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Using Performance Data Could Help Unlock Billions of Dollars of Savings in U.S. Apartment Buildings
Increasing the energy efficiency of America’s multifamily buildings could save building owners and managers, residents, governments, energy efficiency service providers, and financiers close to $3.4 billion in annual savings. Recognizing this, a new report from the Institute for Market Transformation (IMT), “Catalyzing Efficiency: Unlocking Energy Information and Value in Apartment Buildings,” explores how governments and energy efficiency implementers could help these stakeholders better analyze and act upon building performance data to unlock these savings. This report was made possible with the generous support of the John D. and Catherine T. MacArthur Foundation.
“Poor-performing buildings waste energy and money for owners, tenants, and cities. In the past, we found that a lack of information about building energy performance deterred many multifamily building owners from implementing cost-effective energy efficiency improvements. However, while this data has become increasingly available in recent years, it is still vastly underutilized,” said Cliff Majersik, executive director of IMT. “Working with more than 125 industry stakeholders, we sought to examine why this data remains untapped. Governments and energy efficiency implementers or service providers can learn from leaders in the field and turn this growing wealth of information into action and tangible savings for all parties.”
Close to 38 million people live in multifamily housing in the United States (buildings containing five or more units) composing almost 18.5 million households . In recent years, data about how these buildings and units are using energy and water has become more broadly available as 11 cities and the state of California have adopted benchmarking and transparency policies that require multifamily building owners to track and report their buildings’ energy and water usage. These laws are designed to give owners and the market better information on buildings’ energy use while also helping policymakers, energy efficiency implementers, and lenders craft programs and incentives for energy efficiency investments. Despite this, many of the country’s multifamily buildings remain inefficient.
IMT’s report finds that the data is still in its infancy in catalyzing efficiency investments. Most owners and managers comply with benchmarking and transparency laws but don’t act upon the data to achieve greater efficiency and improve their bottom line. Residents lack access to this information when apartment shopping, and investors and appraisers lack valuation context, often leading them to undervalue and under-invest in efficient buildings. Until multifamily stakeholders work together to use and value building performance data effectively in consistent, transparent formats, energy and water efficiency opportunities will remain unrealized.
“As part of AvalonBay Communities’ commitment to integrating sustainability into our design, development, construction, and operations processes, we are pleased to contribute to this report,” said Mark Delisi of AvalonBay Communities, Inc., a REIT that owns or holds an ownership interest in 283 apartment communities containing more than 82,000 apartments in 10 states and the District of Columbia. “We understand the critical importance and clear impact of improving efficiency in multifamily buildings, and have set 2020 goals to reduce both energy and water consumption across our portfolio. Everyone has a part to play in this important move toward greater efficiency and a more sustainable built environment.”
IMT’s report provides concrete recommendations on how governments and energy efficiency implementers can better engage owners, managers, residents, lenders, and investors in using data to drive energy and water savings. Challenges addressed include data access issues that prevent multifamily owners and managers from gathering adequate data; market confusion over how benchmarking data can be deployed to spur and track efficiency investments; barriers preventing residents from factoring performance into their apartment decision-making process; and the fact that most lenders and investors do not yet factor building performance data into their standard business practices.
“The costs savings from energy and water conservation measures can help enable stable ownership for multifamily buildings, preserve affordability, and create more sustainability communities,” said Sadie McKeown, Executive Vice President & COO at the Community Preservation Corporation, a New York State nonprofit affordable housing and community revitalization finance company that has financed more than 170,660 affordable housing units. “We believe that our method of integrating these measures into the mortgage underwriting processes could put the lending industry at the forefront of the sustainability movement, and we’re excited to share our process, expertise and lessons learned with IMT and others in the multifamily housing space.”
In addition to releasing the full Catalyzing Efficiency: Unlocking Energy Information and Value in Apartment Buildings report today, IMT will be hosting a series of four webinars exploring the findings as they related to specific stakeholders: City governments and energy efficiency implementers(November 17); Market-rate multifamily owners (December 1); Affordable multifamily owners (December 8); and Multifamily lenders and investors (December 15). For more information, visit imt.org.