Hard Services:  The Backbone of Building Maintenance

Hard Services refer to the essential physical and structural elements of a building, as well as its mechanical systems.  This includes maintaining and repairing critical equipment like boilers, chillers, and lifts, alongside structural components such as roofs and external walls.  These services are vital for preserving the building’s integrity and ensuring its smooth operation.

Unlocking Insights:  Benchmarking Hard Services Costs with the Assure Index

The 2024 Assure Office Index reveals key benchmarks for hard services costs across the top 50 office properties Assure manages:

Hard Service Costs in 2024 – Tier 1 Office Properties

Cost variation depends on factors like building age and the condition of plant and equipment.  For example, Assure acts on properties where hard services account for 35% of total expenditure, with M&E Services reaching £5.00 per sqft in some cases.  By leveraging the Assure Index, occupiers can better benchmark these critical costs.

Optimising M&E Services:  Maintenance, Repairs & Cost Management

This category typically includes maintenance contracts for plant and equipment and an allowance for repairs.  An M&E contractor handles planned preventative maintenance (PPM) and repairs for breakdowns.  Contracts vary from fully comprehensive (covering all maintenance and repairs for a fixed annual cost, with caveats) to labour-only (materials and equipment charged extra).  Reactive repair allowances, often based on historical costs, tend to rise as buildings age.  The amount of expenditure being incurred on repairs for a particular item will be a key factor in deciding whether it needs to be replaced.

Lifts and Escalators:  Maintenance, Contracts, and Compliance

Most office buildings are equipped with lifts, and larger structures may also feature escalators.  Typically, there are separate lifts for passengers and goods.  Maintenance contracts for these systems vary, from fully comprehensive coverage to basic agreements where repairs are charged separately.

Landlords must adhere to statutory and insurance requirements regarding lift maintenance.  However, it’s important to note that many of these regulations are not retrospective; they only apply if a lift is being replaced or undergoes a major refurbishment.

Maintaining Safety with Suspended Access Equipment

Many larger buildings are equipped with roof-mounted cranes that lower cradles (working platforms) to access all areas for cleaning and repairs.  Regular inspections, repairs, and maintenance are legally required to ensure the safe operation of this access equipment.

Building Fabric Repairs and Maintenance:  Extending Lifespan through Careful Upkeep

This category covers the maintenance and repair of a building’s structure, fabric, and finishes.  It includes expenditure for repairs to roofs and walls, window redecoration, and carpet replacements.  Over time, many elements of a building will deteriorate, often requiring multiple replacements throughout its life.  However, regular maintenance, such as cleaning and timely repairs, can significantly extend the lifespan of certain components.

Balancing Costs and Service: Key Considerations in Building Maintenance

Service Level and Cost Impact:

• Tenants expect prompt repairs and minimal disruption, but landlords have to balance these expectations with cost efficiency.  For example, a commitment by the landlord to provide a fast response time for repairs might require more engineers in the building, who may not be utilised to 100% capacity.

Replacement vs. Repair:

• Some landlords will also be more inclined to replace items sooner, rather than continuing to repair them as the frequency of repair increases.  Whilst items such as boilers and chillers are expected to be expensive to renew, smaller items such as pumps can still cost many thousands of pounds to replace, and many components can be repaired to keep them in service longer.

Obsolescence of Plant and Equipment:

• Obsolescence is also a key factor with plant and equipment.  The timescale over which manufacturers support their products varies but ten years is fairly typical.  After this time, the availability of spare parts will diminish, making repairs increasingly difficult.  Landlords should make reasonable efforts to source spare parts, which might include keeping critical spares on site.  However, there will come a time when replacement is the only option.

Challenges of Improvements:

• An issue that often arises with the replacement of plant and equipment is the concept of improvement.  Replacement items are frequently ‘better’ than the originals, often coming with a higher cost.  While this can sometimes be unavoidable due to advances in technology, most leases explicitly exclude improvements.  If an improvement is being proposed, the landlord must be prepared to justify it to the tenants who will bear the cost.  Potential benefits, such as reduced energy consumption and lower repair costs, could offset the expense over time by reducing the service charge for this expenditure category.

The Future of Office Building Upgrades:  Who Pays for Sustainability?

As we strive to reduce waste and energy consumption to lessen our environmental impact, modernising office buildings with energy-efficient plant and equipment is key.  However, a critical question arises:  who should bear the cost of these upgrades, especially when replacements occur before the end of their expected lifespan and include enhancements?  While tenants may benefit from lower running costs, landlords could see an increase in asset values.  This creates a compelling case for sharing certain costs of such improvements.

Assure Consulting is the UK’s leading professional service charge & lease expense consultancy.  Offering a unique occupier-focused approach to generate significant property cost savings for large corporate occupiers.  In 2023, we generated savings in excess of £34M for occupiers in the office, retail, leisure & hospitality and distribution sectors, across the UK and Internationally. To learn more about the services we provide and how we can support your business, complete the contact form below.