Sustainability is a central concern for homeowners and renters alike, but tenants typically have little direct control over their properties. Still, that doesn’t mean they don’t have demands or a deep engagement with sustainability and the rental market. Tenants, particularly millennials, who are renting in record numbers, have demands for landlords and property management companies – they want to see more awareness of environmental issues. So how are landlords responding?
Sustainability Through A Corporate Lens
In the rental world, change starts at the top. That means industry leaders, landlords, and managers need to be thinking critically about sustainability. As the team from Newland Communities highlighted at a recent UNC Careers With Impact event, real estate companies should be making changes that benefit the local community and regional environment. As the saying goes, to make change globally, you need to start by thinking locally. But, in real estate, to make change at the unit level, you have to start with management.
The importance of top-down change in real estate is especially important when we consider recent construction numbers. New LEED-certified rentals are down for the second year in a row after peaking at over 50,000 in 2016. Does that mean the market has reached saturation? Or that landlords are no longer engaged with the changing marketplace? While both are possible, it could just be that top-down change is taking new forms, outside the LEED system.
If new LEED-certified construction is declining, it’s possible that, at least in part, tiny home rentals are filling the gap. Though not a substantial part of the market, they do constitute a niche interest as both short- and long-term rentals. And for environmentally conscious tenants, small homes are a compelling way to reduce their carbon footprint while renting and minimize waste overall. Landlords who choose to rent tiny homes, typically classed as auxiliary dwelling units, need to be aware that the regulations tend to be very different from those for traditional housing and apartments.
Another way that the housing market may be changing to be more sustainable outside of LEED-certification is through in-house improvement. Simply put, why tear down properties or buy up land and material to put up new units when you can simply improve existing properties. With affordable smart home technologies available that can help makes home more sustainable, as well as improved knowledge of other basic upgrades, landlords are taking energy savings into their own hands.
What improvements are they making? Most are focused on retrofitting properties with the newest IoT devices. These changes allow landlords and tenants to reduce energy waste and better control elements like lighting and air conditioning. It’s generally quite cost effective to perform such upgrades on large multi-family buildings since smart home devices can be bought in bulk and, in newer buildings, factors like insulations and window infill are already up to expected standards.
Along with smart thermostats and other common IoT devices, a growing number of landlords are instituting submetering, monitoring energy use on a unit-by-unit basis. This helps motivate tenants to manage their own energy use more aggressively. A report by Energy Star also notes repeat cases in which landlords have teamed up with tenants to teach them about their residences’ sustainability efforts and create goals together. Environmental responsibility is a collaborative concern.
LEED-certification is hardly the only measure of sustainability in the property management space and the fact that it’s in decline shouldn’t be taken as an argument against environmentally-friendly practices. Landlords and property management firms are thinking critically about how they can reduce their impact on their communities and the wider world and their solutions are exciting, bringing collaboration to the fore of a typically top-down industry.