By Beth Bouvier, PE, CIH, LEED® AP 

Does your HVAC system use a chiller? If so, your facility may be subject to new reporting rules set by The New Jersey Department of Environmental Protection (NJDEP). The new rules, which were adopted on June 6th, 2022, require monitoring and reporting on a number of greenhouse gas emissions including certain refrigerants. The regulations require facilities using these refrigerants to be registered and file annual reports on emissions from those refrigerants. 

If you heard “regulations that apply to facilities using refrigerants” and the first thing to come to mind was large refrigeration systems, you would be correct. These regulations do apply to large refrigeration systems like those found at grocery stores, warehouses, and ice rinks. However, these regulated refrigerants are also commonly found in HVAC systems that use chillers. 

What You Need to Know:
Facilities that have at least one refrigeration system with a full charge capacity of 50 pounds or more of high global warming potential refrigerants are required to register and report their equipment and use of refrigerants. This regulation applies to chillers, as well as refrigeration systems at grocery stores, warehouses, ice rinks, etc. Air conditioning equipment, such as roof top units, air handlers, condensing units, split systems, etc. are excluded from these new requirements, but chillers are not. To ensure compliance, you should review any chillers associated with your HVAC system as well as any other refrigeration equipment to determine if you need to start reporting your emissions under the new regulations.

How Quickly Do I Have to Act?
If your building is subject to the new requirements, you need to register your facility by November 1, 2022. Then, starting April 1, 2023, you must submit an annual report. So, if you didn’t know about this regulation, or that it may apply to your facility, it is important to identify if you are required to submit as soon as possible. 

Is This Rule Just About Refrigerants?
The requirements are part of an effort by the state of New Jersey to identify significant sources of greenhouse gas emissions and monitor progress towards greenhouse gas emission reduction goals. The newly adopted rules also require facilities that have the potential to emit 100 tons or more per year of methane to report their methane emissions annually beginning May 15, 2023, and include requirements specific to natural gas public utilities.

How Do I Find Out If I Need to Act?
If you are unsure if your facility is subject to these requirements, you should contact an environmental services professional to help determine your obligations. If you have chillers or refrigeration equipment, an environmental professional can help you determine if they hold enough of a relevant refrigerant to qualify your facility for the mandatory reporting. If you are required to monitor and submit reporting, a qualified professional can help you through the process.  

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LAN Associates is a full-service architecture and engineering design firm that primarily services K-12, higher education, municipal, commercial, ecclesiastical, and private clients. The firm was founded in 1965, and is based in Midland Park, NJ, with offices in Goshen, NY, Voorhees, NJ, Vernon, NJ, and Bethlehem, PA.

By: Robert Augusto Riva
Cole Schotz, P.C.
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When looking at real estate trends, and especially the demographic-based fundamentals that underpin real estate values, we have seen a lot of change in very little time. The past two years,   a fundamental shift in the market expectations of homeowners and renters alike has emerged. This shift is adjusting where developers and lenders ought to be marshaling their investments and—because no two jurisdictions are alike—impacting the way investments are underwritten.  Whether that shift will be permanent is an open question, particularly in light of the convoluting effect that the past year’s surge in interest rates has had on interpreting those expectations, but there are a few things to note.

What does economic theory tell us?

Higher housing costs typically translate into longer average commuting distances, but with a clear distinction in their effects between homeowners and renters. Empirical evidence underscores that homeowners, especially highly-leveraged homeowners, are more likely to seek new jobs in local labor markets than renters. Renters are less likely to accept long commutes and more likely to move nationwide than homeowners. In other words, the labor mobility of renters – (i.e., the ease and willingness with which renters move from job to job within and across industries) tends to be greater than with homeowners.
Is labor mobility changing?

By virtually all key measures, labor mobility took a sharp downward turn immediately following the financial crash of 2007-2008. Labor mobility rates bottomed out in 2009, and gradually returned to pre-crash levels by about 2015, where they remained relatively constant through 2019. But since 2020, labor mobility rates appear to have turned upwards again, an increase that has been observed for both renters and homeowners, notwithstanding the current surge in interest rates and the greater impact rising interest rates have on homeowners versus renters.

What does this mean for commercial real estate?

Homeowners historically move less than renters. Homeowners also switched jobs less frequently than renters because homeowners generally have more of a commitment – financial, familial, social – to where they live. 

However, this dichotomy may no longer be as pronounced as it once was.  Remote and hybrid work options seem to be here for the long run across a wide swath of industries. In addition,  entrepreneurial at-home/local startups continue to grow at least on pace with the surge in workers changing professions altogether. Labor seems not only better able to move – but also actually moving – more and more to where workers want to live, not necessarily where their jobs take them. That trend may continue to prove disruptive while providing opportunities in multifamily markets, even after the current trend in residential rents, (which has shown recent signs of moderating,) begins to fully normalize along with real estate values.

As a result, commercial real estate developers and lenders, particularly in the multifamily world, have been forced to reevaluate where they are investing. The surge in interest rates this past year, however, has had an otherwise little-appreciated effect of obscuring the exact compositional change in demographic fundamentals, a critical investment consideration, making it more difficult to determine just how significant the homeowner component of that shift has been, compared to the renter component, in the overall increase in labor mobility. 
There has also been a natural tendency to focus speculative attention on where interest rates are heading and how quickly, that inadequate analytical attention is given to understanding potential scope of a more lasting shift in demographic fundamentals. Labor mobility changes, for example, occurring just under the shadow of surging interest rates, should not be overlooked. If (as seems to be the case,) a fundamental shift in labor mobility has indeed occurred, a clearer picture of the magnitude and exact composition of that shift will start to emerge when interest rates begin to moderate.

Until then, commercial real estate developers and lenders, particularly those in the multifamily marketplace, must strive to position themselves to be where the renters are moving. Effective positioning requires a solid understanding of why that is happening – with an eye beyond the transitory effects of interest rate changes. 

A deeper understanding of this potentially derived from a more lasting shift in labor mobility and other demographic fundamentals is a strategic advantage. Understanding and anticipating where the new equilibrium point will be for labor mobility, and the corresponding demand for housing that is linked to it, will prove crucial to identifying the right multifamily investment opportunities in 2023 and beyond.