A wealth of evidence has already demonstrated that wholebuilding energy efficiency upgrades through Pacific Gas & Electric’s (PG&E) Multifamily Upgrade Program are a worthwhile investment—including higher operational efficiency, higher property values, lower energy bills and vacancy rates, and happier residents.
But now, a number of market signs show that energy efficiency is becoming more than just a good idea, but rather a musthave for building owners who want to stay competitive in the marketplace.
Signs that the Multifamily Market is Shifting Toward Energy Efficiency
California is prioritizing it. The state of California recently passed the 2016 Title 24 building code, which sets minimum energysaving requirements for new buildings and renovations that will reduce energy used for lighting, heating, cooling, ventilation, and water heating. In addition, the state set a goal stating that all new residential buildings will be zero net energy (ZNE) by 2020, and according to the Natural Resources Defense Council, “the majority of the changes to the standards will apply to singlefamily and lowrise multifamily buildings.”
Investors are adapting to it. TIAACREF, one of the largest institutional real estate investors in the nation, recently implemented a set of energy management initiatives across its portfolio of multifamily properties, citing the fact that “the green building movement was gaining momentum, and [they] wanted to position our portfolio ahead of the curve.” In addition, a spokesman stated that “adding energyefficient products, energyefficient equipment, and certification of existing properties will give these properties a competitive edge in the marketplace.”
Consumers are demanding it. 80 million millenials—young professionals between the ages of 26 and 35— are expected to enter into the rental market over the next decade. According to the National Association of Home Builders, sustainability, energy efficiency, and environmental awareness are among their core values. In fact, studies have shown that millenials are willing to pay up to nine percent more for energyefficient living—demonstrating demand that will need to be met by supply.