HVAC is one of the most expensive and operationally complex systems a multifamily operator manages. It’s also one of the easiest to underprioritize when budgets are tight, and equipment appears to be running just fine. The challenge isn’t a lack of awareness. It’s that the costs of deferred maintenance and suboptimal system settings tend to be invisible until they aren’t, arriving as emergency replacements, utility overruns, or resident complaints rather than a clear line item that could have been prevented.
Before “smart tech” can be deployed in HVAC systems, facility managers and contractors recommend establishing the foundation of preventive maintenance right in the first place. Many of the energy management mistakes made in HVAC are operational and, oftentimes, not terribly complex, according to the experts we spoke with. Building automation systems may show optimal performance numbers, but the analog equipment beneath them may still be operating on schedules programmed several years ago at installation.
This report draws on wide-ranging conversations with building operators, facility managers, and HVAC contractors, who tell us the biggest mistakes they see in multifamily HVAC programs and how to correct them. That includes not asking ROI questions during the building design phase, not doing ground-up budgeting every year, and having low visibility at the asset level of each piece of HVAC equipment.
Back to the basics
Before any discussion of smart systems or energy dashboards, the foundational issue is that routine maintenance is being deferred across a significant portion of HVAC stock. Robert Martin, Vice President of Hard Services at Lessen LLC, puts it plainly: the goal of a preventive maintenance program is to find and fix things before they break. Most operators are not doing that. They are waiting for failure.
“When you leave it up to reactiveness — ‘the equipment’s running right now, I’ll replace that part when it fails’ — nine out of ten times it’s going to fail in the middle of summer or the middle of winter, when you need it most,” Martin said.
The consequences compound. A unit that is not receiving quarterly PMs degrades faster. Condenser coils that are not cleaned stop rejecting heat efficiently, which drives up compressor load. Filters that are not changed on a proper schedule restrict airflow, which is responsible for roughly 80% of HVAC problems in the field. Once airflow is compromised, the damage cascades through the system. By the time a technician is called, what would have been a $200 coil cleaning is now an $8,000 compressor replacement.
“This has been a problem in the industry for years,” Martin said. “Customers defer maintenance because the equipment is running. They don’t want to spend the money to keep it running. They’ll wait until it gets worse. But what’s your definition of worse? When it completely fails?”
Code-compliant, but not cost-effective
A separate but related issue affects properties from the moment they are built. Frank Camble, General Manager of The Cooling Company in Las Vegas, coordinates multifamily HVAC projects from design through installation and has worked on more than 40 commercial contracts in the Las Vegas market. His observation is consistent with what contractors see across high-growth Sun Belt markets: the energy management conversation occurs after the specification is locked.
“The projects that manage energy costs well share one trait: the owner was asking ROI questions during the design phase, not just cost questions,” Camble said. “That changes what gets specified, what gets installed, and what the operator is managing five years later. Most aren’t having that conversation. By the time I’m on-site with the GC, those decisions are already locked in.”
Martin adds a dimension that is easy to miss: the same building prototype is often replicated across very different environments without adjustment. A prototype designed in a temperate inland climate gets built 10 miles from the Florida coast, and the operator wonders why equipment that should last 15 years looks 20 years old at the 7-year mark. Salt air accelerates coil corrosion dramatically. Coastal properties require shorter replacement cycles, higher maintenance frequency, and larger capital reserves — none of which tend to be reflected in the initial underwriting.
The LED transition created another unintended consequence. When commercial operators replaced metal-halide lighting with LED lighting, the heat load in buildings dropped substantially. Owners responded rationally by reducing HVAC tonnage. What they did not account for is that reducing cooling capacity also reduces heating capacity. Properties in northern markets that downsized their systems to match the reduced cooling load may now struggle to heat their buildings in winter.
Set it, forget it, pay for it
Lo Choe, owner of Aura Fire Safety and a licensed fire and electrical safety contractor working in the San Francisco Bay Area, spends significant time walking through multifamily buildings with 50 to 300 units. He is inspecting HVAC, life safety systems, and energy utilization as an integrated picture. His assessment of where energy waste is hiding in common areas is specific and underappreciated.
Heating and cooling setpoints for common areas are almost universally set on static schedules programmed at installation, sometimes years ago, and have not been touched since. Building occupancy patterns change. Tenant mixes change. Usage of lobbies, corridors, fitness rooms, and community spaces shifts over time. The BAS continues running on the original schedule regardless, and the operations team assumes the system is optimizing because the dashboard says it is.
Choe has identified buildings in which common-area systems were running 10 to 14 extra hours per week beyond actual occupancy. It was entirely invisible to the property team because no one was reviewing the schedule against current usage patterns. The energy cost of that drift adds up. On a 120-unit building he reviewed, small setpoint discrepancies across common areas were costing the owner roughly $6,000 more per year than necessary. Not from equipment failure, but from untouched settings.
“With many building automation systems being overlaid on top of older mechanical equipment, the energy dashboard may show optimal performance numbers, but the analog equipment is still operating with static constraints,” Choe said.
He said he has seen projects where VFD fans were installed to help reduce energy consumption, but the dampers and controls were left as is (i.e., manually controlled). “Building owners think they are ‘smart’ because the BAS platform allows them some degree of control, but only half the system is actually variable,” Choe said. “I’ve seen this result in a 15-20% shortfall in energy reduction projections.” The common thread is a lack of ownership over system tuning. BAS interfaces are implemented and then left alone unless something visibly breaks. As seasons change and tenants turn over, the system continues running on legacy settings. The optimization is theoretical, but the waste is real.
‘Visibility is still the greatest inefficiency’
The operators managing HVAC costs effectively share a few consistent practices, and most of them are not complicated. The first is asset-level visibility. Martin is emphatic on this point: everything starts with the asset. If you do not know what equipment you have, where it is, how old it is, and what environment it operates in, you cannot budget for it, maintain it properly, or make good replacement decisions.
According to Martin, many facility teams are working from incomplete or outdated asset lists. Ground-up budgeting — building a maintenance budget from actual asset counts, failure rate data, and location-specific factors — is rarely done. Most operators take last year’s spend and add a percentage to it.
The second is using energy management systems as monitoring infrastructure rather than set-and-forget installations. Martin worked with a customer who was changing HVAC filters four times a year at every location, regardless of runtime. By pulling EMS data and using actual runtime hours rather than calendar intervals, they discovered that many units did not need filter changes as frequently. The resulting program saved $100,000 in filter costs alone in a single year. The technology was already installed, but it had not been used to inform the decision.
Mike Mulloy, VP of Facilities at NRP Group, one of the larger multifamily developers and operators in the country, describes a similar approach at a portfolio level. NRP manages HVAC property by property but supports each site with a regional facilities team that analyzes work order patterns, physical inspection data, and equipment purchase history to identify trends before they become failures. Energy and water usage are monitored at the unit level via submeters, with a third-party utility consultant flagging any usage anomalies. The approach is manual and labor-intensive, but it is grounded in actual data rather than assumptions.
Mulloy is candid about the state of smart building adoption in multifamily: even with advances in smart home and BAS technologies, adoption has been uneven, particularly in garden-style properties. “Visibility is still the biggest inefficiency we see across the multifamily industry today,” he said. “Greater system‑level visibility around HVAC performance, especially at the individual unit level, has clear potential to improve maintenance planning, reduce unplanned outages, and better support onsite teams. That said, high development, construction, and operational costs are still a significant barrier to industry-wide smart-tech implementation.”
According to Mulloy, the ROI case must be clear, and the technology must be scalable. NRP has not yet deployed smart HVAC systems at scale, but the criteria they would use to evaluate vendors — ROI first, support second, integration third — reflect a mature operator mindset rather than a technology-first one.
Carla Hinson, VP, North America Solution & Innovation at MRI, said the biggest energy management inefficiencies still being left on the table are usually operational rather than technological. The most common culprits are lighting and HVAC systems running on static schedules set when occupancy looked very different from what it does today, parking garages that remain fully lit around the clock regardless of use, and a lack of any occupancy strategy for common areas. That last point often comes down to data. Many owners and operators lack visibility into how their spaces are actually used, making it nearly impossible to develop a plan to reduce energy consumption in underutilized areas. “The highest-performing portfolios have taken an adaptive usage approach that varies with utilization, rather than a static approach to energy use,” Hinson said.
What the vendors won’t tell you
The HVAC industry is not short on claims about what AI and building automation can do. The practitioners in this conversation are more measured. Martin sees genuine value in AI-assisted work order review. His team processes 40,000 work orders in a peak PM season, each with 10 to 25 photographs. No human team can review that volume meaningfully. AI trained to flag exceptions — incomplete work, visible damage, missed checklist items — makes quality control possible at scale that would otherwise be impossible. But he is clear that the AI is only as good as the data going into it, and the data is only trustworthy if the boots-on-the-ground process is being executed correctly. AI layered on top of sloppy field work produces confident-looking garbage.
Choe’s concern is slightly different: that building owners interpret the presence of a BAS or a smart energy dashboard as evidence that their building is being managed well, when the system may be running on settings that were never tuned and have never been reviewed against current operating conditions. The dashboard creates a false sense of control. The technology that practitioners describe as genuinely useful tends to be the technology that extends human attention and judgment. This includes EMS systems that flag anomalies rather than eliminating the need for review, AI that surfaces exceptions rather than making autonomous decisions, and submetering that makes consumption visible at a granular level, enabling humans to act on it.
The habits that keep costs under control
Preventive HVAC maintenance is insurance, not a cost, and the math isn’t subtle. A compressor that fails in August because a coil was never cleaned costs 10 to 20 times what the cleaning would have, plus temporary cooling and resident complaints. HVAC experts such as Martin recommend budgeting from the asset up, not from last year’s spend. Know what you have, where it is, what environment it operates in, and what it costs to maintain.
– Nick Pipitone
Got tips or feedback? Email Nick at [email protected]
