Energy Efficiency in the Property Management Industry

    October 8, 2019

    Project Manager at Fairbanks Energy Services

    Property management energy efficiency means making strategic decisions for saving energy across a portfolio of managed properties. These properties could include apartment buildings, office space, parking garages or lots, or any leased spaced managed by a third party. Energy efficiency is important to the property management industry for three key reasons: tenant satisfaction, safety measures and annual savings.

    Tenant satisfaction and safe facilities are crucial to the success of property management companies and their portfolio of properties. Energy efficiency impacts both of these factors. Ensuring upgraded HVAC systems or better integration of building management systems will allow for smooth and comfortable HVAC operations. Better environments indoors with regulated heating and cooling will result in happy tenants. Energy efficiency upgrades often involve updating these systems or at least auditing their current state.

    A 2018 article by RE Journals, teasing upcoming conference panels focused on energy efficiency and property management, made the point that “Facility managers should of course track maintenance for equipment, keeping an eye on equipment that is old or failing. When it’s time to update equipment, adding variable speed drives to pumps can reduce energy consumption.” While these suggestions relate to the HVAC systems, other energy efficiency services can deliver benefits to property management companies as well.

    Improving site lighting with LED can increase visibility in hallways or, especially, parking lots and garages. Better visibility also leads to tenant satisfaction, as well as improving the safety of facilities like parking garages or exterior pathways. LED lighting is typically a straightforward energy efficiency project to undertake and significant portions of these projects can be covered by local utilities if designed correctly.

    Discussing how energy projects can get approved for property management facilities, Mark Jewel writes for Property Management Insider: “Non-utility-cost financial benefits include improved resident retention or attraction, higher rental rates, lower capitalization rates, and/or higher asset value.” Beyond resident or customer “retention” rates, the financial argument for property management energy efficiency is strong. MassSave lists four benefits of energy efficiency for property managers and all of them reflect financial gain:

    • Reduced operating expenses
    • Increased rental income
    • Increased net operating income
    • Increased asset value

    The financial argument for energy efficiency in the property management industry holds up. Smart facility decision making in property management includes energy efficiency upgrades. “With their boots-on-the-ground perspective, property managers are in a unique position to help buildings make efficiency improvements” BisNow explains in an article about both the obstacles and potential solutions to building energy efficiency. The piece continues, “Most owners and managers — 71.4% — use simple payback to determine whether energy-efficiency enhancements are worth considering.” While we present a fuller financial analysis to property managers about how efficiency projects will prove their ROI when outlining new projects, we provide a simple payback for each project as well. Depending on the requirements of the company in question, that payback period is typically anywhere from 2-4 years. Energy efficiency projects, on average, should deliver about a 2-year payback.

    Fairbanks Energy Services completed an LED lighting project for a property management client in two garages based in Boston, MA. Both properties benefited immensely from improving the light levels at both sites. In addition to a space updated both for tenant or customer use, as well as better safety measures with improved lighting, our client will see financial savings of over $55,000 per year due to upgraded lighting. Additionally, we secured over $75,000 in a utility incentive to help cover the cost of the project. This example shows how property management companies can take advantage of making tenants happier, properties safer and ultimately saving themselves thousands of dollars per year through energy efficiency upgrades. This project resulted in a solid 3-year payback for the property management company.

    Whether the motivating factors are tenants, safety or good, old fashioned budgeting, property managers should consider how energy efficiency upgrades can deliver significant improvements to their managed facilities.

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