The Sustainable Future of Multifamily

(April 2012): In today’s market, multifamily represents the most stable and sought after real estate investment property type in the commercial and residential sectors respectively.  With that said, it’s imperative that Owners factor in preventative maintenance strategies to assure building conditions remain in order long-term.  One such strategy is sustainability.  Sustainability by definition means the “ability to satisfy the basic needs of today without compromising the ability of future generations to satisfy their needs”.  In other words, the same resources available and utilized today should be accessible in the same capacity to future generations as well.  Acquisitions of value-add/non-performing apartment assets requiring any level of retrofitting or remodeling units within stabilized assets during vacancy between tenants both present an ideal opportunity to incorporate energy efficient solutions – hence sustainability.

 

One contribution multifamily owners can make towards long-term welfare of their respective apartment holdings is thru Carbon Footprint reduction.  Carbon Footprint relates to emission of greenhouse gas through human consumption of resources such as fuel, transportation, and building services.  As New Jersey, the most densely populated state in the country, contains a plethora of multifamily buildings erected in the early 1920s – 1930s, many have a negative impact on the environment.  According to statistics from the U.S Green Building Counsel (USGBC), commercial buildings (multifamily included) in the United States account for electric consumption (72%), overall energy use (9%), CO2 emissions (38%) and waste output (30% or 136 million tons annually).

 

Through strategic management and basic processes, apartment owners and tenants alike can implement conservative measures and contribute to the reduction of said percentiles by decreasing consumption and or decreasing dependence on fossil fuels (i,e…oil) in favor of sustainable elements such as harnessing solar and wind power.  One method worth consideration in Net Metering – the process that enables buildings to generate energy, bank/store excess power until needed, and sell excess to power companies like PSE&G or Jersey Central & Power (JCP&L) in the form of credits.  Special meters are required so consult your respective carrier for further details.

 

In order for multifamily Owners to monetize costs for implementing sustainable methods -vs- potential results/savings, conducting due diligence by way of an Energy Audit (average cost $0.04 - $0.10 PSF) to create a road map outlining recommended equipment, materials, and systems should be considered.

The USGBC offers various certifications to categorize commercial buildings by level of sustainability.  The top designation called LEED (Leadership in Energy and Environmental Design) – is issued to building owners who implement practical and measurable energy efficient solutions through maintenance and daily operations of their respective multi-dwelling asset(s).  The rating system (Silver, Gold, & Platinum status quantified by a 100-point scale) is based on demonstration of high standards in key areas that include promotion of human and environmental health, energy efficiency, water conservation (i.e..low flush toilets & faucets), and use of sustainable materials & resources/recycling.  For eligibility and further information about this mark of excellence and organization background, visit the Green Building Council website at

 

As the general public becomes more energy conscience, the demand for sustainable features is taking shape in well-informed renter requirements.  In order for multifamily Owners to maintain high occupancy, grasping the concept of sustainability will be paramount to building integrity and invaluable in high quality tenant retention.

Paul E. Washington
Commercial Broker Associate
Multifamily Advisor
Coldwell Banker Commercial NRT
Email: [email protected]
Website: www.pwcommercialnj.com