A Simple Switch: LED Lights + Incentives Can Mean ROI in as Little as Six Months
NEWARK, NJ — CapRE’s Eighth Annual New Jersey Apartment Summit was a full day of in-depth analysis and networking focusing on the most salient trends and topics in the Garden State’s multi-family arena. The crowning panel to close the day, CapRE Takeaway: The Impact of Smart Buildings in 2019, What Have We Learned Today? And, What Should We Know Going Forward? featured a roster of local movers and shakers synthesizing analyzing the major themes of the day. However in the middle, Moderator Brian Klebash asked two of his panelists to share observations on the Garden State from the ground: Jamie Stover, Vice President of Development at Roseland, a Mack-Cali Company & Wayne Rode, Energy Advisor at CMC Energy Services.
Klebash: Jamie, why don’t you tell us about what type of product came online this year and how leasing went, from your perspective?
Stover: We had two new leas-ups in New Jersey. We had one project, 197 units, in Morris Plains. That was a 20-acre site. We demolished a 70,000 square foot office building and re-purposed that land. Then we have RiverHouse 11, which we started to lease out in July. That one only took about three months to lease out. That was about 300 units. 295 to be exact.
So I’d have to say that the velocity of lease up was tremendous in Weehawken. We did about as we expected in Morris Plains, which was a little bit slower. We found, in Morris Plains, a large number of free locations, which we thought was very interesting. Corporate REIT locations in other parts of the country. Similar to Silverman, we found a lot of groups moving from Manhattan to Weehawken, which we thought was quite interesting. And not just Manhattan actually – all of the boroughs. I think we are really excited about our location, approximate to the ferry terminal in Weehawken, as it relates to what is happening on the west side of Manhattan and Hudson Yards over there. We think it’s a harbinger of things to come for that sub-market.
Klebash: Let’s go to Wayne. Let’s talk briefly about what you’re observing with commercial tenants in terms of energy upgrades, or other specific cases studies. Are upgrades as we enter this stage of the cycle becoming more accessible?
Rode: We’re seeing a big push for energy efficiency. A lot of the retrofits and upgrades have definitely come down a bit as the technology increases. We’re all seeing a big push by the government and utility companies for energy efficiency projects. There are a lot of tax credits, incentive programs, and things of that nature to push corporations and municipal facilities to upgrade to energy-efficient equipment. Another panelist earlier was talking a little bit about value-add services, or what property managers can bring to the table other than just collecting rent.
One is to push for energy efficiency projects on a building to increase cash flow and lower operating costs. Such as LED Lights. I know we’re all pretty familiar with them but those lights can save anywhere from 60% to 80% on energy costs. So with our lighting energy costs, when you’re looking at an apartment building, whether it be common areas, parking lot lights, exterior building lights, those lights that are used a lot or are high-wattage, even the fluorescent tubes in hallways, if you convert them to LED you are looking at considerable energy savings there. You can take that money and put it back into the building, to help stabilize rent costs and things of that nature.
Obviously, if you have a more green building, it’s going to attract a lot of the younger crowd, because that’s certainly a big thing now, to have a lower carbon footprint. That’s something that if you put in an advertisement, you’ll get a lot of attention for. And the return to investment on LED lighting is also very short – it can be anywhere from one to two years. Then, you can piggyback that with credits and incentives and rebates, and we’ve seen clients have a return on investment in as low as six to eight months.
For more from this panel, check out earlier CapRE Insider Reports: