Retrofitting multifamily properties for energy-efficient upgrades may not be a favorite financial topic for multifamily property owners and managers, especially if the old building systems seem to be working just fine and the costs of new systems require sizable capital investments.
In New York City alone, a market analysis from Urban Green Council found that it would cost $1.3 billion for the city’s commercial buildings to upgrade for 2024 standards and $11.3 billion to meet 2030 requirements.
However, by partnering with local utility companies, such as National Grid, for financial incentives and taking advantage of federal tax credits, the cost to property owners can be significantly reduced and the long-term energy consumption and costs are dramatically lowered. Urban Land Institute reports that tenants and property owners can save $8 billion a year in energy costs and reduce their total electricity consumption by almost 15% if the entire stock of U.S. multifamily buildings were retrofitted for energy efficiency.
Renters want energy efficiency.
Recent surveys reveal that energy-efficient systems are important to the majority of the 27 million households living in multifamily buildings. Three out of four renters in the U.S. pay for utilities, and, as a group, they are spending about $21 billion on energy annually. Plus, more than 40% of all renters—56% of those earning less than $25,000—cut essential expenses like food or medicine to pay a monthly energy bill at least once in 2021, according to the Joint Center for Housing Studies of Harvard University.
“Along with providing environmental benefits, investing in energy-efficiency retrofits would enhance rental housing,” states the 2022 America’s Rental Housing report from the JCHS.
Among the energy-efficient upgrades that are important to renters, about 70% want smart thermostats, 61% want smart window glass, 62% want smart lighting, 67% want water-saving features, and 68% want leak detection, according to a 2022 National Multifamily Housing Council Renter Preference Survey. Still, a report from the American Council for an Energy-Efficient Economy found that total energy-efficiency spending on multifamily units accounted for just 6% of 51 major metro areas.
With so many renters prioritizing energy efficiency as an important rental feature, property owners can differentiate their housing through energy-efficient upgrades, which can result in renting vacant units as quickly and cheaply as possible.
Upgrade energy efficiency without breaking the bank.
Resistance to costly and inconvenient upgrades in multifamily properties is a real issue for many property managers. Sometimes the quote for fixing older systems is much lower, and the timeline can be much shorter, too, making fixing and maintaining current building systems more attractive and easier to implement. However, there’s help to significantly reduce the financial burden and potentially create a more attractive and higher-rent-earning product for new renters.
In addition to the availability of nearly $1 billion from the Department of Housing and Urban Development for energy-efficient, water-efficient, and climate disaster resilient upgrades for low-income multifamily housing, local energy-efficient utility companies offer financial incentives to clients.
For example, National Grid offers clients energy-efficiency programs that make buildings smarter, which results in lower energy costs. Renters then have more resources available for necessities like food and medicine. Happy residents help property managers through higher occupancy rates and lower turnover.
How Do Property Owners Benefit From Financial Incentives?
It’s beneficial to check the financial incentives offered from local utility companies, as some are offering programs, technical guidance, and incentives to clients for air sealing, all-season heat pumps, low-flow showerheads, custom measures, LED lighting, and Wi-Fi thermostats. This translates to an increase in overall value of a property due to improved overall performance, a reduction in maintenance costs, and a reduction in residents’ energy payments.
Here are a few examples of how much recent property owners saved by taking advantage of National Grid’s programs and incentives for energy efficiency:
● IWC Bed-Stuy Portfolio partnered with National Grid to install water-saving measures that are certified from the Environmental Protection Agency’s WaterSense-certified products like low-flow showerheads and faucet aerators, which reduced natural gas consumption for water heating. The portfolio saved up to 30% at its six-family dwelling in Brooklyn, New York.
● Selah Realty worked with National Grid’s incentives and free installation of low-flow showerheads, faucet aerators, and thermostatic radiator valves at its low-rise 1930s 7,760-square-foot multifamily building in Brooklyn’s East Flatbush section. It saves 16% annually and received $1,950 in financial incentives.
● Condo facility manager Bill Bannan worked with National Grid to reduce consumption of commercially metered natural gas in the Concord Greene Condominiums in Concord, Massachusetts. Concord Greene experienced an annual savings of $15,500, and the cost was less than 10% of the total project cost of more than $340,000. Much of the cost was covered by National Grid incentives.
By utilizing tax credits and financial incentives from utility partners, property owners and managers can not only attract and retain tenants, they can also reduce overall financial investment and be ready to meet energy-efficient requirements that are expected in the coming years. Plus, it’s easier to upgrade before a deadline is looming and required by the local municipality or federal government.
For more information about financial incentives for multifamily properties, check out the energy-efficiency programs at National Grid.