Tankless Water Systems Heating Up the Multifamily Industry

tankless water heater

Apartment owners who could be pinched by new regulations for gas and electric water heater tanks may be able to offer a hot new amenity to residents.

Technological advances and lower costs are making tankless water heaters more attractive. The upside for residents is that water gets hotter faster and space once reserved for tanks can be otherwise utilized. In addition, water usage can be reduced if the water heater is installed closer to the fixtures it serves.

The gas tankless heater market is growing while tankless electric heaters are gaining momentum. Installation of gas units, which have been on the market for a few years, are increasing in new construction. Electric tankless heaters, although they don’t carry as much firepower as their gas counterparts unless hefty, expensive electrical modifications are made, are becoming a good alternative as point-of-use solutions.

“The tankless market, gas in particular, is growing,” says Jim Connors, Rheem Water Heating’s retail business director. “It’s very strong in the new construction space, and much more often than not a whole home application.”

In April, new regulations mandated by the National Appliance Energy Conservation Act went into effect to make water heaters more energy efficient.  Some new gas and electric heaters are now wider to allow for added insulation, which could create space issues for existing apartments when tanks need to be replaced.

tankless water heater

Tankless may be a more realistic solution than tanks for apartments

Connors said tankless water heaters have improved in technology and have become less expensive, and are getting more looks today by housing providers, especially apartments.

“We’re seeing more interest in some applications in multifamily,” he said. “They are faced with the same pressures, in fact, greater pressures, than new construction. The recent regulations basically resulted in a lot of water heaters getting bigger and more expensive for traditional tank type. What that means, is tankless becomes a more realistic option, not only because it can save space but also because of the price gap between traditional tank type and tankless is actually narrowed.”

Pricing has lowered enough that once prohibitive upfront costs for gas and electric change-outs are easy on the budget. Upgrading is still expensive, Connors said, but not like before. A tankless gas retrofit is three or four times higher, while a tankless electric can be two or three times more, depending upon what upgrades in gas or electrical service are required.

Energy and water use savings can help offset the higher cost. Tankless units are over 90 percent energy efficient and can be installed closer to the served fixtures so less water is consumed by users waiting for water to get hot. Plus, tankless electric water heaters are not pressure vessels and don’t require temperature and pressure relief valves, which makes installation easier.

Apartment floorplan

Size of apartment and floorplan factor into whether to go tankless

Tankless water heaters gain efficiencies by heating water instantaneously without the need for a storage tank. Either a gas burner or an electric element heats the water. The units are usually mounted on the wall between the incoming cold water connection and the outgoing hot water line, and can be installed by a plumber if no gas or electrical modifications are required.

The size of either a gas or electric tankless system – or use – depends on the apartment. The locations of baths, kitchens and other areas that need hot water may determine whether a tankless retrofit is the right choice.

A gas unit is usually capable of heating entire living spaces, and may make more sense than an electric.  While the size of the gas supply line may have to be increased, the meter is typically the right size and does not require an expensive replacement.

Providing hot water for whole living spaces is a little more challenging for electric tankless systems. An upgrade to the electrical service system with two 60-amp breakers can be required, which may mean hiring a costly electrician.

“That becomes cost prohibitive and it becomes very difficult, in which case you are paying for an electrician and a plumber to do the installation of the water heater,” Connors said.

However, one solution is to install multiple smaller-output electric units in kitchens, baths and other areas where hot water is required. The units are smaller and pull enough amperage already provided in the apartment, so upgrading the electrical system may not be required.

“With tankless electric, the market is really moving to a point-of-use solution,” Connors said.

Education on tankless water heater technology

Understanding of technology is key to success of tankless application

The key, he said, is understanding the capabilities of either gas or electric tankless systems and having realistic expectations.

He cautions that going tankless is not right for everybody. Incoming water temperature affects how well tankless units operate, unlike in a tank system where water has been heated in advance and is dispersed at a desired temperature. Gas and electric systems may struggle to adequately heat water in traditionally colder climates.

“There is a lot of education required with these types of products throughout the supply chain whether it’s a home owner making a selection for themselves or contractors doing installations,” Connors said. “The education piece is real, real critical. It will work great if it’s in the right application but tankless is not the right solution for everybody.”


Contributing Editor, Property Management Insider
President, Ballpark Impressions, LLC

author photo two

Tim Blackwell is a long-time publishing and printing executive in the Dallas/Fort Worth area who writes about the multifamily housing and transportation industries. He has contributed numerous articles to Property Management Insider, and worked as a newspaper reporter in the D/FW area. Blackwell is president of Ballpark Impressions, and publishes the Cowcatcher Magazine. He is a member of the Fort Worth Chapter/Society of Professional Journalists.

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