How to Retrofit Value-Add Properties As Carbon-Neutral Assets

With an increasing number of state and local governments committing to becoming more environmentally friendly, property owners are striving to comply to the new rules and regulations, while also catering to residents’ needs and demands.

Consumers are increasingly more aware of climate change and trying to reduce their own carbon footprints, so retrofitting obsolete multifamily properties is no longer just an investment opportunity, but a needed undertaking to help meet sustainability objectives and appeal to prospects.

One of the companies specializing in the transition to a carbon-neutral built environment is RENU Communities, a subsidiary of Taurus Investment Holdings. Since their launch in 2019, RENU managed to complete the company’s renovation scopes on three multifamily projects—South Winds Apartments in Fall River, Mass.; Canopy Apartments in Orlando, Fla.; and Westover Parc in Phoenix—and full HVAC and water heating upgrades on a fourth multifamily project, with completion expected by the second quarter. This means that more than 1,000 units across three markets with different climate regions are targeting energy savings between 40 to 80 percent annually.

Multi-Housing News talked to Chief Technology Officer Chris Gray about the strategy the company uses to overhaul existing properties and transform dated buildings into high-value, carbon-neutral assets—all while not displacing residents.

What selection criteria does RENU Communities use when deciding which communities to retrofit?

Gray: As a subsidiary of Taurus Investment Holdings, RENU Communities directly partners with our acquisition team as they are evaluating properties. We evaluate each asset individually and provide feedback.

We don’t turn down any projects. However, some developments offer far more potential than others. Properties that are 20 years old or greater are often the ones that we focus on purchasing since they present more energy and typical real estate improvement opportunities.

How long does it usually take to complete upgrades at any given property?

Gray: RENU can typically retrofit 250 doors per year on a single property. The buildings are retrofitted following different plans designed in accordance with every property’s unique features. This is really driven by how we implement retrofits—we phase our work using teams that are focused on specific tasks that can be completed in a day. Once the first team finishes, we bring in the next one to ensure we can get in and out with a set of tasks in a single day to avoid displacing tenants.

When creating the plan for each property’s retrofit, we treat each project as an independent entity and system. Specifically, we examine factors such as the age of the structure, the building’s construction and mechanical systems and the local utility environment. We also consider the local renewable energy environment to decide what is suitable for each particular home. We then develop a solution specific to the property, striking a balance between our dedication to minimizing tenant displacements and our respect for the historic structure and its systems.

So, how exactly do you conduct these upgrades without displacing residents?

Gray: We do that by taking a tremendous amount of care planning a retrofit. Our retrofits are done in phases so that every task can be started and completed in a day by staging crews and contractors.

For example, the HVAC crew may come in one day to replace an HVAC system completely. The next day, another crew will come to do drywall repair; the following day, another crew will come to do the touch-up painting. This includes clean-up in any occupied unit to ensure we are not displacing residents. Therefore, it takes strategic planning, staging and bulk purchasing to confirm we have exactly what we need when we need it. This way we are sure to complete each stage of the process as planned.

Tell us more about one of your flagship communities—South Winds Apartments. Before the upgrades, the property’s energy bills used to be twice those of a new property. 

Gray: The retrofit at South Winds Apartments was also done in phases to ensure minimal impact on residents and leasing operations for the property and lasted several years. It took many steps and stages to achieve our projection of lowering their energy bills by an average of 70 percent. The team started the process with a full engineering analysis of the property to evaluate which retrofits would achieve the best energy savings return.

We were able to get this property’s Home Energy Rating System down from the 170s to the 30s by taking a holistic approach to determine how much energy it used. We started with the building’s envelope that separates the indoor-controlled conditions from the exterior weather. We upgraded the attic insulation and the ventilation system and replaced all the windows and sliding doors on the property with new, high-efficiency ones.

We installed very efficient cold-climate heat pumps to replace the inefficient wall air conditioners and baseboard electric resistance heaters. These heat pumps can heat and cool your home, all in one unit, and they work best in cold climates. We also put solar panels on every building. Finally, we wrapped this together with an energy monitoring system that allows each tenant to see and understand their energy consumption and save energy through their own actions.

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What other solutions does RENU use to achieve energy and water efficiency in multifamily properties?

Gray: Our selection criteria are based on how we evaluate each property. Because of this, the technology packages for each property are different and can be very simple or quite complicated. One of the cheapest ways to save energy is by limiting the amount of air that blows in from the outside and escapes from the inside. Consequently, insulation and caulk help control how much you need to invest in mechanical systems, which are more expensive.

The key components of all RENU retrofits are heat pumps, solar panels and energy management systems. The most efficient solutions are heat pumps for space heating, cooling and water heating. Solar reduces the needed capacity of electricity provided by the grid. And finally, an energy management system is also essential because it provides real-time feedback to tenants and the property management team.

For water, we focus on water use reduction for irrigation, faucets, shower heads and toilets. To achieve this, we use low-flow fixtures for showerheads and faucets. We either use low-flow toilet tanks if we are replacing the toilet, or we have toilet valve retrofits we use if we are keeping the tanks. We also install smart irrigation controllers that measure weather patterns and soil moisture content and adjust water usage based on need.

Are there any other ways to reduce the carbon footprint of existing communities?

Gray: In addition to the efficiency measures noted above, we also focus on eliminating natural gas and other combustion technologies where possible. When you eliminate onsite fossil fuel combustion, you can rely on the ever-greening electrical grid to continue to reduce your overall emissions.

Where is the local legislation helpful and where not so much? Have you benefited from state and local government incentives to perform these retrofits?

Gray: States that have embraced energy efficiency are more likely to have incentive systems, which make it possible for RENU to save much more energy and make deeper energy upgrades. Massachusetts is an exemplary state to do multifamily and commercial retrofits. They have state-level legislation that supports carbon reductions on multiple levels: solar, heat pumps etc. At South Winds, we took advantage of over $4 million worth of total incentives from the MA SMART solar program, local utility heat pump incentives, and state-level alternative energy credit programs.

What’s the average cost per unit for these upgrades? 

Gray: Retrofit costs vary depending on the extent of the retrofit. A RENU retrofit can cost an average of $10,000 to $25,000 per door. However, for our deep energy savings retrofits, we aim to save at least 30 percent on energy and strive for net-zero energy. By leveraging a combination of energy-efficient technologies and clean energy sources, we will modernize an existing building that will be comfortable for occupants, mindful of the environment, and profitable for investors and owners in the future.