“Greening” the Multifamily Sector: Why & How to Make it Happen

Amy Hou  |  June 22, 2018   |  Energy & Sustainability  


It’s no secret that energy efficiency has become increasingly important in recent years. Look no further than the rise of environmental regulations and the growing number of businesses and individuals changing their behaviors for proof. But if that’s the case, why is one of the largest housing sectors in the U.S. falling behind when it comes to sustainability?

Understanding the State of Energy Efficiency in the Multifamily Sector

According to the National Governors’ Association, one-third of Americans live in multifamily housing units, yet these properties have 34% fewer energy efficiency features than other housing types.

Why Retrofit? Benefits Abound

This discrepancy becomes especially curious when you consider all of the potential benefits that the multifamily sector has to gain from taking on energy efficiency retrofits. These benefits include:

  • Cost savings: The potential savings from retrofits that help reduce energy and water consumption as well as from government financial incentives can total tens of thousands of dollars a year.
  • Greater tenant satisfaction: Energy retrofits can lead to lower utility costs and better living conditions, therefore increasing tenant satisfaction. In turn, this satisfaction can lead to higher occupancy rates, lower turnover and even a willingness to pay higher rent.
  • Increases in property value: Taken together, the cost savings and tenant satisfaction benefits that can result from energy retrofits can also lead to increases in property value.
  • Improved grid stability and reliability: Energy retrofits can help lower the demands on electrical power grids, thereby improving stability and reliability and lowering associated costs.
  • Environmental progress: Retrofits to multifamily properties can also benefit the communities in which these buildings stand by helping to meet compliance goals and lower GHG emissions.

Reality Strikes: Roadblocks to Energy Efficiency

Although the potential benefits of “greening” the multifamily sector are appealing, several roadblocks exist that prevent multifamily property owners from undertaking energy retrofits and reaping these rewards. These challenges include:

  • The split incentive: In the multifamily sector, even though property owners pay for energy retrofits, they won’t always benefit from the resulting savings — most often their tenants will — which eliminates many of the incentives for undertaking these projects. Meanwhile, in cases where property owners do pay for some unit-level utilities or there is no submetering and tenants pay a flat rate, the tenants have no incentive to modify their behaviors to reduce energy consumption.
  • Lack of capital: Energy retrofits are expensive, which means that property owners often need to secure outside financing to pay for these projects. However, securing this capital is challenging as lenders often lack confidence in the return on these investments and are wary of entering a new market with new loan structures.
  • Lack of data: Aggregating utility data can prove challenging for building owners, and this inability to capture reliable data makes it difficult for multifamily property owners to make a case for energy retrofits and quantify results on any efforts they do undertake.

Overcoming Challenges to Capitalize on Untapped Opportunity

Although the challenges that exist to “greening” the multifamily sector are very real, the potential benefits are simply too significant to pass up. As a result, the multifamily sector needs to plot a path forward to overcome these challenges.

That path should cover everything from establishing a baseline and identifying opportunities to gaining buy-in and involving building managers and tenants alike. While the steps on this journey are important, what’s even more important is injecting data at every point along the way.

Accurate and timely data on energy and water consumption and even tenant satisfaction is absolutely critical to making energy retrofits in the multifamily sector a success. Having this type of reliable data can help inform efforts, quantify results, improve access to funding and much more.

Turning the Corner on Energy Efficiency in the Multifamily Sector

Find out exactly what it takes to overcome the challenges that exist and start reaping the untapped benefits in our complimentary eBook, The Next Frontier for Energy Efficiency: “Greening” the Multifamily Sector.

Grab your copy to learn more about the potential opportunities, uncover actionable steps for getting started with energy efficiency efforts and get advice from industry players who have already realized success with their own efforts.

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About Amy Hou

Amy Hou is a Marketing Manager at Urjanet, overseeing content and communications. She enjoys writing about the latest industry updates in sustainability, energy efficiency, and data innovation.

Tags   Energy Efficiency   |   Facilities & Property Management   |   Multifamily   |   Urjanet   |