Industrial facilities can be somewhat of a balancing act, says Kent Walling, director of operations at commercial real estate company Taylor & Mathis in Kennesaw, Georgia. “You have to find the right match between property management, maintenance and the responsibilities of the owner versus those of the tenant.” Although maintaining the building systems within an industrial space doesn’t always fall to the property manager, Walling says it’s still the property manager’s responsibility to work directly with tenants to keep up with preventive maintenance.
There are certain systems and components, however, that Walling pays special attention to: HVAC, dock doors, plumbing, roofs and common areas.
Loading dock doors endure a lot of use as they are rolled up and down when deliveries come in and go out. Damage through typical wear-and-tear (and trucks getting too close to the doors) can require frequent panel change-outs. “We’re constantly making sure our tenants are maintaining them properly,” says Walling. “We go through and do preventive maintenance work with our vendor on them, checking the rollers and the guides as well.”
HVAC systems typically are maintained by the tenant throughout the lease, but reminders about service contracts and routine maintenance are key. “HVAC systems usually have a shorter lifespan in an industrial space,” Walling explains, “so we want to make sure the tenants maintain those to minimize downtime and bigger complications down the road.”
Because most industrial tenants are focused on what’s happening inside their warehouse, an industrial building’s common areas and office spaces can be an afterthought. Tenants may not notice problems that crop up in restrooms, break rooms or hallways. For example, a toilet may leak water for months before it’s discovered and,by that point, thousands of gallons of water may have been wasted. Walling says it’s a good idea to regularly remind tenants to check on these areas, but also to make an effort to routinely walk through common areas to catch potential problems yourself.
The roof is also a component that Walling keeps close tabs on. For a large warehouse building, roof area could reach up to 200,000 square feet or more, so it’s an expensive asset. After working with vendors that have left tools on the roof or cut holes through roofing material, he now prequalifies vendors before they’re allowed on top of the building to service HVAC equipment. “We’ve put a process in place that requires them to check in with us first. We make sure the roofing contractors meet our requirements to work on the building. If possible, we’ll have our personnel get them access to the rooftop and let them know what they need to do once they’re up there.”
How Tenants Affect Operations
Because industrial buildings typically offer lower rental rates than an office space, Eileen Lewis, property manager at Reliance Management in Tucson, Arizona, says she has several office tenants that have set up their office space in industrial buildings to save costs. “This can create parking problems and a whole host of other challenges,” she explains. When tenants are used to working in a traditional office building, it takes time to teach them that industrial buildings function differently. Indoor environmental conditions may not always be on par with what a tenant expects, either, especially if they’ve never worked in an industrial space before.
Industrial properties also can attract non-traditional tenants. “Here in Arizona, we’ve had several CrossFit gyms move into industrial spaces recently,” says Lewis. “Not only do these gyms get a cheaper rent, but this type of building also offers open space and room to spread out their exercise equipment.” But before you welcome a tenant with specific requirements like this, Lewis says it’s important to understand exactly what they’ll be doing both inside and around the building.
Depending on class schedules, for example, there may be certain times of day where parking will become congested. Some classes also may use the parking lot as a place for participants to run laps and lead exercises. It’s critical to know about these situations upfront, especially if the parking lot has heavy truck traffic or poses other potential dangers to people using the lot for other purposes.
“It’s important that we, as property managers, are able to spot a potential problem and be proactive about it before the tenant even moves in,” Lewis says. Learning exactly what your tenant plans to do within the space can help you put plans in place to protect your property (and your tenants).
Underscoring this point, Lewis says a fellow BOMA member shared a story with her about an industrial tenant in Florida that manufactured pool chemicals—and the chemicals eventually ruined the building. The pool chemicals caused corrosion to the sprinkler system; the building’s metal trusses were also compromised.
Over the years, developing checklists has helped Lewis remember to gather important information from tenants that could be areas of concern down the road. She even creates checklists that are specific to the type of tenant moving in, just to make sure all the right questions are asked. She also recommends taking pictures as a tenant moves into the building. “That way, when you’re moving them out, you have pictures clearly indicating that there was (or wasn’t) a crack in that wall when they moved in, for example,” she emphasizes. “Also, remember to take pictures of areas that aren’t ‘perfect’ so you have something to compare to later.”
Older Buildings, New Problems
Managing an aging building is a task that almost any property manager can relate to. “With the downturn in the economy,” says Lewis, “in the secondary and tertiary markets in particular, we haven’t had much new development.” But new technological advances in the last decade have changed infrastructure requirements, which can present challenges for older industrial buildings.
Case in point: providing internet service. Tenants typically get to select which provider and type of service to use, whether it’s wireless, DSL, cable or something else. Depending on their choice, the necessary infrastructure may or may not be available in an aging building. If it’s not, a workaround has to be established. “The challenge is not only running the service into the space, dealing with penetrations and protecting your building,” explains Lewis, “but you also have to weigh your options for running that service to your property.”
In order to run the cable lines, for example, there could be trenching involved. Once you trench across the parking lot, then how will you get the service to the building? “Older buildings weren’t built with that type of service in mind,” Lewis says. “Aesthetics may be compromised if cables are running up the side of the building across the parapet walls. Physically getting the service to the building is challenging, but so is controlling how they’ll actually receive the service inside the building.”
Older industrial buildings can present other dilemmas for property managers as well. “We ran into a plumbing issue in one of our large distribution centers, which actually is comprised of six different buildings,” explains Walling. When a plumbing line broke, Walling and his team discovered that there were only two valves to shut off water for all six buildings.
“In an industrial setting, you don’t really use a lot of water like you would in an office building with restrooms and break rooms, so there aren’t many opportunity for plumbing lines to break in the first place,” he says. “In order for us to fix that plumbing line, we had to shut off the water to four of the six buildings.” Although it caused some headaches for those tenants, the good news was that it brought the issue to light and allowed Taylor & Mathis to install valves that allowed for only one building to be shut off at a time, minimizing future tenant disruption.
It’s What’s Outside That Counts
If storage is reaching its peak in the warehouse, some tenants may choose to keep pallets outside rather than take up useable space inside. In these situations, pallets tend to pile up. Some tenants make it a priority to keep the area tidy, but other tenants don’t. This can pose safety issues as well as impact how the building looks to passersby. “If the pallets get out of hand, it can affect the flow of traffic or take up valuable parking areas around the office suites,” Walling states. The same holds true for overflowing dumpsters that aren’t emptied often enough.
The Impact of Industrial Equipment
With forklift traffic and constant product movement happening all around a warehouse, there is increased potential for damage to walls, floors and other assets inside the building). “We’ve had situations where tenants move out of a space and we look at a demising wall and realize, ‘Wait, this wall used to be straight.’ But you can tell where the forklift hit it because someone wasn’t paying attention. The wall may be bowed or cracked, or there may be a hole in it,” says Walling.
Knowing that this is likely to happen, his team often installs plywood on the demising wall for the first three or six feet of the wall (depending on what the tenants plans to do inside the warehouse) to prevent damage to the wall down the road.
Cutting Down on Condensation
The topic comes up again and again: floor sweat. There are many variables that can cause floor sweating and condensation, including tenant operations, so fixing the problem isn’t always easy. Once you discover floor sweat, the next challenge is to figure out what’s causing it so the problem can be fixed permanently.
John Aviles, vice president of regional property improvement at Prologis in East Rutherford, New Jersey, explains a time when three different Prologis industrial buildings across the country were experiencing floor sweat—but the cause was different in each situation.
“In one instance, we discovered that our tenants were operating with their doors open both day and night,” says Aviles. “But they didn’t realize what a big impact that had on the internal conditions of the building, and how much moisture a building will absorb and emit during the day and evening hours.”
To help educate the tenants and demonstrate what was happening inside to cause floor sweat, Prologis set up sensors to monitor indoor and outdoor temperature conditions. Condensation meters with alarm indicators offered the tenant a “pre-warning” when conditions were ripe for condensation or floor sweating.
In the second instance, a tenant was operating with the industrial building’s doors open, but they weren’t running any heat in the building. “The internal conditions got so cold that, when the humidity went up, they were getting condensation on the floor,” says Aviles. In this case, the heat levels in the building had to be adjusted to compensate.
The third and final situation involved a customer who specified a 55⁰F space in a build-to-suit property, which was then insulated for that temperature. But after moving into the building, the tenant was attempting to operate the space at temperatures closer to 70⁰F. Due to the type of heating equipment installed, condensation was appearing on the walls and some of the steel.
“In that case, we had to redesign the heating system to compensate for the warmer temperatures the customer wanted. We went from a direct-fired system to an indirect system and added some ventilation in order to reduce the humidity inside the building,” explains Aviles. “The last thing we want to do is move a customer into a space and find out later that we have to modify it because of something the building wasn’t really designed for, whether that involves ventilation, door control or layout”
Although the causes of condensation were different, what these situations all had in common was open communication between property managers and tenants. By working directly with the tenants to understand what was happening to cause floor sweat in each situation, the problems were solved effectively for both parties: condensation levels were decreased without negatively impacting the tenant’s work environment.
Effective communication isn’t a one-way street; taking time to understand what industrial tenants need to be comfortable and productive benefits both parties in the long run.