The new ENERGY STAR® certification for multifamily recognizes and validates commitment to sustainability.

Apartment owners and managers have a new tool to use in their pursuit of increased value through energy efficiency. In November of 2014, the U.S. Environmental Protection Agency (EPA) recognized 17 multifamily communities as the first to achieve ENERGY STAR certification.

This designation—in use for other types of commercial real estate since 1999—is available for communities achieving a score of 75 or higher on ENERGY STAR’s 100-point scale, indicating energy efficiency in the top quartile of similar properties
across the country.

Though ENERGY STAR certification for multifamily communities is new, their ability to participate in the program is not, according to Michael Zatz, Manager, ENERGY STAR Commercial Buildings at EPA.

Since the program’s inception, multifamily communities have been able to track energy consumption in Portfolio Manager®, ENERGY STAR’s online benchmarking tool. What is new, he explains, is the 1 to 100 scores.

The scoring is an intensity measure of energy consumption per square foot, and the rating is on a percentile scale relative to a random, nationally representative sample of like properties, says Zatz.

Historically, there was no such sample for multifamily. The apartment industry was lumped in with commercial real estate benchmarking, which basically was apples to oranges when it came to measuring residents’ energy use. But Fannie Mae
recently completed a project to develop that data set, according to Zatz.

“The availability of a national data set now provides an opportunity for external benchmarking of energy performance and for the highest performers to earn certification,” he says.

The release of the initial winners was received with great fanfare. And, while the communities recognized should be held in high esteem, many of them were simply recognized for the energy-efficiency initiatives that they were already performing, often to match their fundamental belief in the value of sustainability.

This new scoring system allows for other communities to set benchmarks and then set out to improve to earn the higher, qualifying scores.

Multifamily ENERGY STAR Explained

ENERGY STAR certification is distinct from some other wellknown certifications, such as the U.S. Green Building Council’s Leadership in Energy & Environmental Design (LEED) program.

Being a more comprehensive measure of environmental sustainability, LEED presents a correspondingly more complex set of requirements and processes to those seeking certification.

By contrast, ENERGY STAR certification is based on a single criterion: Energy intensity.

“Energy efficiency is a key component to being green,” Zatz explains, pointing out that LEED’s Existing Buildings: Operations & Maintenance (EBOM) certification of commercial buildings requires an ENERGY STAR rating of 75 or higher.

ENERGY STAR, then, is complementary to—not competitive with—programs such as LEED. Zatz also notes that both the direct and indirect costs of ENERGY STAR participation are very low. Although property owners must have consumption data verified by a licensed professional engineer or registered architect to be certified, there is no fee to use Portfolio Manager or to apply for certification.

Simple requirements and low costs do not mean, however, that certification is without challenges. Chief among them is that an eligible score must be based on whole-building energy consumption data from all fuel sources. This was the primary
barrier to developing the national data set, and it remains a major hurdle for many multifamily properties that are not master-metered.

Gathering unit-level energy consumption data from utility providers often requires resident consent or anonymity. Even then, aggregating sub-metered data to the property level presents technological difficulties for some utility companies.

Recently, however, some municipalities have begun to mandate building-level reporting, opening the door to the kind of data collection necessary to receive a score.

“The EPA’s ENERGY STAR rating system and certification process for multifamily assets is a great step forward to create a standard benchmark to quantify efforts in sustainability for property managers and owners,” says Tom Spangler, Senior
Director–Energy & Sustainability, Greystar.

“Although the requirement for whole building data can be difficult to collect for the current scoring, the rating system is already being recognized in the industry as a distinction that has marketing value to owners and residents.”

First Winners Fully Committed

Given both the nature and novelty of ENERGY STAR certification for multifamily properties, it is hardly surprising that many of the initial 17 properties to be certified have a great deal in common.

Significantly, these properties did not intentionally set out on a months-long campaign involving expensive retrofits or intensive documentation efforts to achieve certification. Instead, the winners are high performers because of their commitment to energy efficiency at the ownership level. When certification became available, it served to recognize and validate this existing performance.

Among those recognized are The Albemarle and The Statesman, owned by AvalonBay Communities, and located in Washington, D.C. Mark Delisi, AvalonBay’s Senior Director of Corporate Responsibility, explains that these certifications resulted from continuing efforts that began long before the 100-point scoring system was in place.

“We had already been working for a number of years on making the properties more efficient with systems, windows and lighting,” Delisi says, pointing out that basic maintenance accounts for some performance improvement, because it leads to old equipment continually being replaced by newer, more efficient versions.

“We put in energy data for about 15 properties, and these two got back a score that qualified for certification.”

While Delisi stressed that certification was not the primary goal of any particular retrofit, recent upgrades to lighting in common and exterior areas clearly contributed to the highrelate that to saving money,” he says.

TIAA-CREF, a large institutional real estate owner and a seven-time winner of EPA’s ENERGY STAR Partner of the Year Award, has a similar portfolio-wide commitment to sustainability.

It mandated energy consumption benchmarking for all of its investment real estate, including multifamily, under its Global Real Estate Sustainability Initiative (GRESI), says Nicholas Stolatis, Senior Director-Global Sustainability & Enterprise Initiatives at TIAA-CREF.

According to Stolatis, TIAA-CREF has been using Portfolio Manager across its 15,000-unit multifamily properties since 2008. “In most cases, we have not had whole-building data, so those properties do not get ratings. But we still benchmark
them to improve the areas we control.”

When certification became available, TIAA-CREF obtained verified scores for 17 properties. Three of them, all located in Seattle, achieved certification:

• Circa Green Lake Apartments (managed by Pinnacle)
• Aspira Apartments (Greystar)
• Prescott Wallingford (Greystar)

As with AvalonBay’s certified properties, these three have strong energy performance not because of projects specifically targeted toward ENERGY STAR certification, but because of their ongoing efforts to be efficient. They have also taken advantage of incentives available locally from utilities and governmental entities.

TIAA-CREF partners with JDM Associates on its sustainability initiatives. Deborah Cloutier, a Principal at the energy management and sustainability consulting firm, oversees the team that helps TIAA-CREF and its operators prioritize
projects for maximum benefit.

“Our message is about opportunities that lead to sound investments,” Cloutier says. “Sustainability is a component of that.”

Stolatis views ENERGY STAR certification as an award that recognizes the excellence demonstrated by such projects, which are constantly being implemented across TIAA-CREF’s multifamily portfolio.

“It is an acknowledgment and verification of superior operations and of differentiation from a competitive set,” he says, noting the benefits to both the resident and the owner. “It is helping reduce the residents’ bills and helping them feel better about living at the property, both of which are positive factors for attraction and retention.”