In 2007, a major refurbishment strategy commenced at a flagship building in Regent Street, London.
The typical Edwardian West End property has a floor area in the region of 38,000 sq ft and different commercial classifications of use, with retail premises on the ground floor and basement and six floors of commercial office space above. The retail part is home to a high-end luxury womenswear and menswear retail brand. The office floors are multi-tenanted and are home to some internationally known businesses, and therefore have a mixture of different business needs.
The challenge
The site’s fixed building services were in a dilapidated state and were operating extremely inefficiently. The performance of the heating and cooling systems serving the building was such that heating and cooling often operated simultaneously. Both would often break down when needed most because the systems were being operated for long hours and in seasons when they were not needed. The result of this inefficiency was an increase in utility costs and discomfort within the office and retail store environments. This in turn created concern from tenants regarding service charge levels.
The original appraisal of the site, which took place on a summer’s day, immediately revealed that the heating was operating at the same time as the cooling. Further investigation showed that the major plant items, such as chillers, boilers, lifts and air treatment plant were in a dilapidated state. The standard of maintenance was also poor and this contributed to the high number of contractor call outs. From the frequency of call outs it was clear that a rationalisation of the maintenance and maintenance contract was needed.
A strategic plan of works was implemented while maintaining full occupation and rental income in order to rectify the problems that were causing erratic internal temperatures and tenant dissatisfaction.
Undertaking refurbishments in existing buildings is challenging but not impossible. Inevitably there will be some disruption to tenants while key items of plant, such as cooling or heating equipment, are replaced. The trick is to plan to replace heating and cooling when it isn’t needed so replace the boilers in summer and the chillers in winter. Disruption will then be minimised and, as long as tenants are kept informed and the replacement programme is planned and managed effectively, the desired end result can be achieved.
Action taken
Phase 1
plant appraisal and scheduled capital works programme
An assessment of the life expectancy of items of fixed building services was undertaken and a scheduled capital works programme prepared. The creation of this programme in turn led to the development of a plan of action covering a period of five to seven years, with a focus on the items posing the most risk of failure to the operation of the building. This allowed a forward replacement budget to be developed and enabled capital spend to be understood and planned carefully. Failure to undertake such a robust assessment of plant life and an accurate forward replacement capital works plan can lead to plant being replaced in the wrong sequence and unexpected and unplanned costs for the landlord.
Phase 2
Interim period management of financial risk to the service charge
With the capital works programme plan in place, the costs incurred and the service charges made by the maintenance contractor were analysed. Examples of dozens of contractor call-outs each week were found, dealing with a variety of faults, such as the heating and cooling not working normally at a time when the tenants needed it most. The maintenance contract was clearly not benefiting either the tenants or the building owner. A new M&E maintenance contract was prepared with a view to limiting costs incurred by the service charge. This contract was underpinned by a process of continual review of the maintenance contractor’s performance against key performance indicators. Within the first 12 months after implementation of the new maintenance contract, contractor call-outs dropped by 95 per cent.
Phase 3
Building operating cost analysis
The dilapidated state of the building created a 24/7 operation mentality, simultaneous heating and cooling, causing inefficiencies, such as unnecessary use of electricity and gas. The lack of a control strategy was causing operating costs to be higher than would normally be anticipated for a building of this type in fact, costs had doubled since the services were installed. A detailed analysis of the way the building was operating in relation to the business needs of the tenants was undertaken. The outcome was the implementation of a strategy that allowed the plant to operate and meet the tenant’s business needs and which, together with the rectification of HVAC faults, made running cost savings.
Phase 4
Implementation of capital works programme
All tenant business operations were maintained while the refurbishment and replacement of the boilers, pumps, chillers, lifts and HVAC controls took place.
- Do undertake a robust building services condition survey and report
- Do prepare a costed forward replacement matrix
- Do maximise the life of existing plant
- Do ensure maintenance contractor’s contracts are appropriate for the building
- Do keep tenants informed of the plan
- Do establish a starting point (baseline) to enable the magnitude of improvement to be assessed when the project is complete
- Do install sub metering as part of refurbishments
- Don’t rush ahead with short term fixes that don’t complement an over-arching replacement plan
- Don’t replace plant that is not life expired
- Don’t believe salesmen selling the next best thing since ‘sliced bread’. Suggest a test and verification first.
Phase 5
Ongoing performance
In a multi-tenanted building, the goalposts frequently move. Management of churn and change and the verification of tenants’ licence to alter submissions are key to ensuring that the building’s functionality is not diminished. The refurbishment work allowed the building to be bought in to line with relevant legislative and regulatory compliance, for example F Gas regulations for chillers and the Disability Discrimination Act. The majority of recent legislation and regulations affecting fixed building services facilitate improvements in energy efficiency. In addition to legislative and regulatory compliance, manufacturers’ research and development over the past 15 years has seen energy efficiency improvements in plant such as chillers and boilers, thus the replacement plant items selected had much better efficiencies.
The results
The building as a whole is now set for operation for the next 25 years. And all the projects described were undertaken without loss of rental revenue. Running costs (gas and electricity) have been halved and maintenance contractor call-outs dropped by 95 per cent. At the time of going to print the building was put under offer thus the name of the building has been removed to protect the interests of the vendor. This situation quite accurately represents the typical unknowns that often unexpectedly come into play when working with existing buildings. After all, existing commercial buildings are primarily someone’s high value investment.
