Aging buildings are attractive to buyers and tenants alike for their historical value and “vintage feel.” Even buildings that don’t quite meet vintage status are ripe for redesign and repurposing. Think of a building built in the early 90s. I can close my eyes and smell the stale mixture of old carpet and ozone from laser printers, copiers, and warm electronics. When I think of future-proofing a commercial building, particularly heating, ventilation, and air conditioning (HVAC), one of the first questions that comes to mind is, “Is the HVAC system designed for the long term?”

When upgrading a building’s HVAC system, owners need to consider not only which type of system is most valuable (high efficiency vs standard, technologically advanced vs simplified, upfront cost vs long-term savings) but also what is most practical (phased approach to upgrades, refrigerant regulations and how the building will be used).

Upgrading the building HVAC system not only increases the overall value of the property but has been shown to improve tenant comfort and productivity. Many organizations have an increased emphasis on sustainability and carbon footprint reduction. There are several ways to demonstrate sustainability, including designations such as ENERGY STAR and LEED (Leadership in Energy and Environmental Design), as well as performance metrics like EER (Energy Efficiency Ratio). Companies that prioritize sustainability might seek only buildings with these types of designations when leasing space. For an owner who is upgrading their HVAC, this may make them consider a more efficient system, as opposed to a less costly solution.

Technological advances in HVAC have come a long way through the decades and continue to be smarter, more electronic and sometimes more complicated to operate. Added tech allows systems to operate more efficiently, use of AI to anticipate building load and automatically make minor adjustments to maximize energy consumption reduction, for example. On the surface, this sounds like a great idea; however, a building owner or operator must also consider the resources they have to maintain/repair more advanced equipment and the typically more expensive upfront cost that is inherent with more robust systems.

I’ve worked with customers who have elected to remove a variable refrigerant flow (VRF) system in favor of a simplified system of packaged rooftop units (RTUs) simply because they did not have the personnel to adequately maintain and operate the former system.
So, it’s time to upgrade the HVAC, and you’ve made the cost justification to opt for the latest and greatest. The owner is excited about the increased value to their building, the increased occupancy, and the higher rents that should come with the efficiency designations that they’ll be applying for. A big question remains unanswered: “How?”

Building upgrades of any kind can cause major disruptions to occupants. I think of buildings that have had renovations to the lobby or elevators. Walking into the office that looks like a construction zone isn’t ideal, and re-routing access isn’t always convenient. HVAC renovations are no different. It takes a lot of coordination between ownership and contractors to determine the least disruptive and quickest way to implement an upgrade. This may mean scheduling a chiller replacement for the colder months when it likely will have less impact on tenant comfort than the summertime. In addition to scheduling downtime, designating access is another thing to consider. Depending on building size and project scope, taking a phased approach to equipment upgrades may also be an option, perhaps starting with unoccupied floors to develop a rhythm and workflow, then moving to critical areas to ensure a smooth install.

Building usage is another important thing to consider when it’s time to upgrade. The old office building from the 90s, which was designed for 8 a.m.-6 p.m. operations and segmented offices, may now function as a flex space with an open floor plan. This may present the opportunity to install an HVAC system that is more appropriate to the current usage, occupancy and load. Occupancy sensors can communicate with the HVAC system so it runs only when needed, further reducing energy consumption and operating costs without sacrificing tenant comfort. Building usage changes are probably most recognized in historic buildings. The HVAC system that was in place 60+ years ago is certainly not appropriate to the new function of the building.

Given these factors, the upgrade of the HVAC system is not a one-size-fits-all solution. Owners are wise to work with good partners to fully understand their intentions for the building, work through obstacles and present solutions that address current-state issues along with future-proofing potential transformations. Most building owners are motivated to increase profits and decrease environmental impact from their properties. HVAC systems have been proven to contribute to both.

To stay up to date on news and resources such as this and other topics of importance to the real estate industry, subscribe to the free CRE Insight Journal Newsletter using this link.