After -Hours HVAC Issues

Over the years I’ve observed both Landlord and Tenant experiences with after-hours HVAC.  These include Tenants who can turn the system on either for their floor, the building, or a portion of their space after-hours, usually in the evenings and on weekends as the workload dictates.  Many Tenants may also have a stand-alone unit for their telecom room, which might run on a 24/7 basis.

Horror stories abound in this arena.  I had one client who left control of the HVAC to their IT department who decided that because their computer room didn’t have its own HVAC system, they would run the entire building 24/7.  The problem was compounded by the Landlord’s delinquency in getting out reimbursement bills on a timely basis, and there were serious repercussions when the $92,000 after-hours HVAC bill reached the Tenant’s senior executive desk.  The remedy for this was to install a separate unit just for the computer room on its own sub-meter, dramatically reducing costs moving forward!

In another recent case a property owner again forgot to send out the reimbursement bill for HVAC until three years after the charges were incurred, and the Tenant had already closed their books for that time period and had to creatively take a hit in the current year.  Of course it is the Landlord’s responsibility to make sure reimbursement invoices are sent out on a timely basis, but the lesson here is that it is also up to the Tenant to make sure all past CAM/HVAC reimbursement bills are received in a timely manner.  Leases may differ, but in general even if a bill is delivered to the Tenant years late, it may still be valid, due and payable.

One client gave the HVAC override key to its night shift supervisor who routinely cranked on the system whether or not actual temperature conditions warranted this.  At $25/hour, and $42,000 later, new systems were put into place where fiscal responsibility is now taken seriously, but it is up to the senior management to make sure department heads are aware of what the after-hours HVAC actually costs, to set up guidelines for when it is warranted, and to publish written rules.  Digital temperature monitors are inexpensive and can easily be set up so one knows when the system should be turned on or off.  Timer controls which allow one, two or three-hour increments may be better than an on-off switch which can run indefinitely.

Tips for consideration:

If you have a specific work unit that stays late, comes in on weekends and utilizes one portion of your workspace, consider having a separate HVAC system/sub meter for after-hours usage.

If there are only a few employees involved, consider buying them quality fans for the non-extreme summer months, or space heaters that are building approved and fire-safety rated.  Make sure these stand-alone units do not violate building regulations, negatively impact power usage which may lead to circuit shutdown, and are safe.

Consider other methods of employee satisfaction (i.e. small hourly bonus for not using the after-hours HVAC, providing meal credits, or other incentives so when there are pleasant working conditions the system is not turned on unnecessarily).

Make sure you understand what your after-hours HVAC charges are.  They can range from as little as $10/hour for smaller spaces to $250/hour or more when an entire large floor must be conditioned and the main chiller for the entire building must be turned on.  Landlords might also pass on additional costs, such as wear and tear on the HVAC units, a management charge for monitoring the after-hours system, a charge for billing for after-hours usage, and in some cases the cost of an engineer each tine the system is turned on or off (one client had this in an older building and it was extremely costly).  Also, depending on the length of your lease and type of operation it might make sense to consider upgrading an older HVAC system which can cost 25-50% more to operate than the newer energy-efficient systems.  Landlords may cooperate on this expense on a win-win basis for cost sharing of this upgrade.

If you have additional thoughts or experiences on this, please e-mail me at jweil@colliersparrish.com.  Our team is dedicated to keeping our clients occupancy costs as low as possible and we hope this article was helpful in this regard.