Planning for obsolescence
Published: 25 January, 2012
Many shopping centres are having to bite the bullet and replace ageing lifts and
escalators. How can this be achieved with minimum disruption?
With the average shopping centre approaching its 20th anniversary, the lifespan of M&E facilities like lifts and escalators is fast running out, and with the cost of plant replacement high it could come as a shock to both landlords and retailers with a potential 15-20 per cent spike in the service charge.
Mark Curley, associate director at K J Tait Engineers, which provides consultancy support to Jones Lang LaSalle on the Standard Life Investments portfolio, describes the problem as “sitting on a time bomb”.
Apart from two brand new centres, Curley says all are between 20-30 years old and with insurers often picking up on safety factors from 15 years onwards, there is some urgency. He’s been involved in talks with Jones Lang LaSalle on the issues of plant installation for two years, working hard to get new equipment phased in.
“A lot of the shopping centres we’re dealing with are in the 20-25 year age band,” says Jones Lang LaSalle’s Andrew Gunn. “The life expectancy of a lift is about 15-20 years – as with anything with moving parts, they’ll eventually wear down, and there are major costs involved.”
Gunn says a new lift costs £100,000 to refurbish or £150,000 to replace, depending on the size, speed and number of floors served, and for a panoramic lift that cost can more than double. There are high costs involved in escalators too, which often need step chains replaced every 10 years at a cost of £20,000.
Replacing an escalator might cost £70,000-£80,000 and that would mean lifting it out as a whole which can cause logistical challenges in terms of getting it in and out of the building. The alternative is in-situ modernisation, which doesn’t involve so much heavy lifting but takes 6-8 weeks rather than two.
Hilson Moran conducts regular audits into the condition of plant equipment and provides Jones Lang LaSalle with technical advice on the replacement or modernisation of 160 lifts and escalators across a portfolio of 11 shopping centres.
“Consider every case on specifics,” says Matt Ingleton, Hilson Moran’s divisional director of vertical transportation. “We look after one shopping centre that has very old lifts but they’re well-built so we were able to keep the guide rail and a few other features and replace only the remaining parts.
That’s more economical and involves less disruption than putting in brand new.
“Another of our clients had a hydraulic lift that was subject to more wear and tear than it was designed for. We replaced it with a brand new electric traction lift – it’s more robust and allows for more lift starts per hour with minimal building modification. In that case, replacement was a more appropriate solution.”
Down time is another major consideration. Replacing a lift might take a 20 week lead-in post specification, but it comes out of the factory fully assembled so it’s just a case of slotting it in, which might take two weeks on site. Refurbishment requires a 16 week lead-in but eight weeks on site, depending on the available parts. And with technology leaping on it isn’t unusual for parts to become obsolete.
“The lifespan of a lift or escalator is about 20-25 years but that’s a broad brush estimate – it depends on a lot of factors,” explains Ingleton. “Hydraulic drives tend to wear out quicker than liquid traction lifts, for example, and then there’s the usage factor – if footfall is greater than anticipated, the equipment will wear out quicker.”
Who pays for the installations is another conundrum. “It varies from case to case,” says John Gray, owner of John Gray Service Charges and senior partner at 1st Point Consulting. “But the lifts and escalators in existing shopping centres, those that are 15-20 years old, will be subject to normal wear and tear and can be factored into the service charge as outlined in the tenant’s lease. The exception would be highly inefficient scenic type lifts. If the landlord decided to change those, there’s an argument as to whether it should be their responsibility to pay.
“If an older shopping centre hasn’t already had a major refurbishment those lifts and escalators will be getting old and falling into a category where they need to be repaired all in one go, and that can be a big worry for tenants with a potential service charge increase of 15 or 20 per cent. If you’ve got 300 or 400 stores in shopping centres that are at the age where these things need to be done it’s not going to be too welcome – nobody likes spending money especially in the current economic climate.”
Gunn advises getting a conditional survey or feasibility report done so you’re able to show tenants the audit trail in case they challenge a service charge hike. He also advocates a structured approach to maintenance, putting in place a Planning Maintenance Programme (PMP) for example, establishing what needs to be replaced and when, and allowing managers to inform tenants of any service charge increases in advance.
And works could be phased over a number of years, with equipment with a history of failure or those that are most used and susceptible to wear and tear billed as a priority. “It is a worry for landlords,” says Ingleton. “One shopping centre we work on has 18 lifts and escalators and they’re all the same age so they need to be replaced around the same time, that could cost £1.5 – £2m and that’s a problem to anyone who hasn’t planned for it.
“The reality has to be lifecycle plans. Some of those 18 units might not be used so much, so you can spread the works, and the cost, over five years, replacing those that are subject to more use, or those that have high failure rates, first. Doing it that way is less painful and less disruptive.”
“Well planned lifecycle maintenance plays a part in ensuring that landlords, tenants and service providers are all working to the same timescales when it comes to the expectation on plant life term, repair costs and replacement,” says Martin Reed, commercial director at Incentive FM. “Lifecycle maintenance means there’s total visibility on the cost so you know the break point when replacement is a better option than repair.”
One way to mitigate costs is by replacing old equipment with newer, more efficient versions.
Escalators are available that switch off automatically when they’re not in use and electric traction lifts, using a weight to balance the car, allows the drive system to regenerate electricity back into the mains, allowing it to go up without using power.
“Spending a little bit extra to make equipment energy efficient can save on running costs,” says Curley. “If there’s a three-year payback, that’s a no brainer and it helps the stakeholders with their Corporate Social Responsibility. Historically, if something broke you’d fix it by looking at the old manual and replacing like for like. Don’t do that – planning for replacement with energy in mind could save £50,000.”
Matt Ingleton has one last nugget of advice: “Where possible, try and be consistent across the portfolio so it’s easier to source spare parts,” he says, “and consider all sensible options based on current and future needs.”
