Greystar Saves $6 Million on Utilities and Plans More Energy-Saving Projects
DeeAnne McClenahan says she’s always been a numbers nerd and loves pouring over energy and water usage data. Within the numbers, she says, are tales that potentially lead to greater stories of savings and sustainability. Those are especially relevant considering that costs for energy and water aren’t getting any cheaper and, in some parts of the country, the resources are in short supply.
The Senior Director of Procurement and Sustainability has spent the past three and half years looking for ways to save money in Greystar’s vast business portfolio. During that time, she has helped implement numerous energy-saving projects at many of the more than 700 properties under the company’s management.
She estimates in 2013 that Greystar saved $6 million in utilities just related to consumption, including projects ranging from changing shower heads to improving irrigation systems. Some of the savings were achieved with practices as simple as properly programming a thermostat.
But there is plenty room for more, especially in a portfolio as big as Greystar’s. The company owns a $7.5 billion global portfolio of more than 50,000 units over 40 markets and has more than 210,000 apartment homes under management. According to the 2014 National Multi Housing Council Survey, Greystar ranks first among the 50 largest U.S. Apartment Managers.
“One of my favorite things to do is to look at the overall portfolio; while we can only affect the properties one at a time on retrofits, there’s still plenty we can do across the board,” she said. “We work with on-site property team members to let them know what the best practices are and try to get them to do the little things like turning off the lights when you leave a room. We put stickers out at our corporate offices and at some of our properties to remind them of those things every day.”
Savings from Utility Makeovers Enhance Investor Appeal of Properties
While a seven-figure savings sound big, it’s really a drop in the bucket compared to the $183 million in gross utility expenses spent at Greystar-managed communities last year. A savings of 1-2 percent, however, is nothing to take lightly for a line item that at most properties is only overshadowed by payroll expense.
In some sense, McClenahan is working with a moving target. Her flock of properties that hold energy-saving opportunities changes when apartments are bought and sold. And if an owner isn’t going to hold on to a property for long, it may not be a candidate for a retrofit or upgrade.
The properties that do get makeovers get McClenahan’s undivided attention. She goes on a hunt for rebates and incentives to help bring down the costs. And once the project is complete, savings are diligently monitored. That, says, McClenahan, can be a difference maker when getting the corporate buy-in, and for later when Greystar decides to turn the property.
“If you can hold it for a year and you can document the savings that you had, and that you’re going to pass on to your seller, then you may be able to sell that improved NOI at a similar cap rate,” McClenahan said.
Finding the Right Partner is Key to Maximizing Energy and Utility Savings
At an 800-unit property in Phoenix, Ariz., a friendly competition between contractors showed Greystar not only the potential for water conservation and cost reduction but also how important it is to find the right partner.
An irrigation upgrade was planned at the community to help battle rising water costs that were pinching residents at the amenity-rich community that has four resort style pools, a cyber café and an on-site convenience store.
“They were really struggling,” McClenahan said. “They were looking for ways to reduce costs for residents and the community, but they just couldn’t figure out how to save water.”
Because the massive Adobe-style property was built in two sections that are mirror images of each other, Greystar divided the work between two contractors, each taking a section. The project ultimately became a competition to determine which contractor could get Greystar the greatest return on investment.
“We told them both up front what we were doing, so they would pay attention,” McClenahan said with a laugh.
Greystar spent roughly $36,000 to put the system in, not counting a few hundred dollars a year for monitoring, and the payback didn’t take long. The property saved $71,000 in water the first summer, with each side of the property contributing equally.
But the second year, the data told a different story. The performances of the contractors began to separate when the work on one side yielded more savings than the other.
The difference, McClenahan said, is that the company that got better results spent more time monitoring the system and training property personnel how to most effectively operate it.
“One half of the property actually saved more money,” she said. “That was a great one.”
Utility Upgrades Improve Resident Satisfaction & Retention
A Seattle property is the target for Greystar’s next big water-saving project.
This time more is on the line as the area’s high water costs not only impact resident satisfaction, but can also affect occupancy. Since water costs are so high in the area, residents seek out apartment communities with more efficient fixtures to reduce consumption. Unhappy residents don’t just complain about high water prices, but actually move out, McClenahan said.
About 310, 3.2-gallon, toilets are being replaced with new 1-gallon models to help minimize the potential fallout that’s triggered from rising water prices in the Pacific Northwest. The original project cost of toilets and labor pushed $95,000, but McClenahan is working on rebates that will bring the total out-of-pocket expense to about $50,000.
Even at that price, it’s money well spent, McClenahan says. When complete, each unit will save an estimated $19 per month in water usage.
“That sounds like a lot of money for 300 toilets, doesn’t it?” she said. “That’s how expensive water is in Seattle. People are willing to move out over their water bills. For some of them, it could save them a lot more than that.”
She said that the success of the project won’t be measured in line-item savings but how well the property retains residents going forward.
“The return on this project is going to be impossible to quantify, because most of this goes to the residents. But the owner has come to realize that $50,000 is a small price to pay in order to improve resident satisfaction and to maintain good occupancy.”
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