Key Takeaways:
Developers can unlock new revenue streams through demand response programs, EV charging integration, and energy resale—while also qualifying for federal tax credits of up to 40%.
Improving NOI through energy autonomy not only boosts financial returns but also strengthens ESG positioning and long-term asset value.
The multi-family real estate sector is poised for growth in 2025, with strong renter demand driving improved occupancy and accelerating rent growth. The latest CBRE report projects the average multi-family vacancy rate will be about 4.9%, with average annual rent growth at 2.6%.
At the same time, the multi-family housing sector faces rising operating expenses, including utilities and insurance, and elevated interest rates. Uncertainty over tariffs could increase prices for building supplies, making new construction more difficult. These factors are compressing net operating income (NOI) margins, making it more critical than ever for property owners and investors to manage expenses effectively.
While many factors are beyond developers’ control, utilities are a significant and controllable expense. Implementing on-site power generation and energy storage solutions can help mitigate utility costs, enhance energy resilience, and improve margins.
Operating expenses (OpEx) for multi-family housing can vary greatly based on the region, the state of the property, and other factors. Most multi-family real estate developers face expenses related to property management fees, maintenance and repairs, property taxes, insurance, administrative costs, landscaping, security, and utilities.
Utility expenses for multi-family buildings may include water/sewer, gas/electric, waste management, and internet or cable for common areas. These expenses often comprise 15-20% of OpEx in multi-family and mixed-use properties, according to a recent report, making utility costs a “hidden giant” in multi-family real estate OpEx.
Utility usage can vary considerably across regions and climates. Grid prices are often volatile, especially in the U.S.. Here’s a breakdown of factors impacting recent price fluctuations:
Traditional energy models that place full dependency on the public grid are increasingly unsustainable for builders and developers. Price fluctuations, along with increasing demand on aging infrastructure, introduce elevated uncertainty related to how much to budget for utilities in any multi-family development.
Some developers want to incorporate renewable energy sources, such as solar arrays, to provide support during peak demand times when local utility prices tend to spike. While adding renewables can make a big difference, it can take up to four years to process an interconnection agreement with a local utility. If you’re trying to move quickly, waiting on the “slow gears of bureaucracy” to turn can become a costly bottleneck.
Beyond delays, a lack of control over energy use and sourcing can mean higher monthly utility bills, including peak demand charges. Peak demand charges will comprise a significant percentage of your energy costs and are difficult to predict without an onsite energy management system to provide flexibility and visibility.
Diesel generators can provide backup power in emergencies, but they are not ideal for long-term energy management. They rely on non-renewable fossil fuels, are expensive to run, aren’t built to sustain prolonged outages, and frequently require maintenance. In an era when organizations prioritize decarbonization and ESG commitments, continuing to depend on gas-powered generators is not a viable solution.
For most developers, utility costs represent a non-negotiable line item in their operating budget. With the right tools and knowledge, however, power can become a controllable expense and even a new source of revenue.
Virtual UtilityⓇ represents a new solution for powering multi-family residential buildings, such as condos, apartments and independent or assisted living facilities. It offers the power of a public utility on site, giving owners the ability to control costs and ensure uninterrupted operations in the event of severe weather events or grid outages.
Powered by the R3Di® System and Grove365’s intelligent energy management software, this next-generation microgrid transforms traditional utility usage into a dynamic asset. You’ll gain real-time control over your energy resources, access to automation tools, and responsive ongoing support from our team of experts.
Enabling proactive strategies such as peak shaving, demand response, and precision load management, Virtual UtilityⓇ helps you reduce your dependence on the grid during high-cost periods — and even take advantage of utility programs that pay for reduced consumption at critical times. You can incorporate onsite renewable resources such as solar panels and wind turbines without waiting for an interconnection agreement. Depending on your utility’s policies, it may be possible to sell excess energy from renewables back to the public grid, creating new income streams for your real estate development.
Additionally, multi-family real estate buildings can earn additional revenue from integrating EV charging stations into the system.
Ultimately, the financial impact of long-term savings is tangible.
In one scenario, a real estate complex with 272 units using about 1.5 megawatts of power per month will earn $115,000 annually by installing six EV charging stations alongside the R3Di® System.
A turnkey microgrid solution increases your energy autonomy, or ability to generate electric power apart from the public grid. With visibility into energy usage and the tools to manage it effectively, you can reduce carbon emissions, increase fuel flexibility, and improve ESG scores. This adaptability allows you to stay agile, decarbonizing today while preparing for tomorrow’s regulatory and technological changes.
Resilient energy systems also improve operational stability, reducing the risk of tenant displacement and equipment failure. Lenders expect projects to meet standards such as LEED, ENERGY STAR, and other resilience benchmarks, so improvements in this area will boost your credibility with investors.
Integrated energy platforms that deliver both efficiency and reliability will help you qualify for better financing terms, and you’ll demonstrate a commitment to responsible, future-ready developments.
Choosing a ready-to-implement microgrid solution also yields tax benefits and savings opportunities:
When energy is a controllable expense instead of a fixed cost, you’ll achieve significantly lower utility bills, higher energy efficiency, and the potential for additional revenue from demand response programs. All these improvements to your bottom line drive higher Net Operating Income (NOI), a key to increasing property value.
When you implement the R3Di® System, you’ll immediately reduce operating costs and strengthen long-term resilience, improving your return profile. If your property is in a competitive market with high supply and tight margins, these financial advantages give you an advantage when it comes to winning investors and tenants. Improving your NOI and cap rate doesn’t simply cut costs — it makes your property more valuable, attractive, and future-proof.
Energy might be costing you more than you think. While some items in your OpEx cost list will remain beyond your control, power doesn’t have to be one of them. With a turnkey microgrid solution, you’ll have visibility into usage and automated adjustments to compensate for peaks and valleys in demand.
Benchmark your current utility spend and use our calculator to see how much you could save with Virtual UtilityⓇ.