By Wyatt Roberts
The multifamily real estate market is competitive, and developers face dual challenges of managing rising construction costs while meeting the increasing demand for high-quality, efficient buildings.
Building out major systems like heating, ventilation and air conditioning (HVAC) is especially challenging and represents a significant and ongoing expense.
A geothermal heating and cooling system helps solve this problem, reducing overall costs and improving building-wide climate control outcomes. It is the most efficient, cost-effective and durable heating and cooling solution on the market.
Geothermal heating and cooling systems work by tapping into the earth’s stable temperature just a few feet below the ground.
Utilizing ground loops filled with water and eco-friendly antifreeze, these systems transfer heat between the earth and a heat pump located within the building.
In winter, the system extracts heat from the ground and delivers it indoors, while in summer, it removes heat from the home and transfers it back into the earth.
It’s a compelling option for multifamily developers, allowing them to maximize build quality, mitigate costs and create the most valuable product possible.
Here are three ways to make the most of geothermal heating and cooling for multifamily buildings from Day One.
#1 Integrate Advanced HVAC Solutions Early in New Construction Design
Geothermal heating and cooling rely on ground loops buried beneath the structure.
The most cost-effective time to install geothermal systems is during the initial construction phase, before the foundation is laid.
This allows for optimal placement of infrastructure while minimizing disruption and additional costs incurred when plans aren’t developed and implemented up front.
Moreover, drilling the ground loop directly where it needs to be before building construction starts avoids the extra time and money associated with trenching and concrete boring, making the installation process more affordable, helping keep costs contained.
#2 Leverage Incentives and Analyze Lifecycle Costs for Sustainable Technologies
Multifamily real estate developers know that creating a structure is the easy part. Producing the highest quality buildings that deliver long-term value and bolster a property’s reputation among renters is significantly more difficult and can increase project costs.
To keep costs low, developers should seek out and utilize available geothermal incentives, which can cover a significant portion of installation. Many states and utilities offer builders incentives to offset this up-front cost.
Additionally, the passage of H.R.1 in 2025 fundamentally reset the financial framework for geothermal.
The bill did two critical things. First, it preserved the 30 to 50 percent federal commercial investment tax credit (ITC) for geothermal heat pumps through 2034. It also introduced new incentives for programs like leased geothermal systems, which enable more third-party ownership models to further reduce up-front costs and increase geothermal adoption.
Overall, this helps to make advanced systems cost-competitive or even less expensive over the project’s lifecycle.
#3 Collaborate with Specialized Experts and Utilities for Seamless Integration
Installing geothermal heating and cooling is a collaborative effort, involving technology-specific experts, existing trade partners and local utility companies.
Collaboration with these entities can help design solutions that work at scale, secure subsidies and ensure smooth project execution without disrupting production schedules.
Put differently, engaging experts can help navigate any of the complexities that may be associated with integrating geothermal heating and cooling into a commercial construction project.
The Time to Future-Proof Your Multifamily Property is Now
Real estate developers face pressure to mitigate the effects of rising construction costs, even as demand for high-quality, efficient buildings similarly climbs.
The building choices we make now will have long-term implications, reverberating for generations as they shape the efficiency, effectiveness, and affordability of our built environment.
Geothermal heating and cooling present a compelling opportunity to create properties that are profitable, fundamentally more valuable, and efficient for years to come.
Wyatt Roberts is head of new construction for Dandelion Energy.