What Apartment Owners Say About Building Performance Standards

Building performance standards establish energy-use or emissions targets for existing buildings. Although different from construction codes governing new development, these requirements can also influence renovation, financing, and long-term investment decisions.

A recent National Apartment Association article summarizes a peer-reviewed MIT study based on interviews with executives from 13 multifamily real estate firms. The interviews identify upfront cost and return on investment as central considerations in energy upgrades and emphasize the importance of including rental housing providers in policy development.

NAA describes one regional operator that increased rents by 4% to 5% after installing high-efficiency boilers. This is an individual example, rather than an estimate of the average effect of building performance standards. It nevertheless illustrates why policymakers should examine who pays for improvements and who receives their benefits.

For apartment owners, energy upgrades compete with other capital needs, including roofs, plumbing, accessibility improvements, and major equipment repairs. An improvement may reduce energy consumption while still requiring substantial financing upfront. Where residents pay utility bills directly, the resident may receive the energy savings while the owner bears the installation expense.

Development implications also deserve consideration. Anticipated compliance expenses can affect projected operating income and the financing available for a property. Those pressures may influence whether an owner undertakes a renovation or an investor proceeds with a new project. The cited research does not establish a Charlotte-specific reduction in construction, but it provides a reason to examine those costs before adopting new requirements.

Why this matters for the Charlotte region: Energy efficiency can improve comfort and reduce utility consumption. The affordability outcome depends on installation costs, financing, building conditions, and how savings are distributed between owners and residents.

Policy takeaway for elected officials: Include housing providers in policy design, evaluate the full cost of compliance, allow realistic schedules, and pair requirements with accessible financing or incentives. Measure affordability through the combined cost of rent and utilities.