How the Pandemic Affects Property Maintenance Costs

Enertiv, a commercial real estate technology company, has analyzed maintenance expense data from office and multi family housing units to show the cost of the coronavirus shutdown.

New York City is a perfect model because it was the original epicenter of the COVID-19 pandemic in the United States. After a complete lockdown, the city is now reopening. But the impact on building maintenance costs may come as a surprise, according to a report on the data published on the firm website.

For offices, heating ventilation and air conditioning costs dropped off slightly during the period of low occupancy. But that was marginal because operators could not simply shut down ventilation in the building; the systems still needed to run, and the building needed to be flushed routinely to make it viable for reopening, the report said.

“Of course, many people started working from home before the stay-at-home order was enacted. Likewise, many people have not returned to the office even when the governor initiated Phase II. But from a building operations standpoint, it doesn’t really matter. If tenants can be in the building, you essentially must operate it as if it’s fully occupied,” the report said.

Guidelines from the American Society of Heating, Refrigerating and Air-Conditioning Engineers and the Centers for Disease Control mandate increasing the amount of outdoor air brought into the building and using higher-grade filters. These measures are known to increase operating costs, the report said.

Naturally, air quality control costs have increased, the report said. But overall energy spend dipped with lower occupancy.

Still, multifamily residential buildings did not pick up as much of the burden as might be expected.

“There was concern initially that while office buildings emptied out, multifamily buildings would be crushed by higher occupancy than what operators are used to and systems are designed for,” Enertiv said. “This turned out to be wrong. It appears that instead of staying in multifamily units, many New Yorkers left the city during the stay-at-home order.”

Enertiv concluded that both office and multifamily real estate “have been able to tread water so far in the nascent recession.”

“Landlords are betting on the fact that, while there may be less demand for office due to work from home, it will be offset by the additional space per employee that will be required due to COVID-19,” Enertiv said. “Likewise, multifamily owners expect the sector to remain as resilient as it has time and time again.”

To be sure, reopening brings its own costs. “This optimism is partially offset by the concern over higher operating expenses that are specific to mitigating coronavirus spread within buildings,” Enertiv said. But there is a corresponding value.

The firm concluded, “Bringing in more outside air, high efficiency filters, and cleaning equipment will all add to the balance sheet.”