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sustainability as an amenity

Is Sustainability the New Must Have Residential Building Amenity?

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The amenity wars started as a way to attract and retain tenants. These wars were about luxury and convenience to give buildings that shared a similar location a competitive advantage over their neighbors. Offering everything from car fleets and Himalayan salt rock climbing walls to building a home in Cambodia with the sale of every unit, the math added up for building owners looking for a return on their luxury investments. According to Newmark Group’s research, well-amenitized buildings can go at a 17 percent rent premium and lease-up 23 percent faster.

What attracts residents to a building? What makes them stay? This answer has evolved as generations move in and out of buildings and some new amenities are shocking. If the home in Cambodia perk caught your attention, no, it wasn’t an exaggeration. In fact, Vancouver House successfully raised over $1 million for World Housing, building 375 homes in Cambodia and helping thousands of people. This, while not quite an amenity, is a perk of signing onto the building that successfully drew in residents.

In addition to social leadership, people are regularly voting for other initiatives with their dollars and where they call home. Some of today’s residents consider sustainability to be an amenity. Are the investments in buildings worth it to owners? The calculations for investment, payback, and savings are just as complicated as how buildings themselves run and integrate many different sources of data. These are analyzed in the newly-released “Understanding a Residential Building’s Energy-Saving Investments.”

Buildings and the companies that own them are put under a microscope for social, ethical, and environmental reasons. One heightened focus is on climate change and the impact buildings have on the environment. In fact, according to the National Apartment Association’s report “Adding Value in the Age of Amenities Wars,” energy-efficient appliances are near the top of the list of popular amenities even against more luxurious options. An MIT paper “Multifamily Amenity Wars” revealed an expected increase of demand in residential buildings for products that are environmentally friendly with durability, longevity, and maintainability, too. The greatest energy-using item of them all? The building itself.

The idea of investing in energy-related and cost-reducing building upgrades isn’t new. However, the data about exactly how much building owners can save and if it matters to residents has been sparse. Now residents are interested in and demanding their homes be more energy efficient and climate-friendly. In fact, the experience of the resident is one of the most targeted amenities of residential buildings: “Tenant experience platforms have evolved as the main building integrator, and now play a critical role as an umbrella for almost every use case you can find in a building,” explained Lukas Balik, CEO of Spaceflow. 

Today’s building owners are left with the question of hard dollars. “Whole-building green retrofits can cost anywhere between $2.00-7.00 per square foot ($21.00-75.00 per square meter), depending on the building’s age, existing design, purpose, and the level of savings being targeted,” explained Iain Campbell, Vice President of Global Energy and Workplace Solutions at Johnson Controls in an Urban Land Institute report. These costs can vary based on the goals of the individual building and the motivation of its residents, too.

Once upgrades are installed, it is still up to user participation to see how much energy is actually saved. Gamification of energy usage is starting to gain speed across buildings as residents are more comfortable and aware of using data to find a baseline and track improvements and progress towards their goals. The American Council for an Energy-Efficient Economy’s “Gamified Energy Efficiency Programs” report found that gamified energy efficiency programs can achieve energy savings of three to six percent. And buildings that save energy can qualify for certifications that have been shown to have a nine percent rental premium.

With resident demands and interest in energy usage, the reasons for residential buildings to make energy upgrades are much less of a guessing game than just a few years ago. However, energy upgrades are not inexpensive to make and upfront financial options are limited. Sealed is one such option; Sealed pays for energy upgrades for single family homes upfront and is paid back later through the owner’s savings. This is possible via an algorithm that combines usage and consumption data to predict energy use and savings with an expected energy reduction of up to 60 percent. However, residential buildings do not have the same options.

There is good news; externalities are aligning through residents’ demands, societal pressures, and government incentives. “Buildings are accountable for up to 40 percent of the world’s greenhouse gas emissions and landlords thus need not only to react but to lead the way towards a sustainable future – now,” stated Balik in Spaceflow’s new whitepaper. The tenant experience platform aims to help landlords and tenants with monitoring and controlling energy consumption to exceed their sustainability goals with their product FLOW.

While the motivation is here, the appropriate next move for building owners isn’t quite as obvious. Understanding the ROI of building improvements is a complex equation but data shows it’s worth it in both the short and long run for building owners, occupants, and the planet. Thankfully, it’s all starting to move in the right direction and it’s not a moment too soon.

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