Rising energy costs and the environmental impacts of energy consumption are at the forefront of Canadians’ minds. Statistics Canada reported that Alberta’s electricity prices rose by 128% year-over-year in July. These increased costs, along with the environmental impacts around energy consumption, have prompted organizations and individuals to look for ways to reduce their utility usage. 

Traditional methods of charging residents for utilities by including them in fees (based on square footage, for example) might seem straightforward on the surface, but it can end up costing both property owners and residents more.  

Residential and commercial buildings in Canada account for 17% of our energy consumption. Reducing that consumption is a key part of the overarching strategy to reduce our greenhouse gas emissions and help meet the Government of Canada’s commitment to achieve net-zero by 2050.  

Different Methods of Utilities Distribution 

There are three main ways to deliver utilities to a residential unit in a multi-family property.  

1. Master meters: Traditionally, utilities have been delivered to a master meter, and the total cost of these services is split evenly between the units and included in each resident’s monthly rent. Every resident pays the same price, regardless of how much water or electricity they use each month.  

2. Individual unit meters: Some properties use individual meters in each suite, and utility hookups and pricing are managed directly by the resident. They assume the costs of access fees and other riders connected to their utility bill and are subject to rate fluctuations. In this case, property owners have no visibility into what the resident is using or how much they pay. 

3. Submeters: Properties with submeters receive water, gas, and electricity through a master meter, but also have a submeter in each unit to measure individual consumption. Residents pay the submetering company for their utilities, based on how much they use. The property owner might assume the access fees and the resident may have the benefit of a lower rate if the property manager has negotiated one with utility providers. 

The Benefits of Submetering 

When it comes to energy consumption, knowledge is power. With submeters in each unit, both residents and property owners have a deeper understanding of consumption habits and opportunities to reduce waste. 

A clear picture. Individual submetering allows residents to see how much energy they use, and property owners can understand their residents’ usage. With a clear picture of consumption, property owners can make informed decisions about equipment maintenance and upgrades, finding ways to optimize the building’s energy use overall. In turn, residents can see their own consumption patterns, and make decisions accordingly.  

Responsibility… and accountability. With submeters, residents are responsible for their own energy, heat, and water use rather than paying a portion of the bill for the entire building. They only pay for what they use, rather than what their neighbours might be consuming. This motivates residents to be mindful of their daily energy usage. 

The potential for better rates. Some property owners, like Avenue Living, can negotiate lower bulk utility rates for their residents rather than a single customer could on their own. In addition, property owners might assume some or all of the access fees.  

Environmental benefits through reduced emissions. Studies suggest that submeters can reduce a building’s energy consumption significantly — a study in New York revealed that submetering reduced consumption by 18-25%, while a building in Ontario recorded even bigger savings (approximately 40%). This is likely because residents can see their consumption and make choices to reduce it, and property owners can realize the tangible benefits of installing energy-efficient fixtures.  

Increased efficiency and building value. The ability to monitor consumption also helps property owners and managers spot equipment failures or building inefficiencies. A spike in water consumption could indicate a leak, for example, or high energy use could flag the need for appliance upgrades. This insight allows the property owner to be proactive about maintenance, increasing the property value and comfort for residents. 

Avenue Living’s Submetering Strategy 

Avenue Living has transitioned several buildings to a submetered system. The submeters we have installed are certified by Measurement Canada, and the program is implemented through a certified third-party provider.  

“Avenue Living still covers the cost of utilities in common areas and vacant units,” notes Daniel Klemky, Energy Manager at Avenue Living. “But with submetering we can now give residents the tools to take control of their own costs and be accountable for them. In many cases, we also give people the benefit of a much lower utility rate, due to our negotiations with the providers as part of our procurement strategy.” 

The comprehensive insight we get from submetering will allow us to accurately measure the impact of our energy efficiency capital improvements (e.g., replacing a furnace or installing solar panels). And as we continue to upgrade our properties through the deep energy retrofit program, in partnership with the Canada Infrastructure Bank, submetering will play a crucial role in meeting the reporting and data collection requirements.   

Submetering provides numerous benefits to both the resident and the owner and is becoming a common tool for property managers to quickly take control of energy consumption, and reduce emissions and operational costs.  

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at https://www.avenuelivingam.com/forward-looking-statements for additional information regarding forward-looking statements and certain risks associated with them. 

As cities across North America deal with a growing crisis in affordable housing, it is clear that the solution is not one-size-fits-all and it involves more than simply building new stock. The Canada Mortgage and Housing Corporation (CMHC) estimates that Canada needs to add an additional 3.5 million units, above the current build pace, by 2030 to restore housing affordability. With rising interest rates and inflated costs, the ability to own a home is becoming out of reach for many. Further, there’s a concern that there are not enough rental properties for the population who need them. Add to that the constraints of building permits, labour shortages, and spiralling costs for developers, it is essential to look at other ways to support individuals and families. One such approach is to retrofit existing housing stock.  

While building new homes is essential and necessary, reinvigorating existing housing is equally as important to ensure that people have safe and comfortable homes and to curb greenhouse gas emissions. With approximately 90% of Canada’s existing multi-family housing built before the year 2000, many of these buildings are reaching an age where renovations and upgrades are required to improve overall energy efficiency and quality.  

In a recently published CMHC report, it states that in order to achieve housing affordability, there must be a “variety of housing options available” including those for both ownership and rental, a mix of single-family and multi-family homes, and new builds and retrofits. “Partnerships and innovation are needed in all parts of the housing system,” says the report.  

Strategic Retrofits Are Key 

In 2022, Avenue Living embarked on a landmark partnership with the Canada Infrastructure Bank and other key industry partners to retrofit approximately half of its multi-family portfolio. The initiative demonstrates a solid business case for the property management industry to make widespread changes.  

Catalys, an energy and sustainability program designer, and one of the partners we have engaged to help achieve our deep retrofit goals, understands exactly what a difference these improvements can make. The firm has a track record of working with a variety of enterprise clients to help reduce their environmental impact by designing energy and sustainability programs, either through retrofits or improved processes. Catalys employs a data-driven technology and AI analysis model that helps property owners maximize the environmental benefits of retrofits and other investments. 

“The environmental impacts of demolishing an existing building and replacing it with a new development can be significant,” says Luke Ferdinands, CEO of Catalys. “Both deconstruction and construction are waste-intensive, and a deep refurbishment of an existing building cuts operational carbon emissions — without the emissions associated with building new.   Approximately 60% of embodied carbon emissions are associated with the sub-structure, frame, upper floors, and roof of a building. A deep retrofit will generally retain these elements, meaning on average, the carbon footprint of a refurbished building is about half that of the newly-built replacement.”  

The firm has provided consultation and support to Avenue Living throughout the project, from feasibility studies to ongoing program management. As the retrofits scale, Ferdinands and his team will continue to assist with managing complexity, verifying performance, and measuring success through data tracking and analysis.  

Benefits of Retrofits, from the Bottom (line) Up 

Retrofitting can be completed much more efficiently than new builds, which often require lengthy schedules due to permitting and other considerations. “In Canada, a new building can take well over two years to be completed”, says Ferdinands. “Retrofits can take far less time — and they can benefit from streamlined processes that some municipalities have in place to expedite the permitting for such projects. 

“When executed properly, deep retrofits can deliver buildings that appear to be totally different — they look newer and with a more modern aesthetic,” continues Ferdinands. “But more importantly, the resident experience of living there is also significantly improved.” 

Studies show that living in an energy-efficient or “green” building improves residents’ overall quality of life. Not only are they living in more comfortable spaces, but they experience better health through upgraded lighting and balanced heating and cooling. In many cases, these buildings can become a vital part of the social fabric of a community — as Canada’s Green Building Council (CGBC) notes, “everyone benefits when community members have access to healthy, affordable housing and when communities are resilient and can withstand extreme weather events.” 

Not all retrofits involve turning over the entire building; some upgrades can be quite simple, yet still achieve positive results. Less complex upgrades, such as boiler replacement or rooftop solar PV installations, mean residents can remain in place as retrofits occur with minimal disruption in their daily lives. “From a continuity perspective, it’s really important to make these upgrades as seamless as possible  to minimize the impacts to the people who have made that building their home,” says Ferdinands. 

These retrofits bring aging stock up to today’s standard, but they also ensure buildings are optimized for the future. “We’re making these buildings much more resilient,” says Ferdinands. “With more extreme weather — hotter summers, colder winters, and wildfire smoke – these upgrades really tighten up the building. We’re redoing roofs, adding insulation, improving windows, all of which help the building perform better in different conditions.” 

Social Benefits 

Ensuring existing buildings remain comfortable, desirable, and affordable places to live helps preserve communities. The ability to live in established neighbourhoods close to transit routes, schools, employment, and amenities offers a better quality of life for renters and encourages neighbourhoods to remain vibrant. Residents who are happy with their neighbourhood and comfortable in their homes are likely to stay, bringing added economic stability to a community. In addition, retrofitted, affordable rentals support a growing and stable population, and encourage local economic growth as working renters, seniors, and children all participate in their community, supporting nearby businesses and services. 

“Renewing these older buildings is vital for communities,” says Gabriel Millard, SVP, Capital Markets – Equity & Research, who notes that many are often demolished and replaced with larger, more expensive rental properties. “In Canada, where we have fewer and fewer options at the less costly end of the rental spectrum, renewal helps extend the lifespan of these buildings so they can keep housing families. We’re making sure that important piece of the rental puzzle stays on the market.”  

Retrofits for the Future 

As we deal with two major challenges — housing affordability and environmental impact — it’s becoming clear that retrofits to existing buildings are a key part of the solution. Through a strategic and sustainable implementation, property managers can bring buildings up to date without losing occupancy. At the same time, residents can reap the health, social, and financial benefits of having a comfortable, affordable place to live in an established community.  

This commentary and the information contained herein are for educational and informational purposes only and do not constitute an offer to sell, or a solicitation of an offer to buy, any securities or related financial instruments. This article may contain forward-looking statements. Readers should refer to information contained on our website at https://www.avenuelivingam.com/forward-looking-statements for additional information regarding forward-looking statements and certain risks associated with them.