Posted: August 20, 2019
By: Joe Hoy, A.Sc.T.
With most property investments, whether you’re flipping a building, renting units, or housing your business, the goal is to mitigate risk and maximize value. However, buildings are much more than what they look like. Even so, some building owners only make aesthetic improvements to boost curb appeal, covering up major issues that affect building performance and longevity or they utilize temporary fixes rather can repairing major issues for longevity. And while most real estate investors are prepared for upgrades and renovations immediately after the sale goes through, sometimes structural, building envelope, or building system issues and failures don’t come to light until later, surprising new owners with unexpected capital projects. Prepared or not, whether you’re a long-time owner or recently acquired a new property, investing in building improvements now will increase your asset value and decrease your operational costs.
Unless your building was prefabricated, it’s a custom build which means that every building has its own nuances (and issues), not to mention its own history from initial construction to renovations and use. Whether your building is new or old, you want it to build equity – preferably without costing you a fortune. But investing in building improvements is one of the rare cases where the old “Buy Now, Save Later” slogan applies. When you evaluate your building to find performance issues and inefficiencies and undergo subsequent building upgrades, you’re essentially mitigating risk – the risk of footing a massive bill for emergent remediation (and evacuations). In an ever-changing real estate market, protecting your assets is about much more than underwriting and insurance (though your building’s health and use does impact your insurance premiums), it’s also about understanding your building – how it performs, how it operates, how to maintain it, and how to improve it.
The best way to mitigate risk and decrease costs, then, is to learn about your building. And while a property appraisal will tell you what your building is currently worth, a high-level building condition assessment (BCA) will tell you how your building functions, and more detailed assessments such as a building envelope condition assessment (BECA) or a specific problem investigation (SPI) can tell about any underlying problems. By evaluating the condition of your building – its envelope performance, structural foundation, roofing systems, mechanical and electrical systems, code compliance, and site components – you arm yourself with knowledge. In other words, you effectively assess risk in order to make mitigation plans and prevent unexpected capital projects.
Another crucial diagnostic tool is energy benchmarking which evaluates your building’s efficiency and occupant impacts, allowing you to make targeted plans for energy upgrades that focus on consumption reduction and cost savings. Green infrastructure creates asset value and advances your bottom line in the commercial real estate sector. In fact, the potential value benefits of going green include energy savings, reduced infrastructure costs, increased rent and property value, increased retail sales, better absorption, lower turnover and vacancy, stormwater fee credits and rebates or incentives, reduced flooding, lower water bills, reduced crime, increased occupant productivity and wellbeing, and reduced risk and marketability. In the long-term, optimizing the conditions of the building will result for the occupant a healthier experience, greater financial benefit from improved productivity, lower absenteeism, and for the building owner higher leasing rates, lower energy consumption and reduction in carbon emissions.
Once you’ve got the necessary knowledge for financial decision-making, our team can help you discover your motivations, priorities, and goals for building improvements. This discussion helps us prescribe a customized treatment plan that outlines how to improve your building and meet your goals – whether you’re looking to boost productivity by improving air quality, lower utility costs by reducing energy consumption, or command higher lease rates by upgrading green certifications. We also advise you on upcoming code and legislation changes (like building labelling and climate change rewrites) and green incentive programs (like BC’s Power Smart & Commercial Custom Design Program) to help you plan for the future and prevent costly upgrades. We can assist you to find that balance between energy cost reduction and reduction in green-house gas (GHG) emissions. And finally, we can help with a diagnosis, a custom solution (a remediation, rehabilitation or retrofit) and help with the implementation of any upgrades or renewals needed for your building and your budget.