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Strategy

Building services

Related to the need to assure that building systems are suitable for a tenant’s needs, and that the nature and configuration of this equipment will not result in excess costs, is the need to determine that a renewing or prospective tenant is getting at least market-rate terms for building services.

Many older facilities gave tenants little choice as to how HVAC systems would be zoned, and everyone was served by standard hours of operation. Newer buildings or those with upgraded infrastructure allow substantially more flexibility in zoning HVAC systems and may provide 24-hour HVAC service at no additional cost to the tenant, except for the actual cost of utilities consumed when the service is used. A building service issue is the performance of the existing building HVAC system in terms of temperature, humidity and hours of operation. A tenant that has experienced significant discomfort may negotiate to have building ownership install and maintain supplemental HVAC equipment (tenant pays for use), to extend the time for heat during the heating season, and similar matters. Some landlords are more receptive to changes of this nature, which do not affect the face rental rates, and thus do not affect refinancing negotiations, than to other ways of accomplishing a similar result.

At the time of a lease renewal, other significant service issues to be assessed and negotiated are the general performance of the cleaning contractor, adequacy of the HVAC specification, and performance of the cafeteria vendor. Security is another building services issue to be addressed. To maintain comparability with other options in the market, a tenant may seek to have a landlord agree to provide manned, on-site security during off-hours, card-key access to building entrances, camera surveillance of common areas and similar matters. Landlords may be receptive to such requests because they tend to enhance the value of the building as a whole.