Sustainability in Multifamily: Unlocking New Value in Existing Assets

As owners and operators continue to grapple with rising operating costs, shifting investor priorities and an aging building stock, the conversation around sustainability in multifamily has evolved. Rather than being viewed solely as an environmental initiative, sustainability is increasingly recognized as a practical strategy for improving asset performance, strengthening resilience and creating long-term value across existing portfolios.

Across the industry, organizations are investing in existing buildings to reduce operating costs, enhance resident experience and preserve affordability, while positioning assets to remain competitive in a rapidly changing market. At a time when capital is more selective and performance expectations continue to rise, these investments are becoming essential to mitigating risk, strengthening resilience and creating long-term value.

To explore how leading organizations are approaching these challenges, BREEAM USA recently hosted the latest installment of its Sustainability Webinar Series, “Sustainability in Multifamily: Unlocking New Value in Existing Assets.”

Expert panelists included:

• Lauren Zullo, Managing Director of Impact, Jonathan Rose Companies
• Thomas Stanchak, Head of Sustainability & Innovation, Stoneweg US

 

The discussion — moderated by BREEAM’s U.S. Director of Operations, Breana Wheeler — explored how sustainability is helping multifamily owners strengthen portfolio performance, preserve affordability and build more resilient communities. Key insights included:

1. Sustainability is a core business strategy for improving multifamily performance and preserving long-term value.

“In affordable housing, sustainability requirements first emerged through Qualified Allocation Plans and financing for low-income housing tax credits (LIHTC), putting the sector in a unique position to lead,” said Lauren Zullo. “Over the last decade, we've seen affordable housing become a sustainability leader, with projects like 100% affordable Passive House developments demonstrating what's possible. Today, we're also seeing market demand grow as investor expectations increase and new technologies help solve longstanding challenges. I really think it's been increasing and gaining popularity, but for [Jonathan Rose Companies], the biggest drivers have been investors, regulators and financing opportunities."

"From my point of view, [Stoneweg’s] sustainability journey really began because capital markets were asking for better benchmarking and better performance data,” added Thomas Stanchak. “At the beginning, there were plenty of reasons why people thought collecting multifamily data wasn't possible, but we built the processes needed to consistently collect building performance data across our portfolio. Ultimately, we serve working people who are increasingly finding quality housing out of reach, and I think sustainability has become part of the solution. You can work to make housing more sustainable, and part of that is making it affordable. Those two dynamics together are really the recipe for how investment managers like ours are finding success."

2. The business case for sustainability continues to strengthen as owners prioritize investments that reduce operating costs and improve long-term resilience.

"We're seeing much more traction around rooftop and carport solar than we were even a few years ago. As the cost of energy continues to rise and the economics of solar improve, it's become less about simple payback,” noted Lauren Zullo. “Part of it now is the ability to control at least a small piece of our future because no one knows what's going to happen with electricity prices. Water has also become a huge focus for us. As an owner, it's always been our largest utility expense, and with water rates continuing to climb, it's become one of the biggest opportunities to improve operational performance."

"The hip answer is water. Investments in water efficiency are often the highest-return, lowest-hanging fruit because water stress is going to have an even greater impact on the economics of real estate over time,” commented Thomas Stanchak. “Beyond that, there's still tremendous opportunity with rooftop solar, battery storage and electrification. If somebody asked me where multifamily owners should focus, it's renewables, air conditioning and hot water. That's where the energy is, and that's where the biggest opportunities are to improve performance."

3. Climate risk is becoming a core consideration in long-term investment decisions

"When we're evaluating markets for new investments, we're looking at climate risks alongside traditional market fundamentals like job growth and population growth. We're considering water stress, building performance standards, utility incentives and long-term transition risks because all of those factors affect investment performance,” emphasized Lauren Zullo. “At the property level, we've also invested heavily in real-time water monitoring. It's helped us not only control water costs by identifying leaks early, but it's also improved conversations with insurers. We can't necessarily say it's lowered premiums, but it has absolutely strengthened our position because insurers appreciate seeing owners take a proactive approach."

"I think sustainability sends an important signal to investors, lenders and insurers. Ultimately, it's a stewardship signal and an operations signal that shows you're thinking beyond today and managing assets over the next five, 10 or 20 years,” said Thomas Stanchak. “When we talk about climate risks like water stress and heat stress, we should probably just start calling them water expense and heat expense because that's really what they're becoming. Scarcity affects the economics of entire regions, and even the most efficient building can't perform well if the surrounding infrastructure and services begin to break down."