In an ideal world, sustainability would be a pillar that guides how real estate investors build and develop their residential properties.
And while we’ve made progress towards more sustainable real-estate development, there’s still a long way to go. A recent study across 99 real estate markets found that “compared to the other five dimensions for real estate market transparency, environmental sustainability was seen to be well behind these other dimensions in most markets.”*
In other words, there’s a lot of work to do to address climate risk mitigation, climate resilience, and zero-carbon in residential real estate investment and development.
But sustainability isn’t just important for ESG reporting; it’s also a factor residents consider when choosing where to live.
International real estate developer and manager Greystar found that sustainability is a key differentiator for multifamily developers, with over half of respondents stating that sustainability is an important or extremely important factor when deciding where to rent.**
To shed some light on this urgent topic, we went right to the expert and spoke with Jonathan Burridge. He’s the CEO and Co-Founder of Utopi, a leading proptech company that specializes in data solutions for sustainable real estate.
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What’s the role of proptech in sustainability?
Sustainability is one of today’s biggest proptech trends. According to Jonathan, the primary value proptech brings to real estate sustainability is helping asset managers collect, analyze, and take action on data.
He explains that data provides insights that you simply can’t glean from the design principles and methodologies applied during construction; you get a true picture of how buildings function and operate in real life when people use and inhabit them.
How does this work in practice? “First and foremost, it requires surfacing and creating data sets that create a granular real-time understanding of space utilization and impact,” says Jonathan.
Automation solutions and other digital tools turn that data into value for people and the planet, as well as insights into the P&L of real estate assets.
Without these insights and baseline of understanding, it’s very difficult to make informed and efficient decisions on transformation and work towards more sustainable solutions. For example, he emphasises that “data has a fundamental role to play in decarbonization of real estate.”
How can asset managers get access to rich data insights?
According to Jonathan, there are a couple of sources asset managers can tap into for data insights: existing building infrastructure and Internet of Things (IoT) devices.
“You’d be surprised to know how much data actually exists within siloed technologies that are already embedded in buildings,” he says, such as building management systems and data loggers.
If existing infrastructure doesn’t provide all the data you need, you can use IoT devices like smart thermometers and air quality monitors. These help you build a clearer picture and broader view of how buildings function and consume energy, and how this impacts residents and the environment.
With these insights, “you can then implement strategies to help reduce consumption in a centralized way.”
What are some of the most important data points to consider?
But what kind of data are we actually talking about gathering and analyzing? According to Jonathan, the most critical data points are related to energy consumption. Ideally, these insights will be as granular as possible: for example, at an individual level in a student housing building.
It’s crucial to look at:
- Emissions data: Being able to compare the energy input to emissions output gives you the context you need to create more sustainable living environments.
- External weather conditions: Without understanding what’s going on outside the building, you can’t reliably design projects or interventions and accurately model their impact.
- How people use spaces: This includes how frequently people are actually present, as well as movement within the space.
- Average temperatures within a space: Comparing this data to outdoor conditions can help flag excessive heating or cooling. This also indicates whether or not windows are being used to regulate temperature.
There are also some data points worth looking at that aren’t directly related to energy consumption but rather the quality of the experience within a space:
- Air quality: This enables you to evaluate whether the space provides an environment that supports its purpose. For example, air quality in a fitness center can have a significant impact on health and performance.
- Humidity levels: It’s essential to track humidity levels, especially in areas with a relatively damp outdoor climate, to monitor for mold risk.
- Noise levels: While it’s more of an operational component, noise levels help you manage comfort within a space and ensure everyone’s needs are met.
What are the highest-impact actions asset managers can take to improve sustainability in residential buildings?
Once you have this data, you can leverage it to reduce energy usage, improve sustainability, and lower costs. According to Jonathan, some of the highest-impact actions are related to mitigating excessive heating and cooling patterns.
Think of students who leave their rooms for a few hours at a time. When they wake up and get ready in the morning, their room is cold, so they crank up the heat. When they head out for class, they leave the heat on. And when they return after a few hours and the room is too hot, they open the window, burning energy and money.
When you pinpoint this issue, you can regulate the temperature to a comfortable level, depending on the season. Aside from sustainability considerations, this relatively simple action drives significant cost savings to make the ROI cycle much shorter for the asset owner.
“Having visibility of how residents heat and cool spaces beyond your controls is also very important,” says Jonathan. So while asset managers may know what’s happening with their building’s radiators, they can’t control whether residents go out and buy themselves an electric space heater. Visibility over the whole room temperature, rather than monitoring just at the device level, gives you the data necessary to make informed decisions.
Aside from creating your own energy usage policies and procedures, educating residents can have a significant impact on sustainability in residential real estate.
Jonathan shares the story of one of Utopi’s clients. Data insights demonstrated that residents weren’t turning their heat down when they left for Christmas break. So the property managers ran a campaign for around 1,500 units to educate residents about a “setback” button that automatically dropped the in-unit temperature to 16°C, which is perfectly safe for an unoccupied residence.
The result? The property saved more than 50% on energy bills in the measured period.
What does a truly sustainable residential building look like?
“A sustainable building should be designed, ideally from its inception all the way through to practical completion, thinking about sustainability,” explains Jonathan. He believes the industry has come a long way in the past two or three years, saying that “most modern residential buildings have sustainability as a kind of watermark in their design blueprint.”
This encompasses everything from materials to building standards. Beyond that, “it’s about digitizing the asset as much as possible.”
That means gaining access to data points — and the more granular, the better. For example, a truly sustainable residential building would use submetering at every utility type, such as water and heat, in order to understand energy consumption at the lowest possible common denominator.
Residential buildings should also deploy smart controls so that when things do get out of hand, asset managers have the ability to intervene: for example, if AC usage skyrockets during the summer.
And finally, “the other part of the equation is ensuring residents are educated, motivated, and have visibility of the data,” Jonathan explains.
When you give residents access to insights that show them the impact of their consumption and what they can do to live more sustainably, they’re more likely to make an effort to change their habits. “Otherwise, you end up with a really efficient building with great controls but full of people who don’t understand what the technology is, why it’s there, and what impact it has.”
How can proptech and data help improve the ‘social’ side of ESG in residential communities?
Looking beyond sustainability, there are a multitude of ways data can help residential property owners and managers improve the social aspect of their communities. And Jonathan highlights that there’s a close tie between social and environmental considerations.
Educate residents and motivate them to live more sustainably
The primary social impact asset managers can make is through education. Jonathan uses the example of a student housing building. For many residents, this is their first time living on their own, and they may not be familiar with the environmental and economic impacts of their energy use.
These students probably don’t have any understanding of what a kilowatt of energy consumed costs or what it amounts to in terms of carbon emissions. Educate them by contextualizing the impact of their consumption: for example, what an hour of turning the lights off when you’re not home equates to in terms of planting a tree or biking instead of driving.
After educating and building awareness, Jonathan recommends bringing gamification into play. For example, you can incentivize residents to conserve more energy by showing them a sustainability ranking where they can see how they compare to their neighbors.
“Being able to see yourself move up the rankings and become more efficient is a reward in itself,” says Jonathan, “but you can further validate that with some sort of financial benefit,” whether that’s a discount on groceries, an Amazon gift card, or a voucher for free takeout.
All this goes to say that when students eventually do move out on their own, they’ll have a greater understanding of the economic and environmental impact of their consumption, “and they won’t get hit with a $300 utilities bill they weren’t expecting because they just didn’t know differently.”
Case study: One of Jonathan’s buildings launched a “Pizza to Progress” campaign to reduce energy consumption. “The whole building’s average temperature was too high: 24°C during the winter. So we collectively set a new target of 22°C for the whole building and communicated to students that when we hit the target, we would have a pizza party,” he says.
This was incentive enough for residents to reduce the overall site average temperature in just two weeks.
Improve the digital journey and help residents connect with one another
Jonathan points out that improving the social aspect of residential communities is also possible through enhancing the digital journey. One example of this is providing residents with an app where they can sign agreements, view notice boards, and connect with their neighbors.
This is especially important for residents coming from abroad or those who are only staying for a few months, as it allows them to “make connections with the people they live close to and build a sense of community,” he explains.
Utopi partners with a company called Spaceflow, a tenant experience platform that creates that digital journey and fosters connection. “It’s about really improving residents’ lives,” says Jonathan, “and we’ve done it on a number of schemes already.”
Proptech and sustainability: what the future holds
With all this in mind, what can we expect to see in the world of proptech sustainability a few years down the road? Jonathan points to the importance of data and the growth of AI.
Data and ESG reporting
Looking to the future, Jonathan predicts “a higher demand for real-time, granular data and analytics at an asset level.”
The main reason for this, he explains, is the need to demonstrate “how effectively a building has been managed and the impact of this on opportunity and risk at the point of either refinancing or sale,” as these are two of the critical components of the residential real estate life cycle.
Jonathan shares that the Utopi team is considering creating a log book for refinancing and trading. The goal of this is to improve transparency and help the buyer and seller understand the ESG credentials of a building, which sustainability campaigns have worked, what the emissions profile looks like, and how consumption has reduced over time.
AI for improving sustainability
Like in many other industries, AI is also on the rise for proptech companies, especially in the sustainability space.
“AI is going to play a key role in a number of different areas,” Jonathan explains. Utopi uses this technology to boost operational efficiency, and it has quickly become part of the company’s DNA.
Utopi has also turned to AI to improve its product; the team is experimenting with it to create benchmarks and run deeper comparative analyses. For example, machine learning technology enables the platform to analyze large volumes of data points and see how a building performs against an industry benchmark versus Utopi’s benchmark.
These insights give asset managers a richer picture of how their buildings perform. And Jonathan emphasizes that “understanding where to put your investment dollars first requires understanding how your buildings perform against a benchmark.” That way, you can pinpoint buildings that perform poorly and make smarter investment decisions that bring them up to par to improve sustainability and ROI.
Utopi is also looking to technology to develop more sophisticated control strategies for buildings, as well as enable that gamification factor we talked about above to boost resident engagement.
The future of proptech has sustainability at its core
Now more than ever, residential real estate developers and managers need solutions that help them both create more sustainable residences and report on the impact of their efforts.
That’s where proptech and sustainability come into play. Proptech sustainability companies have the unique opportunity to tap into this growing need by providing products and solutions that lead to more environmentally friendly buildings and happier, healthier residents.
If you’re a proptech company focused on sustainability, Abode can help you get your name out there so you can make a bigger impact in the world sooner. We’re proptech PR specialists that will bring your brand to customers and investors worldwide and transform you into a market leader.
Are you a proptech startup looking to build your brand’s reputation through strategic PR? Drop us a line.
*The increasing importance of environmental sustainability in global real estate investment markets, Journal of Property Investment & Finance
**Sustainability is a ‘differentiator’ for multifamily developers, Multifamily Dive
