Increasing Property Value Through Energy Efficiency

For most boards and owners, the business case for submetering is not "nice to have," it is math. If you reduce operating expenses without reducing revenue, Net Operating Income (NOI) rises. And when NOI rises, property value often rises because value is commonly estimated by dividing NOI by the market cap rate.

In a bulk-metered multi-residential building, a large share of in-suite electricity is paid by the corporation or owner and recovered indirectly. Submetering changes that structure: suites are billed for their own in-suite electricity usage, and the operating statement typically improves.

Ontario's best-known evaluation by Navigant (prepared for Enercare) found significant average reductions in suite consumption after submetering, and those reductions persisted over time.

Studies and case work in the multifamily sector indicate that energy efficiency upgrades can increase NOI, and that the financial benefits can be meaningful when operating expenses are large and controllable.

If your cap rate is 5% (0.05), and you increase NOI by $100,000 per year, the implied value increase is $2,000,000. Cap rates vary, and appraisals consider many factors, but the mechanism is real.

If you want to tell a credible story to owners and auditors, track building principal electricity spend, common area electricity spend, suite billed kWh and dollars, arrears and collections performance, resident complaints and resolution time, and participation in assistance programs.