BuildingRating

Sharing Transparency for a More Efficient Future

The First Step to Unlocking Savings in the Multifamily Sector

The multifamily sector in the U.S. has an estimated potential energy savings of $9 billion.[1] This potential has largely remained untapped in part because many multifamily owners don’t know how much energy their buildings are using while other stakeholders, including policymakers, tenants, utilities, and lenders, don’t have access to energy performance information to help shape real estate decisions or inform the development of policies, incentives, and financial vehicles to advance energy efficiency. Moreover, owners aren’t as motivated to make energy-saving improvements when they don’t pay the energy bills—in many multifamily buildings, tenants pay their own utility bills, making it difficult for an owner to recoup their original investment.

 Benchmarking and disclosure policies demonstrate significant potential to overcome these primary barriers to energy efficiency in existing multifamily buildings. In fact, four American cities—Austin, New York City, Seattle, and Washington, DC—have included the multifamily sector in benchmarking and disclosure policies, requiring large buildings to rate the energy performance of their buildings and make building energy information available to tenants and the public. 

The goal of these new rules is to enable transparent building energy performance information to drive energy efficiency improvements in multifamily housing. Improving energy efficiency would provide energy and costs savings, as well as many other benefits for property owners, tenants, and larger communities, including help preserve rental affordability. About half of Americans living in multifamily housing developments spend between 30 to 50 percent of their income on rent and utilities,[2] and, over the past decade, tenants have seen their energy costs rise by 20 percent, more than three times the average rate of rent increases.[3]

While benchmarking and disclosure policies are an innovative approach to overcome energy performance gaps in the multifamily sector, many challenges must be addressed by policymakers. The multifamily sector is fragmented and diverse, encompassing low-income public housing to luxury properties with varied sources of public and private financing. Many benchmarking tools have been designed for the commercial sector and lack consumer-friendly metrics for multifamily buildings.

The Institute for Market Transformation has released a new report that discusses the challenges, their potential solutions, and opportunities presented by the multifamily sector. Intended to serve as a guide for policymakers and stakeholders on benchmarking and disclosure rules and regulations for the multifamily housing stock, it also provides an introduction to the sector. It’s the first step to unlocking the vast savings potential of a crucial, of often overlooked, sector of the building stock.

 


[1] Benningfield Group. U.S. Multifamily Energy Efficiency Potential by 2020. 2009.

[2] Harvard University Joint Center for Housing Studies. The State of the Nation’s Housing 2011. 2011.

[3] Harvard University Joint Center for Housing Studies, America’s Rental Housing – Meeting Challenges, Building on Opportunities, April 2011.