Inflation has affected retail spaces and offices in more ways than simply increasing the cost of end products. Utility fees and other overhead components all have an effect on the bottom line. In fact, electricity prices in the U.S. alone have risen 3.6 percent over the last 12 months, according to the Bureau of Labor Statistics. (That’s higher than the broader inflation rate of 3.2 percent, by the way.)
And while economists can tout “disinflation,” the compounding effects of inflation aren’t going away.
Whether you manage or invest in commercial real estate properties, this is a concern. But you can mitigate rising utility costs if you’re proactive about it. Here are a few ways you can keep soaring utility costs under control for your commercial properties.
1. Energy-Efficient Upgrades
Your first tactic might be additional investments, if feasible. Investing in energy-efficient upgrades is one of the most effective ways to manage utility costs. While there is a higher upfront cost, you can lower your monthly spending and have a positive impact on your bottom line in the long run. Whether it’s installing LED lighting, an energy-efficient HVAC system or motion-sensor lighting in common areas, these upgrades can significantly reduce energy consumption and are often eligible for tax rebates and incentives. Property management software like Quarem can also help you track these investments and their ROI.
2. Energy Audits
Conducting regular energy audits can help you identify areas where energy is being wasted. These audits can also uncover issues like poor insulation, outdated appliances and inefficient lighting. By addressing these issues, landlords can reduce energy consumption and lower utility bills. Software can also help you streamline scheduling and documentation in this area, making it easier to implement recommended changes. As long as you’re proactive and implement these audits into your utility mitigation strategy, you’ll be able to get ahead of any issues and better protect yourself in the future.
3. Smart Technology
Property management software isn’t the only form of technology you should consider utilizing, however. Integrating smart technology can look like adding programmable thermostats, smart meters and automated building management systems. All of these optimize energy use. These technologies also give you control over heating, cooling and lighting, help you use energy more efficiently and only when it’s needed. Property investment software can provide real-time data on energy usage as well, helping landlords make informed decisions about when and where to invest in smart technology for their buildings.
4. Tenant Participation
Did you know that your tenants can have an impact on your ability to mitigate utility costs? They can contribute to higher costs or help you lower them if they participate in mitigation techniques. By encouraging tenants to be mindful of their energy use, you can experience significant savings. Simple measures like the following, for example, can help:
- Turning off lights when not in use.
- Using energy-efficient appliances.
- Participating in recycling programs.
Landlords can communicate with tenants about energy-saving tips and tricks—and track their participation in sustainability initiatives—by using property management software for communicating with them and navigating critical times when energy usage is at its peak.
5. Submetering
If you’re not familiar with submetering, it allows landlords to bill tenants for their actual energy usage rather than dividing costs equally. This not only encourages tenants to be more mindful of their energy consumption, but also provides more accurate billing (and happier tenants). At the very least, you can survey your tenants to see if this is something they’d be interested in. Again, software can help facilitate implementation here, by tracking individual tenant energy usage and generating detailed billing reports for them (and your stakeholders).
6. Optimized Building Operations
Efficient building operations and regular maintenance also goes a long way toward managing utility costs. Make sure you’re doing the basics like regular HAC system maintenance, sealing leaks and ensuring insulation is adequate. Efficiently operating buildings consume less energy, after all, leading to lower utility costs. And with a tool like Quarem on your side, you can easily schedule and track maintenance activities, ensuring all systems are running smoothly.
7. Renewable Energy
Renewable energy sources are another investment worth considering. Solar panels, wind turbines and other renewable energy sources are sustainable ways to offset utility costs. While they won’t eliminate them completely, they can ease some of the burden. The long-term benefits of lower energy bills (and potential income from selling excess energy back to the grid) make the initial investment worth it. And with property management software, you can better analyze the return on investment for renewable energy projects while maintaining ongoing maintenance and tracking performance for these systems.
These are just a few ways landlords for commercial real estate properties can mitigate rising utility costs. To see how property management software like Quarem can help with implementation and tracking for your utility cost projects, request a demo of our tool today.
