Group Effort

Submetering has long been a great tool, enabling multifamily property owners to shift utility expenses to residents based on their consumption.
Editorial Director Suzann D. Silverman

Editorial Director Suzann D. Silverman

Submetering has long been a great tool, enabling multifamily property owners to shift utility expenses to residents based on their consumption. And it’s becoming even more valuable as a means to measure the building’s utility usage and benchmark it against like-kind properties nearby. It’s ironic, then, that this incredibly useful mechanism—the merit of which is only just beginning to be appreciated by commercial property owners—can be so detrimental when it comes to advancing sustainability measures in multifamily properties.

If your immediate response is, “What are you talking about? Of course it benefits our sustainability efforts. Residents who pay their own energy bill use less energy,” I can’t argue with that. In fact, a recent NMHC paper excerpted in Director of Research Caitlin Walter’s column this month affirms it. And with residents using less energy, submetered buildings do draw less power from the grid. Added to the fact that the building owner doesn’t have to pay for the power they use.

On the other hand, the building owner still has to pay for sustainability upgrades to the property—installing solar panels, for instance, or LED lightbulbs—and realizes very little of the direct monetary benefits because they are largely passed on to the residents. (Water savings are a better source of direct savings, but increased water bill submetering will shift that benefit, as well.) Tax incentives and a good rate on financing for the installation are the best the owner can hope for. That makes it challenging to justify the cost of such improvements, especially since benefits can take years to hit the bottom line.

The upside to upgrading, however, is improving. Whether due to a generally growing favorability toward greener living or an increase in green-minded Millennials living in apartment properties, it’s hard to say. But a 2015 NMHC-Kingsley Associates survey found green-minded residents willing to pay $31 to $33 more per month in rent, and while the 2017 survey is not yet out, another one, by RentCafe, found that 69 percent of respondents would like to live in such a community and 52 percent would pay as much as $100 more per month. While the two surveys are not directly comparable, they do seem to indicate a growing willingness to contribute to the property owner’s sustainability efforts.

For now, at least, there is growing alignment among municipal requirements, resident interests and technological advancements. It’s a good time for property owners to make improvements.

Originally appearing in the April 2017 issue of MHN.