These days, multifamily owners and developers have a vast menu of energy-efficient strategies to pick from. LED lighting, Energy STAR-rated appliances, and energy audits are mainstream. Formerly obscure strategies are gaining traction, low-cost sustainable features are the norm, and organizations that advocate greener practices are seeing interest soar. Options range from on-site solar and green space to smart technology.
With so many other factors in the mix for attracting and retaining residents, the value of energy efficiency should not be underestimated. Studies suggest that living green has significant appeal to renters. That should be an important consideration, argued Marta Schantz, senior vice president at the Urban Land Institute’s Greenprint Center for Building Performance.
“When we think of the motivation for investing in improvements, it’s not just to save money, it’s to secure top residents and motivate them to renew their leases,” she said.
Policies in key markets are driving multifamily properties to be more energy efficient. California, always a bellwether state for environmental issues, is raising the bar. The new code approved in August by the California Energy Commission will require new high-rise multifamily projects to include solar panels and energy storage capacity. When it takes effect in 2023, the code will build on existing mandates for solar panels at low-rise multifamily communities and single-family homes. The next update will also require electric heat pumps as the baseline for new builds, while some municipalities have imposed moratoriums on the installation of natural gas lines at new facilities.
On the East Coast, New York City is moving forward with a series of watershed regulations. Under Local Law 97, buildings larger than 25,000 square feet face a carbon emissions cap starting in 2024, followed by further reductions starting in 2030. Owners and co-op and condo boards are required to make efforts to reduce greenhouse emissions.
“Developers are going to need to double down on the high-performance and energy-efficient aspects of the multifamily buildings they’re developing now to meet those future limits,” noted Samuel Biele-Fisher of Bright Power, which provides energy and water management services to multifamily real estate owners. “Otherwise, they’ll end up paying hefty fines.”
For those launching or improving efficiency strategies, experts urge starting with the fundamental step: benchmarking. “The saying is true—you can’t manage what you don’t measure,” said Schantz. Tools like Energy Star Portfolio Manager are key to prioritizing improvements, she added.
The good news is that smart features are becoming more affordable. Property staff can install unit or water temperature sensors for around $700 per meter; water submeters cost between $2,000 and $5,000 for installation by a plumber. “With newer low-cost controls, we’re able to gain efficiencies but improve resident comfort by supplying better temperature response,” said Lauren Zullo, director of environmental impact at Jonathan Rose Cos., the New York City-based developer.
Choosing the right strategy requires attention to the big picture as well as the needs of an individual community. When it comes to more expensive items like solar panels and charging stations, the investment horizon should shape decisions. “Some things make more sense in the short term but aren’t going to be justified in the long term,” said Elie Rieder, CEO of Castle Lanterra Properties. “A short-term owner may invest in certain things that will drastically reduce operating expenses, but in the long term it’s not worth it.”
At Agave, a 349-unit community in San Antonio’s trendy Southtown neighborhood, solar panels and electric car charging stations have generated positive feedback from residents, said Rieder. Quantifying the benefits is difficult, but Reider pointed to intangible value. “Southtown is a very competitive submarket with a lot of new product,” Rieder said, “so any boost we can provide to leasing by differentiating ourselves through our green initiatives makes a big difference.”
Leading the way
Once rare in the U.S., Passive House design offers an increasingly mainstream alternative with cutting-edge benefits. “For the most part, it’s not rocket science,” said Jonathan Arnold, principal at Kansas City, Mo.-based Arnold Development Group. “You’re basically putting a sweater around the building.” The heart of the strategy is a building envelope that is both thickly insulated and free of metal and dense objects that would let heat escape.
Focusing on the building envelope is “a win-win,” asserted ULI’s Schantz. “It helps address split incentive issues and just makes everything more efficient.”
In the Harlem neighborhood of Manhattan, a project on the cutting edge of energy efficiency is taking shape. At 34 stories, Sendero Verde will be the tallest Passive House project in the U.S. Developed by Jonathan Rose Cos., L+M Development and Acacia Network, the $450 million project will include 709 mixed-income units and a wide range of green amenities, including a 20,000-square-foot courtyard and three community gardens.
Sendero Verde’s energy-saving features include triple-glazed windows, increased insulation and an airtight building envelope that reduces drafts and energy loss. These designs are expected to reduce energy consumption by as much as 70 percent, compared to a conventionally constructed project of similar size. The project’s first phase topped off in November 2020. Phase two is underway and slated for completion in 2024.
“It should really be a very comfortable interior with fresh air supply,” said Zullo. “And we’ll be able to reduce operating expenses for the owner but also reduce costs for residents who will be having a very energy-efficient unit.”
More than 1,200 miles west of Sendero Verde, another significant Passive House project was recently completed in downtown Kansas City, Mo.: Second + Delaware, Arnold Development’s 276-unit community in a historic district along the Missouri River. The property opened in December 2020 and is 99 percent leased.
What sold Jonathan Arnold on Passive House was the promise of a 70 percent to 90 percent reduction in energy consumption that “more than pays for” an increase in operating costs. Another plus: the appeal of leasing units that are “thermally comfortable” and don’t have any cold or hot spots because the rigorous Passive House design is so effective at keeping heat from escaping. Going forward, his firm is looking to develop only Passive House-certified buildings.
And in Seattle, Sustainable Living Innovations recently broke ground on what’s been called the world’s most sustainable high-rise residential building. Dubbed 303 Battery, the 15-story, 112-unit project will be the world’s first net zero multifamily tower. The property, which includes 27 affordable units, is being built with a proprietary system that uses panels fabricated off-site.
The building will feature solar panels on its roof, exterior walls and balconies, radiant heating, captured rainwater and reclaimed grey water, regenerative-gear elevators, and daylight sensors to reduce power use. Solar panels will generate 48 percent of its energy from photovoltaic panels, and the rest will be procured from off-site renewables, according to UMC Inc., which is installing mechanical components as well as the building management system. An app will enable residents to adjust lighting, heating and cooling systems, as well as window shades.