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Why We’re Launching a Sustainability Practice

How Sunrise Management is leveraging ‘green’ to win business

As published by the Institute of Real Estate Management (IREM)
April, 2014

For over 30 years, Sunrise Property Management has operated apartment communities in Southern California and beyond. The company currently manages over 11,000 units in locations where energy, water, and waste management costs are among the highest in the US. In this article, Sunrise CEO (and 2014 president of the Institute of Real Estate Management) Joe Greenblatt, CPM explains the company’s decision to use sustainability as a differentiator.

Why offer sustainability services? Why now?
In the past decade, water prices in Southern California have surged nearly 150%. Our local utility recently decommissioned a nuclear power plant, which substantially increased energy costs throughout the region. Our electricity rates are more than 3x the national average, and property owners and tenants are feeling the pain.

As property managers, we are uniquely positioned to identify and implement sustainability initiatives that make our stakeholders better off. We’re physically on site, we manage the utility bills, and we interact with the tenants. So it’s logical that we play a leadership role to drive efficiency at each managed property.

Finally, we compete with other companies that offer similar services. Most property management companies provide accounting, project management, tenant relations, and so on. At this time, very few management companies deliver truly exceptional sustainability services, and in this area we intend to differentiate our business.

Do property owners finally care about green?
Most owners care deeply about maximizing NOI and keeping tenants happy. Some care about improving the environment. Regardless of motive, our clients want us to help them achieve sustainable cash flows, and are increasingly conscious of optimizing expenses related to energy, water, and waste. ‘Green’ is about making smart business decisions.

What steps is your company taking to get started?
Using IREM’s new sustainability platform as scaffolding, we’re taking a step-wise approach to expand our offering. At a high level, our process is as follows:

  • Create a baseline for current energy use and costs (e.g., benchmark performance)
  • Determine the ways to save for each property
  • Review opportunities with stakeholders
  • Find solutions providers to perform work cost-effectively
  • Determine available incentives and financing options
  • Manage projects to completion
  • Measure and verify the savings

Obviously, that’s a complex process that takes time to execute. Our plan is to begin with the low-hanging fruit, demonstrate success, and then build on the momentum.

How does your company’s service offering relate to IREMsustainability?
For the past year, the IREM has developed extensive resources that enable its members to deliver best-in-class sustainability services – at a level previously attainable only to the largest national real estate companies. The program provides an array of education, data management, procurement, and marketing tools. At Sunrise, we intend to take advantage of these resources for our benefit to win new business and keep our existing clients happy.

What are the biggest barriers to providing sustainability services?
It’s no secret that multi-family assets are among the most challenging to pursue sustainability. Initiatives typically start (and sometimes end) with common areas and may include lighting, water, weatherization, and solar. Because multi-family is a notoriously difficult asset class to pursue, available government and utility incentives tend to be favorable. It’s our job to find the best opportunities and engage owners and tenants when the timing is right.

What advice would you give other property management companies that are considering expanding into sustainability services?
While we’re still in the ramp-up process of our own initiatives, I’ll offer three tips to peers that are thinking about expanding their own sustainability offering:

  • Get educated: this is a fast-moving industry, so assign people within your company to get up-to-speed on the latest data and trends
  • Assemble the data: sustainability-related decisions require bringing together information from a variety of sources – utility bills, equipment, incentives, legislation, etc. Create a central repository of information for each property
  • Use IREMsustainability as a resource. We’ve already begun taking advantage of this powerful tool and are working directly with IREM’s partner, Green Per Square Foot, to manage our data and identify opportunities

Finally, consider that within a few years, offering sustainability services will be expected within the industry. With most real estate markets on the rebound, there has never been a better time to get ahead of the curve.

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