How to extend equipment lifespan in CRE properties (2024)

July 30, 2024 · 4 min read

In the commercial real estate (CRE) sector, maintaining the longevity of costly equipment like HVAC systems is crucial. Enhanced equipment lifecycle management not only significantly reduces cost but also optimizes property management operations. Here’s how to extend equipment lifespan in CRE properties with technology.

Ensuring tenant compliance

Tenant compliance plays a crucial role in how to extend the equipment lifespan of expensive equipment such as HVAC systems. Compliance means that tenants adhere to the terms, conditions, and rules specified in their lease agreements. In NNN (triple-net) leases, tenants typically handle property maintenance, including the upkeep of installed equipment and systems.

In these leases, non-compliance can result in penalties, legal action, or even lease termination. Due to the high costs of replacing HVAC systems, maintaining these units is a focal point. Consistent upkeep ensures that tenants fulfill their lease obligations, prevent unnecessary damage, prolong equipment lifespan, and ultimately save both tenants and property owners significant expenses.

The tenant compliance challenge

Ensuring tenants consistently follow maintenance schedules is challenging. Despite clear directives in lease agreements, tenants may neglect essential maintenance to cut costs. This neglect can lead to premature equipment wear or failure, affecting other tenants and causing dissatisfaction and disputes. The financial burden of unexpected replacements or repairs generally falls on property owners, adding to their operational risks.

Technology solutions

Implementing advanced digital tools can efficiently monitor HVAC systems and alert property managers when maintenance is due or issues arise. These tools maintain accurate records of upkeep, ensuring tenants meet their obligations. Regular maintenance updates shared with tenants encourage proactive participation in routine check-ups. This preventive care significantly reduces large-scale equipment failures, contributing positively to extend equipment lifespan.

By ensuring tenant compliance through regular tracking of HVAC maintenance, you can:

• Protect equipment
• Minimize equipment downtime
• Avoid catastrophic failures

This approach ensures that critical systems continue to function optimally, extending their operational lifespan.

Ensuring comprehensive capital planning

Effective capital planning is a cornerstone of successful property management. Advanced equipment inventory systems play a critical role in this process, providing comprehensive, real-time visibility over all installed equipment, such as HVAC systems.

A robust equipment inventory involves a digital management system that accurately catalogs various details for each piece of equipment, including specific attributes, lifecycle stages, and maintenance schedules. For HVAC systems and other costly appliances, this system tracks essential data such as:

• Date of installation
• Model type
• Frequency of maintenance
• Remaining useful life

The benefits of complete visibility

Having complete visibility over existing equipment allows you to:

• Forecast end-of-service life: By understanding the potential end-of-service life for each system, you can plan replacements effectively. This helps spread out expenditures and mitigates the financial impact of multiple systems failing at the same time.
• Track patterns and needs: Digital inventories help track patterns of equipment usage and needs. For example, a mall owned by an investment trust used advanced equipment inventory to document the frequent, costly repairs required by specific HVAC units after approximately seven years. This foresight allowed them to proactively budget for replacements before failures occurred, avoiding operational disruption for tenants.
• Optimize maintenance and repairs: Documenting each piece of equipment’s complete history allows for data-backed decisions on whether to continue upkeep or replace aging systems. You can compare against warranty conditions, expected lifecycles, and replacement costs to better allocate capital.
• Gain valuable insights: Over time, trends may demonstrate which types of equipment offer the best durability, lowest maintenance cost, and highest performance. This data helps make informed decisions that enhance capital planning, streamline operations, and extend equipment lifespan, increasing the property’s overall value.

How to extend equipment lifespan

With targeted strategies and advanced proptech tools, you can extend equipment lifespan, reduce costs, increase tenant satisfaction, and optimize capital planning. Harnessing technology for proactive maintenance ensures a more sustainable and profitable path forward.

Request a demo of Prism by Building Engines to see how it can transform your property management approach.