November 24, 2021 |
Updated November 24, 2021
Data is critical when it comes to identifying opportunities for expense reduction and maximizing sustainability.
Finding efficiency opportunities in multifamily housing can be a challenging process. Where do you look first and how should you prioritize certain properties within a large portfolio? Data is playing a key role in helping operators reduce expenses and environmental impact while maximizing efficiencies.
Panelists at the Apartmentalize 2021 session, “Finding the Needle in the Haystack: Portfolio Sustainability Strategies,” explored some of the key factors to identifying efficiency opportunities, creating effective benchmarking and navigating local compliance ordinances. Panelists discussed the various issues operators are trying to solve, from operational expense optimization and NOI improvement to carbon emissions reduction and asset value maximization.
The first big challenge with finding efficiency opportunities revolves around data. Difficulties are rooted in the scale of data, accessing that data with individual meters and third-party contracts—and what to do with that data for utilities. Data visualization is playing a critical role in catching trends and anomalies. When data is displayed within a dashboard, it can foster better decision-making and become actionable data. After the right KPIs have been identified to match operator goals, then meaningful action can be taken in a strategic and tactical way.
Benchmarking ordinances and local laws are other common challenges to navigate and to be aware of in multifamily housing, especially with a nationwide portfolio that spans multiple markets. Operators must have a plan on reporting that data. Performance ordinances require measuring data, so not only do operators have to report the data, but they have to improve performance, and there are fines for not doing so.
“We have a large portfolio in California and various benchmarking ordinances in California we have to comply with,” said Lane Jorgensen, Vice President of Investment Management at MG Properties. “We chose to outsource the data collection and reporting for the state and local compliance benchmarking requirements. There’s a regulatory thing you have to navigate, but we outsource because we didn’t want to be the experts in it.”
Peter Chan, Director of Ancillary Services at Fairfield Residential said, “They will catch the consumption versus expense and not just the expense number. You’re going to get granular data like how much you’re paying per gallon on water at a property. Once you separate those two, you gain a whole new world of insight into how your property is operating for utilities.”
Using tools like benchmarking allows operators to compare properties to other properties with similar climates and building designs. Benchmarking platforms also provide the capability to compare a property to itself. This helps to define what normal energy consumption is like for a building, what to expect and how you compare to previous year. If you know what normal is, you can better identify issues and opportunities. But there are still some obstacles with benchmarking.
“Our Achilles heel of that is, if your benchmark or your base year of data has an inefficiency, you will constantly be comparing it to bad data,” said Chris Laughman, Vice President of Sustainability at Conservice. “If you had a water leak in year one and you moved to year two and are doing better, you’re going to miss the next water leak if it wasn’t as large as the first water leak because you’re already comparing it to a bad data set.”
Once benchmarking and utility data processes are in place, operators can then develop an action plan to identify what they have missed and opportunities for improvement. Action plans can include concepts such as site opportunity audits or even an Energy Star Treasure Hunt, where maintenance and onsite teams from two different properties walk each other’s properties. These resources are immediate impact opportunities and provide the framework for optimizing efficiencies.
Morgan Dzak is an Account Manager for LinnellTaylor Marketing.