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HVAC — Whether you lease or own, give it the attention it deserves

Whether you lease or own your facility, it’s important to have a full understanding of exactly what level of preventive maintenance is included in your lease or vendor contract, and what’s not included. This is particularly true of HVAC systems.

The efficient operation of your HVAC system, and the effect it has on the comfort and productivity of your building’s occupants, longevity of the equipment and potential health concerns, is of real importance. As asset manager for a large commercial/industrial portfolio, I can tell you first-hand that HVAC-related matters are the single most common issue addressed by our property maintenance team.

A preventive maintenance contract, or lease provision, typically includes a quarterly changing of filters, inspection of belts, fans, and refrigerant pressures, and recording of electrical voltages and amp draws. Filter changes may be required more frequently based on the building’s occupancy. However, what’s most often not included in preventive maintenance programs are the service charges and parts costs for HVAC repair and replacement items that fall outside the scope of program coverage.    

Most commercial or industrial leases are structured either as “gross” or “triple-net” types.   In a gross-lease arrangement, the quoted rent typically includes all other building operating expenses, including HVAC maintenance and repairs. In a triple-net lease arrangement, there’s a set monthly or annual base rent, but unlike the gross lease, the lessee is responsible for 100% of the facility’s operating expenses. Although less common, single- and double-net leases are also used, but as there is no uniformity to what lessors provide, prospective tenants should investigate them fully.

When comparing leases among several facilities, make it a priority to know all the costs of occupancy, especially HVAC provisions.

If leasing under a triple-net model, be sure to establish and budget for a preventive maintenance program of your own. If you own your facility, a proactive approach to preventive maintenance is just as important.

I recommend the following:

  1. Know if you currently have a preventive maintenance program for your HVAC system, either contracted directly or as part of your lease. If you do not have one, establish one directly or address it as part of lease negotiations.
  2. If you do have a preventive maintenance program, understand it fully, making sure it satisfies the needs of your business. Lease language and contracts from service providers may differ. Know what’s covered and what’s not and the frequency of when maintenance activities are performed.

Providing a comfortable working environment pays significant dividends in a happier, more comfortable workforce, enhanced productivity, and reduced HVAC-related service calls and expenditures. An efficient, well-maintained HVAC system plays a key role in doing so.  Give it the attention it deserves.  

Michael J. Lorelli, CPM, CCIM, Vice President of Commercial Asset Management, High Associates Ltd.