This Issue

Sustainable Housing Breakthrough

Sustainable
The LEED Gold University of South Florida Apartments student-housing project in Tampa, Florida, by The Dinerstein Companies, consists of two 4-story  mid-rise buildings with 182 apartment units and 24 townhomes.   Photo: Laurence Taylor

The LEED Gold University of South Florida Apartments student-housing project in Tampa, Florida, by The Dinerstein Companies, consists of two 4-story mid-rise buildings with 182 apartment units and 24 town homes. Photo: Laurence Taylor

By Eric Butterman

A sustainable rating system for multifamily dwellings is a win-win for residents and real estate investors alike.

 

The opportunities abound—if you know the score. That’s the thought behind the ENERGY STAR rating system 1 to 100 scale finally being applied to multifamily buildings as it’s been for so many other structures. Available through Portfolio Manager this September, owners can assess their building for this official rating. Previously, multifamily buildings were not able to show their green value in this way.

Team Effort

With the EPA’s ENERGY STAR recognized by 80 percent of the public as high-brand recognition, that label can change the conversation, says Chrissa Pagitsas, director of Green Initiative Multifamily for Fannie Mae. The problem was multifamily was left silent without a rating system. “It hurt multifamily’s ability to assess their property’s performance,” she says. “It wasn’t viable to do it before because the EPA didn’t have anyone to collect data to do the analysis.”

Fannie Mae agreed to fill that role. With over 39,000 properties in their arsenal across the U.S., they volunteered to gather data to change the multifamily landscape. The survey, which took place in 2012 and 2013, also resulted in garnering valuable statistics to further bolster that green could equal savings.

But there are certain qualifications. According to the Portfolio Manager website, this rating will only be available to properties with 20 units or more. To receive an accurate score and ENERGY STAR certification (given to buildings scoring 75 and above), more than half of the units on a property will need to be located in structures that have five or more separate living units per structure.

A Boon to Investment

Beyond its positive effect on improving the green status of buildings, Fannie Mae believes this will be a financial boon to affordable housing. “With an ENERGY STAR score affordable housing owners can prioritize where they invest capital,” Pagitsas says. “If you have 100 properties in a portfolio and limited capital to invest for improvement, how do you begin that assessment? This score gives owners a tool to assess where to best make those capital investments to reduce water and operating costs and increase net operating income.”

Roger Platt, senior vice president of Global Policy and Law for the United States Green Building Council (USGBC), also sees the advantage for real estate investment trusts. “They’re increasingly trying to position their particular companies as being committed to broader sustainability goals,” he says. “Investors are often asking what the sustainability aspects of these projects are. To be able to say this portfolio has an average ENERGY STAR score of ‘xyz’ is vital. They can tell their shareholders about their commitment and it goes with the whole premise of [Real Estate Investment Trust] REIT, the idea that it’s the most transparent form for real estate.”

Mike Zatz, chief, ENERGY STAR, Market Sectors Group, offers that we can’t say for sure what will happen with real estate investment trusts from the rating system, but notes studies on the effect to the office sector say we can anticipate the same might hold true.

However, it also benefits Leadership in Energy and Environmental Design for Existing Buildings (LEED EB). There has been a credit linked to the ENERGY STAR score but multifamily buildings couldn’t previously access it since there wasn’t a score for that category, says Pagitsas. Platt also sees a more focused and committed market for the LEED EB rating system after September. “If you are a company that has already done what is necessary to make your building an ENERGY STAR building, it will be much easier to make an additional investment when you’re talking about a LEED for existing buildings,” he says. “It can bring in the apartment building industry in a similar way to other industry.”

An Affirmation to Affordable

Shauna Sorrells, director of the Office of Public Housing Programs for HUD, believes the establishment of a score can push housing authorities to redevelop at a higher level. “It also encourages housing authorities to do their own internal assessment, identifying energy consumption hogs within their own portfolio, and prioritizing their limited resources to make improvements in that space,” she says. “Anything that increases the resonance of this conversation to our owners and gives them specific tools to help prioritize their resources to make these types of improvements we see as a strong benefit.”

Platt says the improvements also will likely be passed on in much-needed savings to tenants in affordable housing. “If this could create a reduction in someone’s energy bill of $1,000 a year, that’s a big difference,” he says. “The opportunities are there and now the data helps back it up.”

Moving Forward Together

The USGBC, a strong supporter of the initiative from early on, is excited to push its collaboration further now that the rating system is going online. “With our huge audience of 13,000 member companies and 30,000 individual members of our chapters, this is a benefit everyone needs to know about,” Platt says. “Our role will be to build on this score and encourage as many building owners as possible to go beyond energy and water performance and go into environmental details and lifecycle of buildings.”

The easiest message to spread is one that’s simplest. That, more than anything, is the beauty of this one. “The value is that you bring together the energy auditors, the energy efficiency and sustainability community with a common language that can speak to the finance people,” Platt says.

And, in the end, that value’s score just might be immeasurable.

Statistics Uncovered

In addition to the rating system, beneficial statistics have also come out of the survey. Notable ones include:

  • A sample 100,000-square-foot multifamily property operating the least efficiently may end up paying $165,000 more in energy cost per year than one operating most efficiently.
  • High-rise properties use almost 10 percent more energy per square foot but 20 percent less water per square foot than low-rise properties.
  • Properties in the West use almost 50 percent more water per square foot than properties in the Northeast.