HVAC Hacked: What it means for Your CRE Investment

Asset owners are constantly seeking new ways to optimise their property portfolios performance and return. The largest focus is operational efficiency, and one of the largest line items is a building’s HVAC, which drives 40-45% of a building’s Utility costs. Although many HVAC systems in commercial buildings are linked to the Internet, “hacking” doesn’t refer to cybersecurity as you might expect.

Instead, this new term and approach, developed and patented by Rensair involves optimising HVAC systems to improve air quality, would help tenants and landlords meet net zero target emissions, and ultimately save businesses money. For CRE investors, understanding how to successfully “hack” their existing HVAC systems could help them reduce costs, increase returns as well as help meet building standards like WELL and BREEAM.

So, why are increasing numbers of CRE investors looking at hacking their old HVAC systems?

Many commercial buildings have inefficient HVAC systems that fail to meet current environmental standards where lowering emissions has become a primary focus. In addition, with ever-increasing energy costs, reducing consumption and increasing efficiency is critical to an asset’s ROI and Net Zero goals.

The usual solution of ripping out and replacing the system with a new solution requires a substantial up-front investment, disrupts tenants, and reduces income while the ROI of a rip and replace solution takes 5-10 years, a 360 degree hardware and software solutions like Rensair’s SDCV can deliver a payback in 2-3 years. Typical project IRRs are 35-41%, while creating no need for any works or disruption to the building.

HVAC hacking involves finding innovative light retrofit solutions for your existing HVAC system, but reap the benefits of a heavy retrofit-Besides saving you money, it allows you to continue to maximise your CRE investments while the work is undertaken.

Among the many benefits available to you and your clients are:

With the rapid pace of technological advance, integrating new technologies into existing systems has never been easier. Innovators in the Proptech space have enabled CRE investors and asset managers to maximise operational efficiency substantially while effectively not deploying capital. This is where a subscription model  to upfront costs come into play.

Rensair’s SDCV allows you to upgrade your HVAC without the need of a capital expenditure. Rensair’s subscription model allows tenants and owners to reduce energy and costs creating net positive returns from day one. It also ensures minimal disruption to tenants. This means they can remain in place during the work, continuing to contribute with regular rental payments and maintaining your income.

New HVAC upgrades and retrofits focus on improving energy efficiency. This helps reduce consumption and save money without compromising air quality and operational effectiveness. Now it’s possible to upgrade your existing systems to help you achieve these goals and maintain your bottom line.

For instance, cloud technologies and remote monitoring allow you to optimise your HVAC system based on building occupancy and seasonality. Similarly, smart sensors automatically adjust the system’s operation in real-time according to environmental factors.

Meanwhile, new technologies, such as air filters and purification systems, help improve efficiency and air quality without fully replacing the system.

Indoor air quality matters more than ever. A Harvard study shows that cognitive function for those working in green environments were 61% higher. In a similar study, the Lawrence Berkeley National Laboratory in the US found that good air quality can boost productivity by 10% while improved ventilation can cut staff sickness by up to 35%.

As awareness of airborne viruses, like COVID-19, has grown, businesses have become more focused on ensuring high quality of the ventilation systems at their workspaces.

HVAC hacking can help with this. Adding robust air quality ecosystems to your existing HVAC systems improves air filtration levels, preventing the spread of harmful bacteria and germs. In addition, hacking with top-of-the-range air filtration units helps trap pollen, dust, and other allergens, making your office space safe for anyone with allergies and chronic respiratory issues.

Compliance with air quality regulations help asset managers meet building standards like WELL and BREEAM and your office space becomes more attractive to prospective tenants, boosting your CRE investment profile.

More and more businesses are setting themselves challenging sustainability goals. Hacking your HVAC systems can help you meet your environmental, social, and governance (ESG) goals by making them eco-friendlier and more efficient.

This demonstration of safeguarding the environment and reducing your commercial property’s carbon footprint goes hand-in-hand with attracting tenants who commit to similar ESG goals.

You’ll need to understand how best to implement your HVAC hacking strategy to realise these benefits. Here’s a step-by-step guide to help you:

Before making any changes, assess your current HVAC system to understand how it works and what needs to happen to maximise its effectiveness.

Assess the system’s performance, energy efficiency, and air quality to use as a baseline for identifying areas for improvement. This will help you measure the impact of the hacks and articulate these to your tenants.

Many new technologies can be integrated into your existing systems in a modular fashion. This reduces the need to strip out entire sections of the units, instead relying on cheaper, more flexible fixes.

As a result, your capital outlay is less, and you can make incremental improvements over time as new technologies emerge. Consequently, you can protect your CRE investment profitability while attracting suitable tenants.

Most existing HVAC systems can have air purification technologies added to them. These work in unison with your HVAC units to improve indoor air quality without needing to make structural changes to the building.

This makes them infinitely cheaper to install and helps boost productivity for your tenants in a healthy work environment.

Smart metering is ideal for maximising your CRE investment by ensuring your system always works to its potential.

Smart technologies provide real-time data insights on your HVAC performance. They monitor energy usage and air quality and flag any potential issues. Use this data to guide future improvements and demonstrate the benefits to your tenants and stakeholders.

Asset owners target energy reduction because it’s the area where the most efficiencies are to be found. Typically they look at implementing occupancy-based controls, which work only when the space is occupied, and smart technologies that allow you to schedule when the HVAC system is on.

If you are a CRE investor, HVAC hacking has potentially huge implications. These include:

HVAC hacking offers CRE investors a new approach to upgrading their systems without long-term, disruptive works that might require structural changes to the building. This means you can continue to rent out your space with minimal disruption and without jeopardising relationships with your tenants.

Meanwhile, you increase your property value, reduce regular costs through improved energy efficiency, and future-proof your investments by ensuring they meet evolving regulatory requirements.

If you’d like to know more about how Rensair can help make your existing asset portfolio more HVAC energy efficient, contact us today.