ ALSO: Advocating for Widespread Adoption of Mass Timber in Construction

What are the most popular methods these days to reduce a new development’s carbon footprint?

Colao: One of the most popular methods is the introduction of timber to construction projects, both structurally and architecturally. That is a significant way to reduce a project’s carbon footprint.

Also, another method is to replace the mixes of concrete with “green concrete.” Innovators are developing ways in which concrete can actually sequester carbon dioxide emissions, embedding the emissions into their hardened form. Any method to reduce the footprint of a project is worth exploring.

What are your thoughts on Passive House concepts and all-electric buildings?

Colao: I think Passive House is great! In fact, I think legislation should be passed that requires it. I expect to see it more commonly used in the near future, becoming the norm soon enough. Nowadays, when developers hear about it, they are concerned about the cost. In reality, Passive House concepts add as little as 5 percent to the cost of a project, and the savings in energy usage would offer considerable payback in a relatively short amount of time.

It is clear to me that the right direction is to go electric. Gas stoves in home kitchens, and even commercial kitchens, can yield carbon monoxide and dioxide spread around the enclosed space. Even with proper ventilation, some of those emissions are going to end up in the lungs of whoever is cooking at the stove.

I expect solar energy to further advance, as it has been on a rapid scale over the last few years, becoming more efficient and accessible. I also expect to see small wind turbines begin showing up on the roofs of homes and buildings, converting wind energy into electricity for these all-electric buildings. This is where I see the future heading.

READ ALSO: Passive House Standards Gain Ground in Multifamily

How can construction firms make operations more sustainable when developing multifamily properties? What challenges do they need to overcome?

Colao: Construction companies need to be more proactive, focusing on recycling waste and diverting waste streams from landfills. Companies must also reduce their overall energy consumption on projects, which saves on time and costs. I believe that contractors become more competitive when they offer these practices.

Very often, developers and owners don’t bring builders early enough to the design. If they were brought in, they could work with the designers to educate the owners about moving toward a sustainable design and give them proper advice so that the cost of the efforts can be minimized. If builders had more of these opportunities, I believe you would see more developers and owners embracing sustainable design and development. It can get frustrating being at the bottom of the “food chain.”

Also, the supply chain issues are certainly a challenge facing all aspects of the construction industry, and multifamily projects are no exception. With multifamily projects aiming for affordability and efficiency, projects often require large amounts of the same specific piece, whether that be furnishings, windows, doors, etc. With the supply chain challenges of today, these materials are harder to come by and more expensive to acquire.

The cost of construction materials has been rising considerably since the onset of the pandemic, consequently increasing the price paid by the client—buyer and tenant. How much of this price increase stems from the environmental requirements?

Colao: Very little. I think that most cost increases are due to supply chain snags and the unavailability of factories that closed during the pandemic. Processes don’t return with the flip of a switch. I do not think the environmental requirements are a factor whatsoever, as they actually serve to drive costs down in the long run.

To what extent are the current environmental regulations adding to the housing crisis? How are you addressing this “necessary evil,” and can it be improved?

Colao: The current environment is not adding any negativity to the housing crisis. In affordable housing, workforce and middle-market developers are voluntarily embracing sustainability. Clients are more educated now than before and people want to be living in a space that is healthier, so it is not adding to any crisis, but rather helping to lessen it. Developers have the most to gain by tapping into sustainable strategies for affordable housing.

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