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Multifamily Housing Market FEATURE A combination of innovation, accommodation and determination is helping natural gas utilities achieve success in the challenging multifamily housing market. BY CAROLYN KIMMEL MARKETING TO MULTIFAMILY huck Fraser still remembers when the topic of getting natural gas into the growing multifamily market first came up in a meeting with fellow representatives from other natural gas companies. “The question was asked, ‘How many of you want to get into Cthe multifamily housing market?’ Many hands went up. Then we were asked, ‘How many of you are having success?’ Many hands went down and just a few stayed up. Next question, ‘Are you doing incentives?’ and the same hands stayed up. That pretty much told me, you need to give the developer a reason to change,” said Fraser, an account manager with Atmos Energy. The company’s MidTex Division took those words to heart, and after decades of seeing multifamily markets in their service area go almost completely electric, the tide is turning. Atmos Energy is in the midst of closing on six multifamily housing projects, with one 200-unit project for adults over age 55 completed in Burleson, Texas. By changing their approach, offering incentives and educating everyone involved in the construction project—from architect to developer—that natural gas is a beneficial option, utilities are finding firm footing in the growing multi- family housing market. It’s challenging terrain, however, and natural gas utilities seeking success have to offer up innovation, accommodation and determination. “There’s really nothing magic about it—it takes going to the designers, developers and engineers and talking about the benefits of using natural gas again and again,” said Carl Garofalo, manager, energy solutions, Southern Co. Gas, parent company of Atlanta Gas Light, which is also enjoying success in the multifamily market. It’s an essential path to be on, given the booming multifamily construction market nationwide. 30 AMERICAN GAS DECEMBER 2016 / JANUARY 2017 PHOTOS COURTESY OF CENTERPOINT ENERGY, CARL GAROFALO AND ATMOS ENERGY DECEMBER 2016 / JANUARY 2017 AMERICAN GAS 31 Alta Midtown is one of Atlanta Gas Light’s crown jewels in its recent efforts to expand its reach into the multifamily housing arena. PHOTO COURTESY OF CARL GAROFALO A recently released study commis- will be installed and puts in all the piping sioned by the American Gas Foundation, and meters. Expanding Natural Gas Service to “It does cost the developer to pipe from Multifamily Buildings, cites a Federal the meter to the apartment, and it might Reserve Bank of Kansas City report that cost more for the gas water heater and for shows that in the past decade, multifamily the gas cooktop, both of which we require construction has risen from less than 25 in our projects. Our study showed that a percent to one-third or more of newly built developer would pay about $500 more per residential dwelling units. unit,” Fraser said. “The company’s decision A key finding of the study states that to fund the main on the property and if natural gas technologies were applied acquire the easement could be a way the across all or at least part of the nation’s developer offsets some of the additional multifamily building stock, unit occupants upfront cost of using gas.” could realize $2.2 billion in reduced Across the board, the fact that virtually annual energy bills, or about six percent of all the units in a complex will produce total energy expenditure for multifamily margin in year one makes this investment units in the United States. On top of comparable to a subdivision, Fraser said. that, carbon dioxide emissions would be Considering the growing trend toward reduced by an impressive 20 million tons or multifamily housing construction, these more nationwide. apartments might take the place of what With results like that, experts predict used to be single-family homes, and Fraser that multifamily construction will hold added, “If we don’t go after them, our new onto its high share of new construction customer additions could start to decrease.” over the next two decades, creating Similarly, Atlanta Gas Light started enormous opportunity for natural gas. recognizing the multifamily housing trend in 2012, but its efforts were not reaping PHOTOS COURTESY OF CENTERPOINT ENERGY A NEW APPROACH success, so it overhauled its program in CenterPoint Energy focuses on educating trade allies on how to sell the value of natural gas to end-use customers. When Atmos began refocusing its efforts 2014, Garofalo said. on the multifamily market, it re-thought “We had a one-size-fits-all mentality its approach of requiring all on-site piping where we went after everybody the same be furnished by the developer. Now, at way. We were talking to the developer or the beginning of each project, Atmos the engineer, and we didn’t address each purchases the easement where its gas mains project as a whole. We needed to talk to 32 AMERICAN GAS DECEMBER 2016 / JANUARY 2017 all the decision-makers to get feedback expanding natural gas service in America’s innovations in technology, program design and tailor our proposal just for them,” multifamily markets. and marketing that have enabled some gas he explained. “Architects are more artists The project took into account the utilities to gain market share in their multi- than structural designers, and they may growing importance of the multifamily family markets. not realize the technical or economic housing market nationwide; the continuing The biggest challenge, Garofalo said, is values of natural gas. An architect may challenges faced by natural gas utilities the myth that natural gas costs too much. pick a gas range for its aesthetic value; in their efforts to expand service to new “You have certain firms whose specs in an engineer may pick a tankless water and existing multifamily buildings; the multifamily housing are total electric. heater or gas heater for its value in the technical, economic and environmental They have floor plans that they carry way of cost saving.” benefits of using natural gas; and recent from project to project with universal By packaging options together, the company could raise awareness of the total natural gas package available. The 369-unit Alta Midtown—one of the crown jewels of Atlanta Gas Light’s recent efforts to expand its reach into the multifamily housing arena—is proof that PROTECT LIVES the company’s strategy is working. Outdoor amenities include a brick pizza oven, fire pit and grilling area, and inside, each unit & PROPERTY. features natural gas heat, water heater, range and clothes dryer. “Increasingly, renting is the prefer- AND MORE. ence for millennials, empty nesters and WE DO THAT. urbanites,” Garofalo said. “Everyone wants to live, work and play in the same With the highest level of accuracy in utility community. That creates density and more locating, we’re shattering industry standards multifamily development.” for damage-to-locate ratios. But there’s more Overall, since 2014, Atlanta Gas Light to us. Our family of companies provides: has secured contracts to serve approxi- mately 40 new developments with more • Telecom, Electric & Gas Construction than 6,500 individual units and about $1 • Wireless Network & Tower Construction million in annual revenue. This year, the • Professional Services & Site Development utility expects to add natural gas appliances • Underground Utility Locating to another 2,000 multifamily units in the midtown Atlanta area. When you work with us, you will know Predictions are that metro Atlanta will you’ve hired the right people for the job, add more than 20,000 multifamily units no matter what the job. between 2014 and 2018; this represents ® a potential revenue growth between $2 We’ve Got This. million and $3 million per year for Atlanta Gas Light, Garofalo said. The company is also expanding into subsidized, low-income multifamily projects. It just completed a 240-unit building in Augusta, Georgia, that will have natural gas heat and water heaters. Ready to dig in? The company is also ramping up its efforts Call us at 800-757-6842. to protect its existing stock of aging SNCOMM.COM multifamily units, combating conversion incentives being offered by electric utilities. KNOCKING DOWN BARRIERS AGF’s multifamily study grew out of a Our Subsidiary project designed to identify the barriers, Partners benefits and solutions associated with DECEMBER 2016 / JANUARY 2017 AMERICAN GAS 33 layouts that remain similar and are for fellow natural gas companies wishing to START HERE FOR SUCCESS copied and pasted from project to project,” break into the niche: he said. “We had to get inertia moving The American Gas Foundation report, in our direction, and once we did, we DO YOUR HOMEWORK. At Atmos Energy, Expanding Natural Gas Service to had success after success.” a task force was established to assess the Multifamily Buildings, offers case studies and highlights methods for utilities seeking Education of trade allies, including potential, define the product and develop to find success in the multifamily sector. builders, architects and engineers, on how a sales plan. The task force began by These include having: to sell the value of natural gas to their end- commissioning a local engineering firm use customers is key to success, according with multifamily construction experience INTERDISCIPLINARY STAFF such to Rafi Sohail, director of regional sales to study comparative costs of gas versus as a team of people with a mix of sales, technical and management skills to and tech support for CenterPoint Energy, electric service for multiple end uses. support outreach, engagement, technical which has also enjoyed success in the To counter the tendency by contrac- assistance and project management multifamily market. tors to overestimate the cost of natural gas support.
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