🏡 Built to Zero Week 1
Crazy masterplan proposals, billions of investment in net zero projects, and why sustainable real estate matters...
Welcome to our first edition of Built to Zero!
Why, you ask, is it called built to zero? We’ll explore developments that are striving to operate on their own grid, generating all their own power from clean resources and thereby producing zero emissions.
Our mission is to streamline the flow of information in this niche space. We realize the real estate sector as a whole is very segmented, however, sustainable real estate in particular is still in its nascent stages of its prosperous future. In the meantime, we are here to sort through all the BS and get to the root of what is going on in the sustainable development arena.
2021 in Review
15,000 acre net zero community Five Point Valencia breaks ground
More than 21,000 homes will be built in the Southern California community through a partnership between FivePoint, Lennar, KB Homes, Toll Brothers, and Tri Pointe. The community aims to be the largest net zero development in the US upon completion.
The ultra-master-planned city of Telosa announced
Marketed as a city of awesomeness, the man with the plan, Marc Lore, touts the city will be the first of its kind. The utopian vision calls for prospective resident applications and prohibits you from driving.
Linear city, The Line, Neom planned
The plan is to quite literally create a giant linearly integrated city. Crown Prince Salman of Saudi Arabia announced the first state-backed venture into a full-scale society that aims to be net positive (providing more energy and resources than it consumes). Talk a about a vision: this is master planning at a whole other level. However, the pure scale of the project is bound face some hurdles.
What’s News
NYC follows California to ban all gas inputs in new buildings
All buildings in NYC built after ‘27 will be required to run completely on electricity. Though it’s a huge step in minimizing the impact of commercial and MF buildings, chefs are up in arms.
Centennial at Tejon Ranch development in CA seeks net-zero status
Not only is the 12,000 acre community looking to be ultra-efficient (it’s even slated to incorporate 30,000 electric charging stations for its residents), the project looks to provide upwards of 18% of the total homes as affordable housing units.
California is planning to cut back on solar incentives
California? Slashing environmental incentives!? Well, kinda… The core of the proposal is to reduce the amount it pays to customers who sell excess electricity to the grid. The state argues this will incentivize citizens to invest in batteries, thereby reducing peak energy loads and consequently making the entire grid more efficient. Even though Elon Musk despises incentives, Tesla is standing firm against the proposal from the state.
Houston has finally learned about green buildings
For the first time ever, the city of Houston is issuing a tax break for a sustainably designed building, signaling a continuing shift in the oil capitol of the world as green buildings become more commonplace.
What You Should Know
Did you know the built environment (buildings, public infrastructure, open spaces…) contributes more than 40% to global emissions annually? 28% of global emissions are solely due to the day to day operations of the built environment.
While most climate tech innovations over the past several years have focused on retail transportation and single-family residences (see residential backup batteries, solar panels, LED bulbs, electric cars, etc…), what most people fail to realize is these innovations are small increments of progress towards a lower emission future.
Although these technologies can affect major changes when implemented en masse, the initial cost represents a large barrier which prevents the majority of private homeowners from taking action and adopting these technological advances. Even after subsidies and tax incentives, home owners still face a steep cost to implement energy saving technologies because it’s inefficient to retrofit and reconstruct.
Therefore, the majority of the necessary change is put into the territory of commercial developers - those planning large scale communities, buildings, public works, etc. This group not only has access to more capital than an individual homeowner, they have greater access to portfolios of properties, meaning they have the power to affect much more change. Additionally, because most developers are in the business of just that, they have the ability to build efficiently from the outset.
So, with all the incentives and the benefits evident, why don’t more investors and developers take advantage? That is the question I am venturing to solve and answer. My hunch is that most wealth in the real estate arena is that of old – meaning individuals have their proven business models and are hesitant to adopt new ones, even though the higher risk is commensurate with a stronger return. Even though many developers and investors are not risk averse (you can’t realistically avoid risk in real estate, you can only mitigate it), they view the larger amount of capital required and additional risk as red flags.
Our goal with this newsletter is to inform, to show how and why developers can and should take on more sustainable practices - not only is it better for the environment, it’s much more lucrative for investors.
Random Fact of the Week
The Welsh government decided to give every household a tree (totaling 1.3m trees) for the new year in a gesture to combat climate change. Read more here.
Cheers to a new year! I hope you enjoyed this first letter, we would love any and all feedback. Thanks for reading… we’ll catch you next week!
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