Energy Cost Reduction Strategies for Multifamily Properties

Multifamily properties face energy cost challenges a single-tenant office building never has to solve: mixed metering, shared common-area systems and resident energy use the owner doesn't fully control. Reducing energy spend here starts with figuring out which of those three problems is actually driving the bill.

Why do multifamily properties face different energy costs than single-tenant buildings?

In most commercial buildings, one tenant or operator controls the majority of energy decisions and sees the cost on one bill. For multifamily properties, that control is split across the owner, the property manager and dozens or hundreds of residents, each paying a different share depending on how the building is metered. Understanding utility rate structures matters here, but the metering setup on top of that rate structure is what actually determines who has the incentive to cut usage.

What's the difference between master metering, submetering and RUBS?

Some properties use master metering: the whole building is billed as one account, and the owner absorbs the full cost. Others submeter, installing individual meters so each unit is billed for its own usage, the way a single-family home would be. A third approach, Ratio Utility Billing System (RUBS), estimates each unit's share of a master-metered bill using a formula based on square footage or occupancy, rather than measured usage. Each approach puts the cost reduction incentive in a different place: master metering puts it entirely on the owner, submetering puts it on residents and RUBS splits it in a way that can blunt the incentive for anyone to conserve.

Where does the biggest energy waste show up in common areas?

Common areas, corridor and stairwell lighting, lobby HVAC, laundry rooms, parking garage ventilation and pool equipment, are almost always billed to the owner regardless of metering type, and they typically run on fixed schedules rather than actual demand. According to the U.S. Department of Energy's Better Buildings program, shared building systems like these are a common source of avoidable energy use in multifamily properties precisely because they aren't tied to occupancy. Moving common-area lighting to occupancy sensors and putting HVAC on real schedules costs the owner controls directly, independent of how individual units are metered.

Does upgrading HVAC and lighting actually pay off in a multifamily building?

It depends on the age of the equipment and how it's currently controlled, but the highest-return upgrades are usually the ones tied to systems that run constantly: corridor lighting, exhaust fans and pool or laundry equipment on a timer rather than a sensor. Unit-by-unit HVAC and appliance upgrades tend to pay back more slowly for the owner, since the savings usually flow to the resident under submetering or get diluted under RUBS.

How much control do property owners actually have over resident energy use?

Less than they'd like, especially under master metering or RUBS, where a resident running the air conditioning constantly costs the property the same as one who doesn't. According to ENERGY STAR's Portfolio Manager guidance, properties that benchmark their energy performance consistently identify common-area and shared systems, not unit-level usage, as their most controllable reduction target. Where submetering isn't feasible, a defined maintenance and replacement cycle for common-area equipment is the more realistic lever left to the owner.

Key Takeaway

Energy cost reduction in multifamily properties depends on knowing who actually controls the spend. Common-area systems and shared equipment are the owner's most direct lever regardless of metering type, while submetering is what aligns resident behavior with resident cost. Getting the metering structure right is often a bigger factor than any single equipment upgrade.