Multifamily Operators’ Guide to Cutting Cooling Costs

If you think it’s really hot outside with summer around the corner, you’re not imagining it. According to the National Oceanic and Atmospheric Administration, the global surface temperature in May 2025 was nearly 2F higher than the 20th-century average—and the month was the second-warmest May since NOAA started tracking in 1850. Only May 2024 was warmer.

For apartment owners and operators, those temperatures translate into higher energy prices. Even if your units are separately metered, you still have to cover the cost of cooling common areas, such as hallways and clubhouses. So, it’s in your best interest to run your apartment communities as efficiently as possible to keep costs down and NOI up.

According to a residential outlook released in May 2025 by the National Energy Assistance Directors Association and the Center for Energy Poverty and Climate, consumers this summer will face the highest cooling costs in 12 years, with the average cost U.S. electric bill from June to September reaching $784, a 6.3 percent increase over 2024.

Prices are high for two reasons, the report noted. First, the cost of electricity is rising faster than the average rate of inflation, and second, as the Earth’s temperature continues to increase due to climate change, additional energy is needed to cool indoor spaces.

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“Cooling costs continue to be a significant operational consideration across our communities,” said Norbert Glod, vice president of facilities management and engineering for Chicago-based Habitat. “Over the past few years, we’ve seen an average increase of roughly 10 percent, driven by inflation, rising summer temperatures and heightened demand on the electrical grid due to factors like electrification and increased data-center usage.”

The benefits of cooling-efficiency strategies

Cutting energy costs is just one benefit of implementing strategies designed to cool your communities more efficiently. According to Jeff Klotz, CEO of The Klotz Group of Cos., both renters and owners reap benefits.

Resident Benefits:

• Lower monthly energy costs
• Improved comfort, with fewer hot or cold spots and less need for fans
• A quieter interior, since high-efficiency HVAC systems reduce equipment noise
• Fewer maintenance disruptions
• Higher perceived value, since residents value energy-efficient and technologically advanced homes

Owner/Developer Benefits:

• Increased rent potential and reduced turnover
• Lower maintenance costs
• Higher asset valuation and NOI
• Potential eligibility for “green” lender programs and the possibility of lower insurance premiums
• Tax incentives
• Market differentiation

To improve cooling efficiency at The Reef, a five-story luxury community in Atlantic Beach, Fla., Klotz used high-reflectivity roofing, high-performance windows and doors, shading for rooftop condensers and increased the roof insulation. The company also implemented a strict semiannual service schedule.

Klotz said that while savings vary by climate, building age and existing systems, the company typically sees 10 to 30 percent annual reductions in energy costs across portfolios that prioritize energy-efficient retrofits. And, in some cases, especially where systems were severely outdated, those numbers can go even higher—up to 50 percent, he added.

Other benefits of improving cooling efficiency include resident attraction and retention. “Energy-efficient systems can reduce utility costs for residents, which many environmentally and cost-conscious renters value,” said Glod. “These upgrades also contribute to fewer service issues and improved reliability, which are both important factors in resident satisfaction.” So, how can you reduce cooling costs across your portfolio? Owners and operators can take these steps to mitigate costs:

• Educate residents about things they can do on their own to reduce costs. Ask them to keep blinds closed during peak sun hours, raise thermostats to 76 degrees or higher when they’re out of the apartment and to promptly report any HVAC issues.

• Change filters regularly. This is one of the easiest ways to lower costs.

• Meter units separately. “Across our portfolio, we have transitioned heating and cooling costs—as well as responsibility for usage—to our residents,” said Michael Zaransky, managing principal of MZ Capital Partners in Northbrook, Ill. “Each unit is separately metered for HVAC, making residents individually accountable for their utility expenses.” Zaransky said that this not only promotes more responsible energy use but is also an effective marketing tool.

• Partner with a third-party energy provider. Petrucci Residential partnered with Nationwide Energy Partners, a company that specializes in energy management for multifamily communities. “We get billed at a commercial rate,” said Elisha Wolstenholme, Petrucci’s executive vice president of multifamily housing. “And the energy provided is carbon-free, so that’s a marketing tool that helps us attract residents.” At Petrucci’s Jacksonville Station community in Warminster, Pa., the company saw a 10 percent reduction in energy costs after partnering with NEP.

• Make small changes. Even small improvements can have an impact on cooling costs. Replacing standard thermostats with programmable ones, installing energy-efficient windows and doors and replacing older HVAC systems with Energy Star-rated ones can pay off not only in reduced energy usage and costs but also in improved resident comfort.

The importance of preventive maintenance

Preventive maintenance is crucial to ensure that HVAC systems maintain peak functionality and run efficiently. “(It’s) essential, not only for managing costs but also for preserving equipment lifespan and performance,” said Habitat’s Glod. “Our teams follow a proactive schedule that includes filter replacements, cleaning coils and condensers, checking refrigerant levels and inspecting systems ahead of peak cooling seasons.”

“Maintenance is everything, and I would repeat that over and over again,” said Klotz. “Nothing works well, optimally or efficiently, without regular, proper and appropriate maintenance—not your car, your body or anything else.”

“We spend thousands of dollars on equipment, and something as simple as not replacing the filter can cause a $7,000 unit to go bad in a short period of time,” said Avery Rouse, a regional maintenance director at The Breeden Co. “Doing preventive maintenance three months before the summer hits saves us tons of money and helps with energy consumption. It also keep the residents happy because they don’t have to call us with problems.”

The impact of LEED

According to the U.S. Green Building Council, as of March 2025, there were 16,239 LEED-certified multifamily projects, representing approximately 2.1 million units and 2.7 billion square feet of built space. Building apartments to LEED standards enhances the health of occupants and preserves resources by using less energy, thereby lowering utility bills.

According to the USGBC, the average certified LEED home uses 30 percent to 40 percent less electricity. “LEED certifications can reduce energy costs, but it’s not always the certification itself–it’s the operational principals behind it,” said Klotz. “Building to LEED standards encourages more efficient HVAC design, insulation and materials, all of which can lower utility consumption. For developers focused on long-term holds, the ROI can be compelling, especially in energy cost-heavy regions.”

A word of caution

Despite your best efforts to improve energy efficiency at your apartment communities, you might struggle to lower cooling costs. That’s because rising electricity rates are offsetting potential efficiency gains. In addition, increased household energy usage–from smart-home devices, multiple televisions, robot vacuums and always-plugged-in appliances make it difficult to isolate the impact of a more efficient AC unit because those devices draw power even when not in use.