‘Future Proofing’ Strategies to Transform the Old into Something New
There’s an adage, “one person’s trash is another person’s treasure.” When looking at building classifications, Class B and C buildings may be less desirable to prospective tenants and investment plans. However, with a well-thought out long-term strategic plan and technology roadmap, Class B/C buildings can transform into Class A opportunities.
Buildings classified as B and C are older in age but can become some of societies greatest gems with a proper upgrade plan. Many times, these very properties command the prime locations but often the market has a mindset of an all or nothing approach to retrofit, which can stall or perpetually delay completely viable projects. There’s no reason to have to do minor fixes when fix it once, fix it right and keep it relevant, are viable options.
I like to view B/C buildings and portfolios as “Building Conversion” opportunities to do a deeper scoped project that is transformative and can potentially future proof the asset. Also, if done strategically and methodically, it can open options for higher rent, higher value and an on-point mission for the property.
According to a report titled Unlocking Hidden Value in Class B/C Office Buildings by Rocky Mountain Institute, Urban Land Institute and BOMA International, implementing a combination of low-to-no cost energy efficiency strategies can result in 15% to 35% energy savings for an average annual savings of $20,000 to $46,000 on a 75,000 sq.ft. building. Using the average $6/sq.ft., this equates to $450,000 of added value. Proof that real money invested can be the building blocks for other strategic financial options for the property.
In the past, owners of older Class B and Class C buildings may have been resistant to making investments or operational changes to their properties due to limited working capital and resources. However, according to the BOMA report, the market for Class B/C Buildings is changing. Tenant preferences, demand for new energy efficient technologies, and mandated policies to reduce building emissions are forcing building owners to look at options to stay competitive and in compliance. The market demands more, and energy efficiency is only part of the solution.
In order to ensure the monies invested are building blocks for the future, one must look at opportunities that achieve total facilities optimization. When one collaborates and strategically partners with their building solutions integrator and service provider, a strategic plan that future proofs the building can be executed, ultimately increasing the value of the property. When one takes this comprehensive approach, there are many factors to consider – energy usage, yes – but also, tenant expectation, maintenance, differential maintenance, building mission, and overall technology roadmap.
Let’s start with the data.
By collecting and auditing building and utility data, we’re able to benchmark the site against similar buildings and other sites in the real estate portfolio. This gives us a baseline understanding of how energy usage in the building has changed over time and how it compares against similar profiles. The data identifies inefficiencies that are occurring, and, in turn, one is better equipped to make recommendations on how to achieve the long-term goals of the building.
This can be a critical step when a building needs to upgrade equipment and integrate disparate systems to comply with building code and regulatory changes. The data helps identify upgrade needs and solutions that fit budgetary and compliance criteria.
In addition, the data may also identify the source of occupant complaints. One may recommend changes, such as optimized HVAC controls programming and ongoing preventative maintenance strategies that reduce or eliminate unplanned downtime. Another option may be retro commissioning the HVAC and Building Automation Systems, for more efficient equipment usage and output.
In another scenario, capital improvements may be suggested to address deferred maintenance on assets by replacing outdated and inefficient equipment, such as HVAC, control systems, generators and more. The upfront investment with the right strategy can result in a fast return with higher property value and income streams.
The data lays the groundwork for the long-term technology roadmap needed to install the right upgrades that convert B/C buildings to high demand property.
In one scenario, Stark Tech Group analyzed a portfolio of more than 150 properties for a major commercial real estate company. Using proprietary software, the project considered energy, building inventory and market data to determine which properties had the most opportunity for quick, efficient and high return on investments. In the project scope, Stark engineers implemented a plan that included retrofitting equipment and building automation upgrades to improve asset performance and ensure building code compliance.
Stark Tech Group can offer strategies to help building owners identify opportunities for total facilities optimization, including new and upgraded technology, and long-term roadmaps that optimize overall building performance. For more information, visit StarkTechGroup.com