Infrastructure that supports commercial real estate is in high demand. Electrical current is so high that special precautions, like protective arc suits, are often required just to test breakers safely. Commercial customers use plumbing for things like cooling and restroom trips by everyone in the space several times a day. Elevators are similarly challenging to maintain, but instead of just stopping when they break, they risk putting lives in jeopardy.

What causes elevators to fail in commercial buildings?

According to National Elevator Industry, Inc. data, elevators typically lift five people, four to five floors, four times per day – approximately 20,000 people per year. That’s a lot of mechanical work. Elevate Monitoring estimates that approximately 1 in 100,000 trips on a commercial elevator takes longer than it should because the car stops where it shouldn’t, and the doors never open. For property managers, that’s a simple fix; for users, it’s terrifying, claustrophobic, and extraordinarily inconvenient. At the best of times, a stuck cab is a nuisance; at worst, it can be fatal – and that’s without a catastrophic failure (which are rare, contributing only to 17,000 injuries and 30 deaths in the U.S. annually).

Lifting the equivalent of a small car hundreds of times per day is a lot of mechanical work. Wear is a fact of life. Even following manufacturer guidelines, mechanical equipment ages and reliability decreases over time. A common misconception is that failures result from poor parts availability and technician shortages. While that contributes to poor performance in some places, a larger factor is at play: money.

How much does it cost to modernize an elevator?

Alcor Elevators quotes elevator modernization projects at approximately $175,000 per car. That covers most wear items, improves control electronics, provides faster operating speeds, enhances passenger comfort, and improves reliability. Any piece can be repaired or upgraded alone, but it often makes more financial sense to do it all in one go. There are opportunity costs for tenants when an elevator is out of service, and it’s more cost-effective to do as much as possible “while you’re in there.” The expense is significant even in commercial real estate, where severe-duty equipment costs multiples of its residential counterparts.

Office buildings taller than a few stories often include elevator banks with anywhere from two to a dozen cars. Modernization for six cars can easily cost more than one million dollars. Even for Class A office towers, large capital projects require significant planning. In some cases, elevator improvements can cost as much as an entire annual maintenance budget.

Surely, the juice is worth the squeeze? Not so fast. Although typical service calls are included in annual CAM billing, the costs of modernizations or replacements fall on landlords. A nice elevator is enjoyable, but even a malfunctioning system works most of the time, and that is where tenants focus their concerns. Often, capital improvements come with some return. Rental rates could increase, marketability may improve based on amenities and quality, or even the sale price could rise. Elevators are different. Tenants won’t pay higher rates, and stakeholders won’t recoup their money at the sale. Capital improvements that don’t feed back to overall value get minimal traction. Elevators, unfortunately, do not.

Why elevator upgrades are delayed or ignored

There may be a good story about why the market doesn’t care about elevators. Still, the vital thing to remember is that as long as they function, nobody–not fund investors, asset managers, NNN occupiers, or private owners–wants to spend money to update or replace them. “There’s no mechanism for incorporating elevator condition in assessments,” says Jeff Gerwig, Colliers’ National Director, Engineering & Sustainability, U.S. “It just doesn’t move value. You’ll likely see real change in that infrastructure only when a property changes hands.” Then, another million dollars on top of a few hundred million may be a drop in the bucket.

According to Stephen Smith, executive director of the Center for Building in North America, federal elevator regulations are lacking. Having not changed since the 1980s, when Ronald Regan rolled back many of them, they do little to incentivize improvements. A patchwork of local and state regulations continues to provide guidance, but they require significant time and capital to interpret, put into practice, and enforce. They are also only focused on achieving a bare minimum of safety, not reducing inconvenience. At one office property in New England, this maintenance “blind spot” meant elevators weren’t replaced until an emergency situation involving a pregnant woman occurred.

How does Colliers improve elevator performance?

Due to the age and variety of elevator types and configurations throughout the country – North Carolina’s Biltmore Estate features two elevators that were installed in 1895, and dozens more in other buildings throughout the country date back to the start of the 20th century – servicing them is a quagmire of proprietary systems, obsolete parts, and encyclopedic knowledge. Training technicians on new and old equipment costs money, as does finding and procuring parts, which discourages firms from accepting small jobs. Getting an expert on-site for an assessment can be difficult for those properties. Instead, high-quality, full-service property management firms are ideally positioned to manage this gap. Due to the large number of relationships with vendors and suppliers that these firms maintain, earning portfolio business is in vendors’ best interests, and their services often come with SLA’s.

Colliers’ property management teams operate across the country, covering all major U.S. markets and most tertiary ones. They are familiar with all the options where they operate, and have relationships with many already. With more than half a billion square feet under management, Colliers’ scale also enables it to consolidate bargaining power, keeping costs down and speeding up response times. Not only do large, urban-center office buildings benefit from these agreements, but smaller, remote properties also receive preferential pricing and response. Response time and cost are preferential compared to small, independent managers or calls to in-house operators.

To learn more about how Colliers can help keep your properties operating safely and efficiently, please get in touch with Jeff Gerwig at jeff.gerwig@colliers.com.

Note: If you ever find yourself in a stuck elevator, do not attempt to exit on your own. Escaping without professional assistance is extremely dangerous. Modern elevators are governed by complex systems that can reset without warning, causing the car to move unexpectedly. Attempting to exit between floors or through other openings can result in severe injury or death. Always use the emergency call button and wait for trained personnel to assist you.