Team Member Login follow usFacebookTwitter

Industry News

At Sunrise, we combine some
of the industry’s best minds
to guide us…and you…to a
more profitable future.

Sunrise Management Logo Sunrise Management Logo
Stacks of newspapers.

Sunrise Management Newsletter Signup

Enter your email to join our mailing list

Sunrise Management Newsletter Archive

Executive Q&A: Joe Greenblatt, Sunrise Management

As published in the San Diego Business Journal by Joe Greenblatt
November 26, 2014

As Title 24 continues to evolve and shape new building construction in California — the latest requirements went into effect July 1 — the complex and varied ownership structures and resident profiles in the multifamily world have made achieving sustainable energy and conservation practices far more challenging.

But the opportunities are no less significant, and market forces are now pushing sustainable practices forward at a faster pace. Younger generations of investors, property managers and tenants are increasingly conscious of optimizing expenses related to energy, water, and waste, according to Joe Greenblatt, CEO of San Diego-based Sunrise Management, a firm specializing in multifamily properties.

Greenblatt is the immediate past international president of the Institute of Real Estate Management(IREM). He recently sat down at his Kearny Mesa office with the San Diego Business Journal to discuss the opportunities and challenges in transitioning multifamily properties to a more sustainable future. Here are some excerpts:

Is it now standard for new multifamily projects to have solar, smart thermostats, double-pane windows and all of the energy-efficient features?
We still see a range of commitment to Title 24 requirements. Some new developments are barely compliant and there are leading-edge projects, such as the Solterra project in Scripps Ranch. It depends on the investor.

H.G. Fenton built Solterra with above-standard insulation, photovoltaic opportunities and more aggressive LED lighting. They were all in. They felt they had a lot of marketable features, and the lease-up was about one-third of the time that was expected. It’s been very successful.

Fairfield Residential is doing some great things in La Mesa.

There also is a middle ground, maybe putting PV (photovoltaics) in for common areas and some components in units that are marketable.

What are some of the barriers to LEED certification with multifamily?
Existing building LEED certification is inaccessible for multifamily. It’s difficult to obtain energy savings data and to identify efficiencies for rental properties. That’s one of the barriers to sustainability. It’s hard to support investments in sustainability without analytics. Utilities can’t give you that kind of data. Utility companies want to do it. They just have to figure out how. I think they eventually will for multifamily.

The question is more about what strategies make sense. The industry doesn’t have access to the data that is available on the office side. We don’t yet have that identifiable ROI. Multifamily is years behind that — a decade, maybe more.

Why is that?
There are many reasons. One is the bulk of the rental market in San Diego is smaller properties — lots of properties with 5 or 6 units and owner-operators. Many of these were built in the 1960s, ’70s and ’80s.

So you may not have the investor mentality to say, upgrade the lighting until the lights don’t work. On a drive around town you will see plenty of properties with lush lawns and beautiful but high water-use landscaping.

Bigger companies may be more cognizant of potential savings. Owner-operators may be less exposed to best practices.

Utility incentives may go to the residents to conserve usage vs. going to the developer or operator to enhance the property.

Another reason is investors are looking at shorter holding periods than in the past, and that provides less incentive to invest if you are going to be selling the property.

What are the low-hanging fruit for smaller owner-operators when it comes to sustainability?
There are cascading opportunities. Lighting, restricted-flow toilets, drought-tolerant landscaping, trash and recycling — those are at the low end. Higher-end investments include double-pane windows, insulation, PV. The savvy investor may invest a little more.

IREM launched its own Sustainability Program in 2014. What are its goals?
It isn’t to compete with LEED certification, and it’s more applicable to existing buildings. The goal of the program is to provide information and tools to professional managers. They can research what incentives are available from which utilities and model prospective investments. It’s about giving a toolset to practitioners to make better investments.

What do you see in multifamily 10 years from now?
Some municipalities — cities and counties — are looking at codifying the Energy Star Ratings for consumer disclosure. So if you move into a community you know as a renter what your utility costs may be.

The industry is collecting more data and raising awareness. There are more than 19,000 bench-marked multifamily properties across the U.S. in the Energy Star program as of Dec. 31, 2013. There also is the GRESB Survey (Global Real Estate Sustainability Benchmark).

You may see more split incentives — things that will benefit the residents and the property owner.

Utility data will be out there and accessible. There will be measureable benefits to investors. There will be validation of our intrinsic beliefs in the tangible benefits of sustainable practices.

Return to Top

Press Releases | Industry News |