By Stan Phelps, Project Manager
With climate change ever so present, and every other headline being something pertaining to Global Warming, now is the perfect time to initiate Green renovations. Not only for the climate but for the pocket book as well.
In the past, green renovations have been sidelined due to material costs and long term payoff. Now, with energy efficient material prices going down, the payoffs are quicker and savings can be realized in the short term.
This payoff model is critical when trying to achieve value adds in the multifamily industry. The point of a value add is to show residents improvements to justify rent increases. What better way to justify a rent increase by saving the tenants money so the rent increase is not a burden on the resident?
“When Residents see property improvements, it makes the case to achieve rent lifts. But when residents see direct savings from green improvements, they are really onboard with seeing the justification of a rent lift.” - Michele Burns, Cohen Esrey’s Deputy Managing Director.
Nexus 5 Group, in cooperation with Cohen Esrey and HD Supply, just finished a 312 unit property wide green improvement at The Lakes at North Port in North Port Florida that I was the project manager on. We not only green renovated 312 apartment units, we also renovated the amenities and the common areas. This renovation involved lighting, plumbing and HVAC with material and installation provided. The projected savings are 15.6 % on energy and 17.5% on water.
Let’s do some quick math to show the savings benefit.
Lakes at North Port in North Port Florida averages 420k/year in energy and water cost. The program we just finished will save the property on average 16.5% which equates to a savings of $69,300 to the property. That's less than a 5 year payoff of product and installation.
Tenants pay an average of $3,600/year in water and energy. With a 16.5% savings that equates to $594 worth of yearly savings.
This is a win win for everyone, especially for ownership, as not only does it save the property money but it also increases the overall value of the asset.