By Jack Stubbs
In an era where sustainability in the built environment is one of the main concerns for building designers and developers, commercial real estate tech platforms nationwide are looking for new ways to track the environmental footprint of commercial and residential buildings.
WegoWise, a company founded in 2010 and headquartered in Boston, is a platform that analyzes and benchmarks the environmental footprint of multifamily buildings. We recently spoke with Laila Partridge—who joined the company in 2016—about the platform. We discussed the goals of the platform, how sustainability in the built environment remains a pressing national concern, and how community awareness around resource preservation has been evolving over the last several years.
What can you tell me about WegoWise and what are some of the day-to-day services that the platform provides its clients?
WegoWise’s technology platform automates utility data collection for customers interested in using that utility performance data to: identify and take quick remedial action on faulty equipment or excessive utility spend; prioritize property retrofits and validate performance improvements once retrofits have been completed; determine a property’s ability to qualify for a green mortgage; and comply with city, state, lender, and investor sustainability and [environmental, social and governance] reporting.
WegoWise works with owners and operators of portfolios of multifamily properties throughout the U.S. The company’s software-as-a-service (SaaS) products are now used to benchmark utility and water usage in more than 57,000 buildings comprising 2 billion square feet of multifamily housing in the United States.
Are there certain cities/markets in the country that are experiencing particularly pronounced challenges when it comes to monitoring/regulating energy/water usage in buildings?
Real estate and utility performance issues are regional. Water is of particular concern for most owner/operators since leaks are costly and can also cause property damage. Draught or low water accessibility areas acerbate this with rising rates.
Due to drought, the entire state of California struggles with water issues. Multifamily needs to play a role because [the properties require] such a concentrated user of water. The split incentive issues make it hard, however, as the residents are the primary users, but they generally don’t pay the bills. There are a lot of existing buildings that struggle with conservation and monitoring. Other areas of the country like Detroit, Baltimore, San Francisco and Chicago all have raised water and sewer prices significantly to pay for infrastructure improvements. These rate hikes—nearly 50 percent since 2010 across 30 major cities—hit housing hard, in particular affordable housing. This is a huge challenge for the next 10 years.
The platform serves a wide array of industry professionals, from property owners and managers to energy service providers to energy efficiency programs. Who are some of the platform’s clients, and how does the platform ensure that its goals/objectives are scaling effectively across these different groups?
WegoWise has a powerful suite of analytics and data visualization tools that provide asset performance visibility across large and diverse portfolios. The platform can be customized to provide actionable information at a meter, building, property, and portfolio level.
Customers include the City of Los Angeles, Elderly Housing Management/Community Housing Management, Inc., Homeowner’s Rehab, Inc. (HRI), Peabody Properties, Volunteers of America, and Wingate Companies.
Sustainability in the built environment has become an increasingly prevalent concern for tenants, clients, developers and architects across the board in the industry. Can you elaborate upon the intersection of data analytics (Saas), sustainability and the operational/functional performance of commercial and residential real estate assets?
Sustainability efforts are being driven by several macro trends. Major U.S. cities’ growth rates are outpacing utility infrastructure capacity, [which leads] to urban planning challenges. In response, municipalities are passing city ordinances to drive building energy efficiency. Non-profits are helping: The City Energy Project participants doubled to 20 and others have announced evaluations. Forward-looking states, such as California, are joining the trend, driving requirements statewide. Capital markets are increasing pressure on building owners, adding reporting requirements for cheaper capital: CalPERS has added building energy reporting requirements for any real estate it funds. Green multifamily mortgages from Fannie Mae, Freddie Mac and HUD represent [approximately] 15 percent of all new mortgage underwritings (estimate: $45 billion out of $253 billion in total underwritings in 2017).
At the heart of these trends is the need to measure utility performance. Performance cannot improve unless it is first measured and then analyzed. Good analytics require good data and WegoWise is the leader on data quality in the multifamily sector. WegoWise is one of only two companies that provide in-house automated utility data collection for multifamily. WegoWise also provides data collection for commercial and residential.
How does the company sit at the next of these three broader fields?
Business intelligence is about receiving actionable information in a timely fashion. Since [its] inception, WegoWise has focused on actionable information, not just data. We aim to help property owners and operators improve NOI and asset values with actionable information from utility data. More recently, we [have been] working with underwriters of green mortgages that aim to improve sustainability and utility performance in multifamily properties
With an emphasis on sustainability, outreach with clients and the wider community seems central to the goals of the company. Can you elaborate on the importance of community involvement when it comes to addressing issues in the built environment?
Community involvement has been, and will continue to be critical. Community can be defined in many ways. [This can include] individuals living in an apartment building or condo that start a recycling program; local organizations like Mothers Out Front; broader change agencies like HUD and EPA who sponsor a variety of incentive programs; and non-profits like Natural Resources Defense Council and Institute for Market Transformation who fund those programs. There is a broad range of community driven efforts taking place nationwide.
Have you seen community awareness around energy/water usage increasing over the last few years? How will further educating people—changing the conversation around sustainability—continue to play a role?
Absolutely! When we were founded 8 years ago, we found ourselves having to educate the concepts of sustainability and data analytics. These days, the conversation is no longer about education; it has finally shifted to a discussion about how our platform and tools can help.
I think more and more, property owners and managers now see their sustainability activities as having a direct impact on the broader community. The education impacts their current tenants and touches other parts of the community once those tenants move on to own homes or live elsewhere. It makes good business sense, of course, to adopt cutting edge waste and utility management practices—but they also understand the important role they play in the community and want to lead by example.
In broader terms, how do you think technology will continue to play a role in the ever-evolving real estate industry, especially when it comes to tracking energy/water usage?
Technology will continue to grow and evolve. For the near term, getting good reliable utility data will remain a key challenge for any platform. The decreasing cost of sensors and proliferation of smart home devices will have a dramatic impact on tracking everything in real-estate, including energy and water. We are still in the early adopter phase of that cycle—especially given the complex challenges apartment communities pose for the technology—but in 10 years, most buildings will be spitting out massive amounts of data. The key will be interpreting that data in a useful and actionable way.
Is there anything in particular that concerns you about the commercial and multifamily real estate industries moving forward?
Real estate is a cyclical business. Based on a number of leading indicators, we are likely heading towards a down cycle. Since we help owners and operators manage expenses, a down cycle is good for our business. However, there are always unpredictable aspects of down cycles, so it is worth keeping a close eye on.
We are excited about the work we are doing with mortgage underwriters of green loans. It is a growth area for us and one that we think has terrific upside for our company. Near term expansion will be within new portions of the multifamily ecosystem rather than expanding into new sectors.