Aging Facilities Part 2: The Costly Consequences of Aging Buildings
This is the second blog in a series of four that discuss the challenges of aging buildings, including the demands of today’s tenants, the costly consequences of older facilities, modernization strategies, and the resulting benefits.
In my last blog, I discussed how today’s tenants are a major driving force behind building modernizations. However, future-proofing aging buildings with the kinds of capabilities tenants demand—modern connectivity and mobility, workplace quality, sustainability, security, and efficiency—can be challenging.
The reality is that older buildings can’t support smart technologies with existing, outdated systems—and there are a lot of aged buildings out there that are facing this dilemma. In fact, according to the U.S. Energy Information Administration 2012 data, nearly half of all commercial buildings were constructed before 1980. The age of buildings on higher education campuses is very similar. In fact, a Sightlines report, State of Facilities in Higher Education: 2014 Benchmarks, Best Practices, and Trends, 51% of all buildings on American college campuses were built between 1951 and 1990.
The Internet was barely a concept back in the 1980s and 1990s, so certainly many of these older buildings don’t have the wiring and connectivity that today’s tenants demand. Plus, oftentimes in these older buildings, the core operational systems and infrastructures are well beyond their optimal 10- to 15-year lifecycle, and most likely need repair or replacement. They may have been updated in a piecemeal fashion over time, but the newer systems most likely haven’t been integrated with the older systems, which can cause all sorts of havoc—and unnecessary costs.
The cost of running an older building
A building with incompatible legacy systems, proprietary system architectures, and dysfunctional operating processes has costly consequences, not only from an operational perspective but also in its attractiveness for tenants.
Here’s a quick look at some of the most common issues.
- Increased maintenance costs. For some aging buildings, maintenance costs account for almost as large a percentage of a facility’s operating budget as energy expenses. For instance, an APPA report on higher education facilities says work orders in buildings between 25 and 50 years old average $2.35 per square foot as compared to $1.40 for buildings under 10 years old. The report also notes that older buildings have higher maintenance backlog costs. For buildings between 25 to 50 years old, the cost is $110 per gross square foot of the building. For buildings 50 years old or older, the cost is $160, while maintenance backlog costs for buildings 10 years old or less are, on average, only $20 per gross square foot.
- Inefficient energy usage and outdated systems. According to the U.S. Energy information Administration (EIA), office buildings are the top users of energy, followed by mercantile, education, healthcare, and lodging. From 1979 to 2012, the share of electricity in total energy end-use consumption in commercial buildings increased from 38% to 61%. This comes from increased use of existing electrical equipment and the introduction of new types of equipment, such as computers, office equipment, and telecommunications equipment. The increase is also attributed to the additional electricity consumption needed for cooling and ventilation. All these costs are magnified when the systems behind them are older, outdated, and in need of upgrades.
- Lacking IT and communications infrastructures. Today’s office occupants, hotel guests, and students are part of a highly connected society and they expect the infrastructure in their buildings to support them technologically. Facilities that were built 40 or 50 years ago were not designed with laptops and mobile devices in mind. A simple example is electrical outlets—with every occupant and visitor using one or more mobile devices, there is a greater need for more outlets today to support worker productivity. And innovations like global collaboration, which is important both in the office and on campuses, requires an advanced IT and communications infrastructure that an older building can’t support without modernization.
- Inappropriately used space in facilities. The physical space allocations in older buildings are very different than the ones build from the ground up today. However, buildings constructed 40 or 50 years ago are not equipped with the physical infrastructure to accommodate today’s extensive communication network of fiber optic cabling, Wi-Fi routers, and other data center equipment. Consequently, without the proper design, this equipment is placed in spaces that are ill-fitted for it, which can compromise its functioning and cause excessive use of energy. In addition, buildings designed decades ago were not built for today’s needs. For instance, in higher education institutions, space allocation today is very different than it was 40 or 50 years ago. Therefore, on today’s campuses, it is not unusual for classrooms to be unoccupied 60% of the time, yet they are probably still being heated when no one is in them. The same goes for hospitality. Guest rooms are unoccupied 70% of the time, yet they account for 40-80% of hotel energy consumption.
Building owners need updated infrastructures that address tenant needs with up-to-date IT and communications technology as well as advanced energy management, mechanical, and space utilization systems. In my next blog, I take a look at a few key strategies that buildings owners can use to modernize their buildings, save costs, and better satisfy tenants.
To learn more about how to modernize aging buildings, read the first blog in this series on how tenants are driving modernization. Or read this white paper: New Life for Aging Facilities: Four Strategies for Future-Proofing Older Buildings.