4 Property Types That Benefit Most from Submetering

Submetering, a utility billing arrangement where each unit or common area has its own meter to get exact readings on utility consumption, offers many benefits to a variety of property types. In this blog, we explain those benefits and property types. 

Why Should You Submeter Your Property?

Submetering is the best way to fairly and accurately allocate gas, water and electric utility costs to individual units within a property. This improves utility cost recovery (and NOI) by ensuring that residents and tenants alike are billed according to their actual usage.

That’s why many property owners, landlords and management groups elect to submeter their properties. No matter what type of multifamily, muti-tenant or mixed-use property you own or manage, submetering can be a beneficial utility billing setup for three main reasons.

• Submetering increases cap rate by improving NOI – With submetering, you take the variability out of utility costs by billing them back to your tenants.
• Submetering reduces utility consumption – When tenants get billed for their utility usage, they tend to use less.
• Submetering unlocks detailed metrics and actionable analytics – Submeters track utility usage, creating lots of utility data. Property owners and managers can use that data to make strategic changes to their property.

When installed properly, a submetering system can be tailored to the specific property and needs of stakeholders, including owners, investors, management and tenants – delivering even better utility cost recovery. Here are the four different types of properties that benefit most from this utility billing system.

4 Properties That Benefit Most from Submetering

#1. Multifamily Residential Properties

Submetering is most commonly associated with multifamily properties for good reason. Aside from mortgage and property taxes, multifamily utilities are the largest expense property owners face. Unlike mortgage payments and taxes, utilities are not a fixed cost. So, if you charge a flat rate for utilities or include utilities in rent, odds are you’re not recovering the full cost of utilities every month.

Multifamily properties like apartment complexes, condominiums and townhomes are all well-suited for submetering.

• Apartment Complexes: Depending on the age and utility set-up of your apartment property, you can submeter each unit to ensure residents pay for their utility usage.
• Condominiums: Like apartment complexes, individual billing ensures that each unit pays for its actual usage, promoting fairness and efficiency.
• Townhomes: Submetering townhomes gives residents more control over their utility bill. Plus, a townhome community layout allowing for individual utility lines to each home is conducive for submetering.

#2. Commercial and Industrial Properties

Commercial and industrial buildings also do well with submetering. In addition to recovering utility costs, submetering individual areas of an office building or retail space can give property owners better insights into utility usage across the entire building. This allows them to make informed improvements to make the building more energy efficient.

• Office Buildings: Submetering can track utility usage in multi-tenant office buildings where different businesses may have varying levels of consumption.
• Industrial Parks: Different industries have different utility needs. Submetering ensures each tenant is billed for their specific consumption.
• Retail Spaces: Shopping malls and strip malls can use submetering to bill tenants fairly based on their specific utility usage. Storefront size and hours of operation can all impact utility usage, and a flat fee isn’t sufficient to account for these differences.

#3. Mixed-Use Developments

Both multifamily residential and commercial properties can be submetered, so it makes sense the mixed-use properties can benefit from submetering, too.

Mixed-use properties are made up of different residential buildings, businesses and retailers. With the right set up, you can bill precisely across these different types of spaces, accommodating the varied utility usage patterns. Plus, utility usage data allows you to make improvements where necessary, further reducing utility costs across your mixed-use development.

#4. Residential Communities

Lastly, many residential communities struggle to charge residents fairly for utility billing. Submetering also works well in single-family residential arrangements. Two types of setups that stand out in this category are homeowners associations (HOAs) and mobile home parks.

• HOAs: Rising utility costs can quickly cause financial issues for HOAs. Submetering allows them to fairly bill homeowners, cutting expenses and making it much easier to balance the budget.
• Mobile Home Parks: With how spread out and exposed to the elements mobile home parks can be, utility billing can be a challenge. A well-planned submetering system can alleviate these challenges and make it possible to better allocate utility costs.

No Matter the Property, a Utility Billing Partner Can Help Your Submeter it Properly

Whether you own a portfolio of multifamily properties, head your HOA, or manage a corporate office park, your property stands to benefit from submetering.

While submetering systems can be tailored to meet the specific needs of your property, planning, installing and maintaining a submetering system is no easy feat. If you’re considering submetering your property, you may also want to consider working with a utility billing company.

The right utility billing partner can help you every step of the way, no matter what type of property you’re trying to submeter. From installation to optimization, a utility billing expert with experience submetering a wide variety of properties can help you get the most out of your submetering system so you can reliably recover utility costs and better manage utility usage across your entire property.

Want to reap the benefits of submetering? Get in touch with Synergy today. Our experts will be happy to help you sort through your options.