By Todd Feist
As the results of the second annual IREM Energy Efficiency Survey show, energy benchmarking is a widely adopted practice but by no means universal, particularly in the multifamily sector. This is just one of the conclusions drawn from recent IREM research and published as Measure What You Manage: Insights from the IREM Energy Efficiency Survey.
According to survey data, the benefits of energy benchmarking are clear from both a financial and environmental perspective. Controlling energy expenses adds value to properties by increasing net operating income and may also make the properties more attractive to prospective tenants and help owners and investors meet sustainability goals.
Here are key findings from the research:
- The multifamily sector lags behind the commercial sector in benchmarking energy use, with 48.4 percent of multifamily and 73.4 percent of commercial respondents indicating that they benchmark some portion of their properties.
- ENERGY STAR® Portfolio Manager® is the benchmarking tool of choice for commercial properties. A total of 74.6 percent of commercial respondents say that they use Portfolio Manager. On the multifamily side, 29.0 percent of respondents indicate that they use Portfolio Manager, and 50.0 percent of respondents use a utility billing and tracking service.
- Metering configuration, which impacts access to utility data, varies according to property and fuel type. As expected, most multifamily properties have separately metered units, especially for electricity, with 82.3 percent of respondents indicating that configuration. Conversely, 66.5 percent of commercial respondents say that most of their properties have master electricity meters.
- For both multifamily and commercial properties, the most common scales of comparison for benchmarking are previous data for that property and portfolio performance data. A total of 86.7 percent of multifamily respondents compare the property to itself, and 40.0 percent compare properties in the portfolio. On the commercial side, 81.6 percent of respondents use previous data for the property, and 40.5 percent use portfolio performance data.
To some extent, survey results confirm what has been assumed through anecdotal evidence. For example, the survey shows that financial institutions, REITs, and corporate real estate entities benchmark at higher levels than other types of owners or organizations. This makes sense, since those types of owners are more likely to have corporate sustainability initiatives and other top-down drivers. Larger companies also benchmark at higher rates than smaller companies. Again this seems logical, since larger companies typically have more staff and resources.
Impediments to energy benchmarking were identified in the report, and one of the main barriers cited was a shortage of staff knowledge in this area. Indeed, 29.6 percent of respondents said a lack of staff expertise and training were holding them back from benchmarking. This is largely fixable through education, and IREM has a made its contribution by providing online courses and the IREM Certified Sustainable Property certification, which is approachable enough to serve as a framework for training staff on the job.
The intent of the survey was to gain insights on building energy efficiency practices and perceptions among investment real estate professionals, including property managers. The survey findings were further enhanced by interviews with experts in the property management industry, who provided practical insights into and observations about the survey responses. Industry experts interviewed were Deb Cloutier, CRE, Founder and President, RE Tech Advisors, Inc.; Craig Haglund, Program Manager, CRE & Multifamily, ENERGY STAR Commercial & Industrial Branch, U.S. EPA; and Kelly Vickers, LEED Green Associate, GGP, Vice President, Corporate Social Responsibility, Alliance Residential Company, AMO.
The research was made possible as a result of the Yardi Energy Efficiency Grant provided to IREM. To learn more about what the research says, download a free copy of the Measure What You Manage: Insights from the IREM Energy Efficiency Survey.
About the Author
Todd Feist is the sustainability program manager at IREM Headquarters in Chicago – committed to increasing the energy efficiency of buildings everywhere and overseeing the IREM Certified Sustainable Property certification.