The appeal of upgrading apartment complexes with green technology is on the rise in the multifamily industry. Not only is it an increasingly attractive and important feature for a new generation of eco-conscious renters, but it also can be a big money saver in the long run for property owners. So what’s stopping most properties from making the transition? Well, according to a recent article in Habitat, the ability to secure the necessary capital is often a huge obstacle.
The problem is many potential lenders are still not sufficiently convinced that energy-saving retrofits will result in meaningful savings for multifamily owners in the long run. And they worry that they won’t see their money back. Apparently, they are waiting to see the data that proves the loan can be repaid.
“Despite rising interest in green technology and the savings it can provide, lenders will probably be reluctant to make loans when the money to repay the loan is expected to come from energy cost savings,” says Mary A. Brennan, former assistant commissioner for energy at the New York City Department of Housing Preservation and Development. “Why? Lack of reliable data about actual savings, unreliability of audit predictions, and the need for unconventional underwriting requirements,” she adds.
Brennan goes on to discuss how Deutsche Bank, in conjunction with Living Cities, completed the first study which examines the energy savings at more than 230 properties that implemented green technology in New York in 2010. But until more data is compiled, many lenders will remain on the fence.
Have you seen significant financial benefits from green retrofits at your properties? Let us know by leaving a comment below.