Utility Benchmarking Enables Millions of Dollars in Savings and Increased Property Value in Multifamily Housing

New report details how multifamily owners, managers, and investors realize immediate, sustained, and scalable increases in property value

BOSTON, July 12, 2017 (GLOBE NEWSWIRE) -- Increasing energy and water efficiency in multifamily housing significantly improves the financial performance of properties, while promoting sustainability for residents and government entities. A new report, The Property Utility Benchmarking Report from WegoWise®, reveals immediate, sustained, and scalable increases in utility savings by more than 15 percent over three years, leading to improving Net Operating Income (NOI) and property value. The report is based on a long term study of multifamily properties in the United States engaged in utility benchmarking.

In a first-of-its-kind study, WegoWise takes a broad and in-depth look at utility consumption over seven years across the U.S. multifamily housing industry to identify how utility benchmarking and building analytics positively affect usage and costs immediately and over time. The analysis details the direct and significant link between proactive utility benchmarking and increased NOI and asset value. For top-quartile savers, The Property Utility Benchmarking Report finds:

  • Property owners and managers who actively benchmark and prioritize energy and water efficiency see first-year savings of 4.3% or better.
  • Savings scale to nearly 8% at 24 months, and more than 10% at 36 months.
  • Utilizing data analytics saves 4.9% over 12 months and more than 15% over 36 months.
  • Retrofitted properties achieve savings of 7.6% and 17.2% over comparable periods.

“The link between energy and water efficiency and asset value is direct, actionable, and scalable,” said Laila Partridge, CEO of WegoWise. Forward-thinking investors and underwriters must incorporate utility benchmarking and performance into real-estate asset valuation. For multifamily owners and managers, this escalates the importance of a data-driven utility strategy as a means to improve operating income and drive property value.”

Real Life Savings
The study analyzes usage reductions at the property level in order to get a good understanding of the performance improvements that result from proactive benchmarking. Applying these results to determine how energy and water savings affect operating income and asset value, WegoWise projects the impact in the example below:

Sample Property Spotlight
Units: 200
Monthly utility spend: $150/unit
$360,000 annual utility spend

In the example, study results show potential savings of 4.3 percent after a year of active benchmarking, which translates into a $8,550 reduction in annual operating expense.  Savings of 7.9 percent in the second year accumulate to $31,230, and 10.8 percent in the third year totals $65,160. All reductions in operating expenses translate directly to increases in Net Operating Income (NOI).  The table below demonstrates how NOI increases based on use of benchmarking, advanced analytics features, and completing retrofit projects.

 After 12 monthsAfter 24 MonthsAfter 36 Months
 You have
Your savings
rate is
You have
rate is
You have
rate is
All Properties$8,5504.3%$31,2307.9%$65,16010.8%
Properties with Advanced
Retrofitted Properties$17,1007.6%$52,74011.2%$106,20017.2%

Applying a 5% cap rate to the above 3 years savings, creates the following increases in value:

3-year value gain
All Properties$777K
Properties with advanced
Retrofitted properties$1.23M

"This study provides clear evidence of the direct, actionable, and scalable benefits that accrue from energy and water efficiency, which increases NOI and improves asset value,” said Barun Singh, co-founder and CTO of WegoWise. “It underscores the need for multifamily owners and managers to incorporate utility benchmarking and analytics into their buildings’ operations, and for investors and underwriters to recognize the positive impact on real-estate valuation."

“The benefits of a proactive and continuous utility benchmarking strategy extend beyond just operational improvements. They can be leveraged to identify undervalued assets for acquisition, to obtain low-interest ‘green’ loans when financing, and to justify a higher sale price,” said Partridge. “Asset and property managers with a benchmarking strategy are better positioned to find opportunity, implement cost-effective projects, and deliver increased property value throughout the ownership cycle.”

A full copy of The Property Utility Benchmark Report is available here.

Study Methodology
WegoWise set out to determine the extent to which energy and water benchmarking affects the utility consumption in multifamily buildings. WegoWise’s data scientists conducted an extensive analysis using the WegoWise database of over 8 million utility bills sourced from over 49,000 buildings. To analyze the change in performance, the team first modeled usage for each property based on the historical usage prior to using WegoWise (typically two years of data). Using the pre-benchmarking data and historical temperatures associated with each property’s location, WegoWise built regression models to describe the consumption pattern for every utility account being analyzed. These regression models accounted for various patterns of use, including heating and cooling. By applying these regression models to actual temperatures post the introduction of WegoWise, they estimated how much energy and water a given property would have consumed in the absence of benchmarking. The savings from using WegoWise was then found as the the difference between the actual usage and modeled prediction.

About WegoWise
WegoWise is the real estate industry’s leading energy and water benchmarking, building analytics, and sustainability reporting company. The company transforms the way multifamily housing and commercial buildings are increasing operating income and asset value through benchmarking and building analytics. WegoWise’s software-as-a-service platform helps real estate managers achieve environmental, economic, and social sustainability with a payback in months. For additional information, visit www.wegowise.com.