A surplus of CAM funds gives property managers and asset managers options to attract new tenants and retain valuable tenants with building improvement activities. But what truly adds value that tenants will notice? How can you set your building apart in a way that not only impresses tenants but adds value to their businesses too?
Capital Expenditure as Common Area Maintenance
Tenants usually don't assume that capital expenditures are included in CAM charges. However, building improvements are generally accepted if they reduce the property's operational costs, lead to reduced CAM charges and benefit all tenants.
Whether your property is under a triple net (NNN) lease or a gross lease structure, upgrading your building's HVAC system falls into these parameters nicely, and it doesn't have to break the bank. Reducing heating and cooling costs, optimizing ventilation and improving indoor air quality not only reduces the property's operational costs, it also improves the productivity of the workers in the building.
Benefits to Tenants of an HVAC Retrofit
In addition to reduced utility costs, an HVAC retrofit that optimizes outside air and dynamically balances interior air for temperature, air quality and humidity provides workers with increased comfort, which is correlated with improved productivity and reduced absenteeism.
Poor indoor air quality decreases productivity by about 10%, but an energy efficient HVAC system that optimizes the ventilation rate for your building can improve productivity by 8%, according to collaborative studies performed by Harvard, Syracuse and SUNY medical centers.
Why should you care about 8%? Let's say a worker produces $100,000 in revenue annually. That 8% productivity boost could translate into about $8,000 annually.
Additionally, a 2014 study by the Harvard School of Public Health found that on average, cognitive ability scores of workers were 61% higher in green buildings operating HVAC systems at ASHRAE minimum recommended standards for CO2 levels and cfm ventilation rates, as compared to scores recorded in conventional buildings. By comparison, in green buildings operating HVAC systems at twice the ASHRAE minimum recommended standards, cognitive ability scores of workers were 101% higher than those recorded in conventional buildings.
What Does a Smart HVAC System Cost?
Upgrading to a smart HVAC system typically requires minimal new hardware, and installation is made simple by wireless technology connecting the Internet of Things (IoT). 75F systems are quick, out-of-the box retrofits and operate on a mesh network of NSA-level secure devices. The solution uses your building's existing HVAC infrastructure, including RTUs, AHUs, heat pumps, boilers, chillers and cooling towers. We just add sensors and equipment controllers to optimize outside air, dynamically balance airflow and integrate other smart building solutions to maximize your ROI and ability to attract valuable tenants. The 75F Facilisight software suite even gives you visibility, alerts and control across your property portfolio, whether using the web portal or the mobile app.
75F is frequently able to retrofit HVAC systems at about 50% of the price of competing vendors. It's like being able to update four floors instead of two, on the same budget. Enabled with sensing, data, predictive analytics and software-defined functions, 75F's approach delivers powerful multi-site building automation systems, way beyond traditional HVAC controls and energy management system (EMS) models.
Where do the cost advantages come from? Our systems can use your existing infrastructure, cure inefficient air handlers, substantially reduce installation costs, and optimize HVAC systems with the power of cloud computing and machine learning.
Once fully installed, our system reduces your building's HVAC-related energy costs by 30% to 50%, not including the reduced maintenance costs of a system that tells you exactly where issues arise and if they can be resolved without the need for a truck roll. This true predictive maintenance enables real-time notification of issues. Add on our smart lighting solution, and savings grow as lights are put on schedules, dim automatically with the level of sunlight in a space and are connected to occupancy sensors.
What is the Payback for a Smart HVAC System?
You can use the simple payback formula, as long as you have your current average utility payment per period and a quote for the estimated energy savings your building will achieve with the retrofit.
P = Vi / S
P = payback period
Vi = initial value of investment
S = estimated annual savings
These numbers can also help you calculate net present value (NPV), internal rate of return (IRR) and the impact on your net operating income (NOI). Energy savings free up additional investable dollars for other building improvement or tenant improvement projects.
It is also useful to consider that, according to the U.S. Department of Energy (DOE), predictive maintenance can:
- Reduce maintenance costs up to 30%
- Eliminate 70% to 75% of equipment breakdowns
- Reduce equipment downtime 35% to 45%
Check out the case study results to see how clients have reduced operating expenses (leading with energy costs) and created a more comfortable and productive workplace for their tenants and employees.