What to Know About Multifamily Retrofits

Features January 30, 2025| | Amy Wolff Sorter
Chris Gray

According to Cushman & Wakefield, retrofitting is “the process of making alterations to an existing property to improve its energy efficiency and reduce energy consumption.”

Retrofitting involves a lot of forethought, analysis and research when it comes to multifamily improvements. Or, as EcoSmart Solution’s CEO Chris Gray told ApartmentBuildings.com: “Retrofitting starts with stepping back, determining where energy consumption is going and what’s feasible to implement.” Other issues to consider include:

  • The building’s construction and age
  • The existing energy envelope (insulation and windows)
  • Cost of utility bills and improvement trade-offs

“There are dozens of retrofit options,” Gray explained. “You want to look at the entire study, determine the highest benefit and return, then overlay it with your goals.” He added that EcoSmart’s first step when working with a multifamily client is an energy audit. “From there, we build energy models that help with solutions,” he said.

Financing the Fix

One goal of retrofitting is to save operating expenses, but that occurs down the line. Retrofits involve upfront costs, which could require access to equity through recapitalization or partners.

Then there’s the potential for debt. “Traditional lenders have goals to lend a certain amount of funds to climate-related actions,” Gray said. “Agency lenders also have existing green loans.” Then, there is Commercial Property Assessed Clean Energy (CPACE), a low-cost, long-term financing structure that allows multifamily owners to borrow money for energy efficiency projects.

However, Gray cautioned that securing the right debt financing for retrofits involves much effort and attention. “You have to have someone who can walk the lender through the process and model,” he said. “That provides better prospects for securing the loan.”

Pursuing Best Practices

One takeaway is that not all retrofits are the same. Some involve opening walls to deal with insulation, while others might include upgrading HVAC systems.

“While the typical rehab is vacating, most deals can’t handle this,” Gray said. “It’s better to plan a retrofit in a way that works through vacant units. Figure out ways to work in stages that can work around tenants—either move them to other units for a short period or keep them in place and protect them.”

Starting with the low-hanging fruit could also be an ideal strategy. “Focus on improving lighting or reducing water consumption,” Gray advised. “As units turn, you could access them to install systems upgrades.”

Retrofits should be planned as systems and buildings age. “If you’re starting to get more repair calls and the costs are going up, it’s probably time to think about replacements,” Gray said.

Above all, retrofits shouldn’t be thought of as “one-and-done.” Gray said that the process is ongoing. As such, “It’s a good idea to have someone on your team that can help you pinpoint and plan retrofit strategies,” Gray said.

Other Features

Apartment Construction Slows as Multifamily Market Moves Toward Balance

The U.S. multifamily market entered the fourth quarter of 2026 with declining vacancy, improving rent growth and fewer new apartments entering the market. The result is a sector moving closer to balance, according to Q3 reports from Cushman & Wakefield, MMG Real Estate Advisors, RealPage and Yardi Matrix. However, as real estate is local, conditions...

Continue reading

250-Unit Arcadia Huntsville Lands $53M Refi to Replace Construction Loan

Bobo Development Group and its limited partner Revitate obtained $53 million in senior refinancing for the two-year-old Arcadia Huntsville at 4810 Bradford Dr. NW in Alabama. JLL Senior Managing Director Gregg Shapiro told ApartmentBuildings.com. that a debt fund provided the loan, which will replace the original construction loan. “The property was capitalized with Opportunity Zone...

Continue reading
Sunsweet Apartments modern residential apartment building exterior view

Multifamily Deals Span California, Carolinas and Beyond

Photo: Sunsweet Apartments, Courtesy of Northmarq Multifamily transactions continued to move across a range of markets, from a $45 million sale in Morgan Hill, California, to construction financing for a 24-unit condominium project in Arcadia. The latest deals also include apartment sales in Nebraska and South Carolina, refinancings in Colorado and North Carolina, and financing...

Continue reading
New call-to-action

Brokers

View All

Lenders

View All

Management

View All
Login
or
Sign up