This blog post is the second in a series of three examining recent findings and recommendations in IMT’s report, Catalyzing Efficiency: Unlocking Energy Information and Value in Apartment Buildings. This post examines how owners and managers can use building performance data to unlock vast savings through energy efficiency and gain a competitive market advantage. Click here to download the full report. In addition, please join IMT for webinars where the findings mentioned in this blog post will be further reviewed. For the December 1 Market-Rate Owners webinar, register here. For the December 8 Affordable Owners webinar, register here.
Today, 18.7 million U.S. households—over 38 million people—live in 5+ unit apartment buildings. Many of these multifamily buildings are inefficient, wasting water, energy, and money. While building performance data has become increasingly available as 12 cities and the state of California implement benchmarking and transparency policies that require building owners to track and report their buildings’ energy—and sometimes water—use, the data impact is still in its infancy in catalyzing efficiency investments.
The good news is that there are numerous opportunities for owners and managers to use building performance data to uncover efficiency savings and gain market advantage. In putting together IMT’s new report, Catalyzing Efficiency: Unlocking Energy Information and Value in Apartment Buildings, we spoke to a wide range of multifamily owners and managers, and came away with a number of insights into how they can be encouraged and assisted in analyzing and acting upon building performance data to unlock billions of dollars in potential annual energy savings.
Turning Data into Action
In an ideal market, owners and managers would use building performance data to:
- Compare their portfolio to peers
- Track building performance over time
- Reward staff for improving building performance
- Identify buildings needing further investigation into energy and water consumption
- Identify additional data needs
- Understand and prioritize efficiency into their operations and financing of capital investments
- Incorporate efficiency into business-as usual
A few innovative owners and managers are capitalizing on these opportunities already by integrating benchmarking into their standard business practices. For example, JP Morgan Asset Management benchmarks its 51,861 market-rate apartment units by requiring its properties to enroll in Bright Power’s EnergyScoreCards, an energy analysis and benchmarking service with a scoring system that provides a snapshot of overall building performance. The company also meets with its asset managers on a quarterly basis to review the EnergyScoreCards. Similarly for TIAA, benchmarking is an ongoing process—properties have to update their energy data on a monthly basis. Third-party property management teams receive the utility invoices for the buildings they manage and use the invoices to populate ENERGY STAR’s Portfolio Manager. From Portfolio Manager, TIAA’s sustainability consultant aggregates the energy data and creates quarterly reports, which are provided to both portfolio and asset managers. Through its sustainability maintenance policies, Forest City Realty Trust requires property managers to review their energy use annually and conduct an energy audit. These templates are loaded into Forest City’s property management systems so that maintenance receives this information as it would other maintenance work orders.
However, many owners have yet to develop a protocol for sharing building performance data with their management teams and merely comply with benchmarking requirements. As nonprofit affordable housing owner LINC Housing Corporation’s Samara Larson explains, ideally LINC Housing would share benchmarking data with its asset managers through tailored reports, showing what they expect the property to consume, its actual performance, and trends. Yet, LINC Housing has just one staff person in charge of building performance data. Developing reports and resources for asset managers is a huge lift, especially for small and mid-sized apartment owners.
Many building owners contract for data analysis and energy management services provided by companies including American Utility Management, Bright Power, WegoWise, and Yardi. Third-party energy service providers offer competitively priced services and help make creating reports and sharing results easier. In addition, as Drew Ades with Housing Partnership Equity Trust claims, “the value in [these services] is the ability to manage a portfolio and quickly identify areas to focus on” based on budget, staff resources, and retrofit needs. These companies provide software tools to help owners and managers access utility data, automatically upload data into ENERGY STAR Portfolio Manager, evaluate building performance data, and provide analytics and support. Yet, many apartment owners are reluctant to take on additional upfront expenses.
Today, 12 cities have benchmarking policies for multifamily buildings and many of these municipalities provide resources for owners and managers to lower the burden and cost of improving energy and water performance and turning data into action, sometimes by subsidizing or providing free third-party energy management services. Moreover, the value for what energy service providers offer in identifying and acting upon energy efficiency opportunities often outweighs the initial investment. Owners and managers, especially those who are relatively new to the building performance data field, should take advantage of what governments, efficiency program implementers, and energy service providers are offering.
Market Building Performance to Residents
In addition, market-rate owners and managers should market their building performance data to residents and gain a competitive market advantage over their peers. AvalonBay implements a Green Label program in all its new construction that demonstrates to customers how much they may save on utilities compared to an average older apartment in the neighborhood. Prometheus Real Estate Group tests how to market a particular efficiency feature and then instructs its leasing agents across the portfolio to carry out the same effective messaging. For example, it installed energy-efficient windows at one unit on a property and achieved a premium in rent for that apartment over other apartments within the same property by marketing the quietness and sound proofing that the windows helped produce. Forest City provides green and energy efficiency brochures as part of its leasing packets for new buildings to draw attention to design features.
Communicating energy and water efficiency as an amenity to its residents is ripe for discovery. The U.S. Department of Energy and CoStar announced in May 2016 that CoStar would display building energy performance information in its online property platform. CoStar owns Apartments.com, the leading online apartment listing website, and ideally CoStar will integrate energy data with its Apartments.com interface. If and when owners have CoStar’s Apartments.com tool to communicate the energy performance, which is a market channel that they know residents use to shop for apartments, owners may be more interested in performing energy and water conservation measures and testing whether high performing units are valued by residents more than a typical apartment unit through increased rents or faster lease-ups.
To learn more about best practices underway, download our full report here. In addition, check out our on-going webinar series:
December 15, 2 PM ET
Catalyzing Efficiency: Lenders and Investors
Presenters: IMT and Community Preservation Corporation
In this webinar intended for apartment lenders and investors, participants will learn about the benefits of using benchmarking data in their standard multifamily business practices and hear from industry leaders who are successfully doing so while promoting energy and water efficiency.
Catalyzing Efficiency: Market-Rate Multifamily Owners
Presenters: IMT, WegoWise, and Yardi
This webinar will focus on market-rate apartment owners and managers, and showcase how these audience members can capitalize on benchmarking data to uncover energy and water efficiency opportunities in their properties. In addition, attendees will learn about using performance data to build resident demand for efficient apartments.
Watch the recording here: https://www.youtube.com/watch?v=9BKNA_-7vNE
Catalyzing Efficiency: Affordable Multifamily Owners
Presenters: IMT, Bright Power, and American Utility Management
This webinar is intended for affordable apartment owners and managers. Participants will learn how to capitalize on benchmarking data to uncover energy and water efficiency opportunities in their properties.
Watch the recording here: https://www.youtube.com/watch?v=4cmoKa9f2WY
Catalyzing Efficiency: City Governments and Energy Efficiency Implementers
Presenters: IMT and City of Cambridge, Mass.
Participants can hear from efficiency program implementers who have capitalized on city benchmarking data to build and refine programs that better engage owners and managers to implement cost-effective efficiency actions in multifamily properties.
Watch the recording here: https://www.youtube.com/watch?v=wlSZerXwdhE