Commercial real estate buildings constructed 60 to 100 years ago used a different building code. Most were constructed without fire suppression, and many had limited 16-foot clear ceilings or less. They are aging, and all major components are affected, which poses risks to you and your tenants. Let’s review some components and their challenges, which could become risks if not maintained proactively.
Electrical
Older buildings are equipped with outdated technology. For example, they may come equipped with knob and tube wiring or aluminum wiring. They may have older panels that, in some cases, are overloaded or are unable to meet the current electrical demands. Even though newer lighting uses LED bulbs, older lighting often stays in place until a manager realizes it’s time for an upgrade or a change.
Electrical systems can wear out after 25 – 30 years of constant heating and cooling (use), and typically wiring is in places hard to get to and is not upgraded. You can tell if there is potential for a problem. If you hear noises coming from your circuit breaker box, touch a panel or breaker and it feels hot, have breakers that must be reset all the time, or you see flames you should call an electrician.
How Often Should I Inspect My Older Building’s Electrical System?
In many cases, you should have an electrician complete a routine electrical system inspection every three to five years to prevent a potential future circuit overload. Aging buildings can cause many issues that can be avoided with a routine inspection.
Nowadays, inspecting buildings is faster and more convenient with newly available tools like infrared thermography, which can detect hot spots in walls and help quickly spot problems. Remember that not only computers and cell phones need power, but also elevators, machinery, and cranes.
Plumbing
One of our clients has recently had many plumbing problems. He has had wall leaks at three of his properties, and he asked me for a simple solution to identify and plan plumbing renovations so that he could be better prepared.
I responded to his email with the following:
Water pipes end up with scale (think mineral build up) and pin hole leaks as they age. Bear in mind, most plumbing is installed when a property is constructed. To establish the age and condition of the plumbing in your properties I would have a plumber sample three locations at every property to establish the material used during construction or during a renovation to establish the current condition of the plumbing. Then using the following as a guideline, you will know how to plan.
Types of material used in plumbing construction
Many materials are used for plumbing, but below are some of the most common ones used in commercial real estate buildings.
PVC:
The lifespan of PVC (polyvinyl chloride) pipes can vary depending on the source but is generally between 25–40 years. However, some say that recent technological advancements could allow PVC pipes to last 70 years or more.
Copper:
Copper pipe use remains extremely common in plumbing systems across America. They last roughly 70-80 years or more.
Brass:
An alloy of copper and zinc, brass piping is slightly less common than copper piping but has a slightly longer lifespan. Generally, brass pipes can survive between 80-100 years.
Galvanized Steel:
Galvanized steel piping also lasts between 80-100 years (except for Korean pipe that was available on the market in the 1970’s and 80’s that did not last).
Cast Iron:
Cast iron pipes last between 80-100 years but have been susceptible to rust over time.
Polybutylene:
Between the late ‘70s and the mid-90s, polybutylene pipes were popular, because the materials used in them were cheap and they cost less to install. However, these pipes were flimsy and started to break apart after about 10-15 years.
Pex:
Pex is a newer more flexible product, but it too has faced significant problems. There have been multiple lawsuits involving PEX plumbing, including a class action lawsuit against NIBCO and a class action lawsuit investigation involving Rehau PEX. Other pex products from Zurn and Uponor have also been facing class action lawsuits.
It stands to reason that Brass, Steel or PVC plumbing might be the materials to select if you decide to upgrade your plumbing systems.
Sewers
Sewer line connections last between fifty and one hundred years. Older sewer lines were typically assembled with clay tile pipes that fit together. The biggest challenge with that approach is that roots work their way between the sections and crack the tile, interrupting the flow of water or effluent. Every few years, these lines must be scoped with a camera from the building to the mainline connection to inspect their condition. If they disconnect, you must excavate them to replace or reset them.
The same is true with cast iron and steel pipes. In some case you can reline sewer lines, also called trenchless repair that avoids excavation of sewer line. Currently PVC is the most commonly used sewer line because it is light, resistant to corrosion, damage from chemicals and has a long lifespan. Cast iron is slap used because of its success repelling root invasion. Other materials include concrete, ductile iron, and polyethylene.
Fire suppression sprinkler systems
Fire sprinkler pipes can fail for a few reasons, including:
- Corrosion – Exposure to environmental factors over time can cause corrosion in the internal and external piping, which can lead to leaks or stuck valves
- Calcium carbonate obstructions – These are common in systems that use hard water from non-potable wells or surface water. They can’t be fixed by flushing, so sprinklers should be inspected annually and replaced if they have deposits
- Exposure to chemicals – Incompatible chemicals on the inside or outside of the pipes can cause failures
- Freezing – When water freezes in the pipes, it expands and puts pressure on them, which can lead to cracks and bursts
Due to the number of failures, fire suppression systems are typically inspected yearly to find any failures. Federal guidelines put forth by the National Fire Protection Association (NFPA) require that every sprinkler system installed be inspected once per year.
A five-year internal inspection is an NFPA-mandated inspection examining the insides of your fire sprinklers’ piping. The requirements do not differ by state; however, every jurisdiction is a little different.
Appliances and water heaters
Water heaters tend to need replacement every eight to ten years but can last longer if well-maintained and flushed regularly. They should also be inspected every few years to ensure they are not leaking or failing.
Carpeting and linoleum
Depending on the kind of use, carpeting can typically last from 5 – 10 years, the same goes for linoleum. The longer your tenants stay, the more likely you are to be able to extent these time frames. Many of these products come in tile format, so that you can replace sections as they get damaged or get so filthy they cannot be cleaned.
Asphalt and concrete
Parking lot asphalt is affected by heat and cold, rain and sun and it expands and contracts. It is also affected by improper design and drainage. An 18 -wheeler (aka semi-truck) can weigh between 35,000 to 80,000 pounds and they tend to destroy asphalt surfaces. Because trucks are so heavy, truck wells are usually ten to twelve inches thick concrete often interlaced with rebar, or rebar mesh, to support the weight of the heavy loads. The older the asphalt the more brittle it gets. Every three years you should plan on seal coating and crack sealing your asphalt. In areas with high heat and cold temperatures asphalt may need more frequent attention or Concrete should be selected instead for parking surfaces.
Once concrete is poured, set, and cured, it is one of the most durable materials used in construction. It can handle a high variation in temperature and humidity. But if it does not cure properly during installation, it can crack and spall. Installing it at the right temperatures will allow it to last for a long time.
Roofing
A tight roof is the key to long-term building life. Most commercial real estate buildings have flat roofs, with a typical 15-to-30-year lifespan depending on the quality of roofing installed and the workmanship of the roofing vendor. Materials used in roofs include:
- Standing seam metal roofing
- EPDM (Industrial-grade Synthetic rubber)
- TPO (Thermoplastic Polyolefin -roofing membrane)
- Built-up roofing (BUR) -3 -5 layers of built-up roofing – is very resistant to lots of traffic
- Hot Tar
- Torch Down
As roofs age, you can extend their life by using a fiberglass and emulsion system to extend roof life by an additional 10 years at a lower price than a new roof. The LeakSeal System is a cold, spray-applied roof membrane made up of four main components: asphalt emulsion, fiberglass gun roving, polyester sheeting, and solar shield reflective coating. All roofs, gutters, and downspouts should be inspected and repaired annually.
Summary
Every year, commercial real estate building owners face the aging of building materials. To maintain property value, you must keep up with the annual wear and tear.
Your commitment to maintaining the property and funding your reserve fund is critical to your success in investing. Property investors should set aside 5-7% of their annual income to build a maintenance reserve fund. Regular maintenance will extend the rental life of all properties. Establish these reserves as soon as you have purchased your real estate investment.
Finally, there is something to be said for “value-added “investing; if you have a solid contractor or group of contractors who can help you establish a budget early on and you repair or replace aging building components regularly, you can deliver an improved property to tenants at a significantly lower cost than a new building. This enables you to compete with a better product at somewhat lower rents compared to new construction rents. This could keep your property full and reduce your turnover.
Remember, as you upgrade, you can also better manage property insurance rates. Newer and renovated properties tend to have lower insurance costs than older properties. Insurance companies want to reduce their risk. Older properties with older components are a riskier bet for the insurance companies, and you or your tenants will pay for that risk in increased premiums and or rent. As an owner of real estate, you have the ability to extend the life of all commercial buildings with a well-thought-out and consistent maintenance plan.
