Sufficient availability of affordable housing is a significant and growing concern across the world, in high-income and lower-income countries alike. Governments at all levels are feeling the urgency...
Increasing the adoption of energy-efficient building practices will require the energy sector to increase its understanding of the ways that retrofits affect multifamily financial performance and how the lending and appraisal industries interpret those indicators. The U.S. Department of Energy’s Building America research team Partnership for Advanced Residential Retrofit analyzed building, energy, and financial program data as well as other public and private data to examine the relationship between energy-efficiency retrofits and financial performance on three levels: building, city, and community.
The project goals were to increase the data and analysis in the growing body of multifamily financial benefits work and to provide a framework for other geographies to produce similar characterization. The goals are accomplished through three tasks:
• Task 1: A pre- and post-retrofit analysis of 13 Chicago multifamily buildings
• Task 2: A comparison of Chicago income and expenses to two national data sets
• Task 3: An in-depth look at multifamily market sales data and the subsequent impacts of buildings that undergo retrofits.
Key findings include:
• The net operating income of buildings that had energy-efficiency improvements increased by 2.95% ($55.96/unit) by1 year post-improvement.
• Rental incomes increased by almost 2.39% ($227.48/unit) annually in the year after energy-efficiency improvements were completed.
• Utility costs are one of the largest multifamily building operating expenses in Chicago and nationally.
• National data sets of income and expenses should be used cautiously as a benchmark for city data.
• A retrofit that costs the same in two similar buildings within two different communities could increase a building’s value by $335,000 in one neighborhood and by only $12,000 in the other neighborhood.
• The capitalization rates for a neighborhood are one of the most important factors in whether an energy-efficiency retrofit is feasible for building owners.
• Refinancing presents a significant opportunity for building owners to realize the value of the energy-efficiency improvements and for programs to increase building owner participation.