CREJ - Multifamily Properties Quarterly - October 2015
There are three major benefits to making a multifamily property green. The first is reduced operating costs from lower utility bills as well as operations and maintenance costs. The second is an increased net operating income and profitability because happier tenants result in reduced turnover and increased occupancy. And third is increased property value from the green upgrades and increased NOI. The influx of new multifamily properties, most of them built to higher green standards, soon will cause a drop in the occupancy rates from the current highs, and the older properties will need to do something different to attract tenants. One smart solution is to obtain an Energy Star certification because it not only provides the benefits listed above but also because Energy Star is an influential consumer symbol with over 85 percent of Americans recognizing the label. The Energy Star certification became available to multifamily properties in late 2014 and, perhaps, is the most cost-effective way to show potential tenants that you have a green property (as compared to LEED or other labels). An Energy Star certification could cost as little as $1,000. And because it is a rating system, it expressly states that a property is more efficient than its neighbors. On average, Energy Star-certified buildings use 35 percent less energy than similar buildings, which, by the way, makes a property more affordable to you and your tenants. The first step to achieving an Energy Star label is benchmarking, which compares your property against your peers. A recent study by the Environmental Protection Agency found that benchmarking a building consistently reduced its energy use by 7 percent over three years, at no-cost, because it allows managers to pay attention to the energy and water consumption and react to negative trends.