Gil-Bar in the News: “HVAC Solutions are Crucial to NYC’s Most Ascendant Asset Classes Right Now”
The following article originally appeared in the March 2021 edition of Mann Report.
Over the past few years, four property types have been gaining steam with commercial real estate investors, especially in the Tri-State area, where commercial and residential were king before Covid-19. Now, the talk is largely about life sciences, healthcare, warehouses and fulfillment centers, and data centers. Recent research by leading brokerages shows that favorable supply and demand metrics for these assets are not abating.
For instance, the supply of U.S commercial laboratory space has grown 12% this year to 95 million square feet, with another 11 million square feet under construction, according to CBRE, which says rents will continue to climb despite supply. In terms of data center space, about one-third of the 373.6MW under construction has already been leased, according to CBRE, a figure that reflects stronger preleasing for the asset compared to last year. Regarding healthcare facilities, total private construction spending for healthcare has been at its highest in over a decade, per FRED data. And the volume of investment into medical office buildings is settling into a higher equilibrium, according to JLL, which cites $13.4 billion invested in 2019, nearly double the $6.8 billion spent in 2012. Meanwhile, an October report by NAIOP predicts that by 2025, there will be enough demand to satisfy 1 billion square feet of additional industrial real estate state space.
What isn’t necessarily discussed are the specifications necessary for these facilities to perform optimally, especially HVAC requirements. Consider the following:
Life-sciences properties require some of the most highly specialized HVAC systems, and the property types are enjoying a renaissance in New York City. Nationally, demand for buildings that can accommodate life sciences research continues to climb, bolstered by public and private funding.
These buildings typically house research labs, creating distinct challenges in airflow and filtration that need to be addressed by a robust HVAC system. These labs operate by BSL (biosafety level) ratings mandated by the CDC for containment of bioagents. The structure of HVAC systems becomes more complex to answer higher biosafety levels. A project may need separate breathing air systems, air handling units, exhaust systems and decontamination systems. These systems need to be structured within the building as to ensure researchers and scientists have a fresh supply of air and are not inhaling dangerous chemicals and bioagents.
For healthcare and medical facilities like hospitals, medical offices or nursing and rehabilitation centers, it’s crucial to keep air as clean as possible. Infectious agents can spread quickly between rooms and common areas. In addition to temperature control, HVAC systems implemented into healthcare facilities need to be able to offer infection and odor control. Optimizing these systems to be able to operate with resiliency in the face of a power outage is also crucial. For larger facilities, HVAC systems need to carefully account for the number of air changes and proper filtration, based upon the number and types of rooms that could be in use at any given time.
Data Centers and Warehouse/Fulfillment Centers
Even before the Covid-19 pandemic highlighted our reliance on ecommerce, a crescendo of demand for industrial space was fueling speculative development and repositioning of fulfillment centers.
Although data centers and fulfillment centers represent different types of industrial space, they have similar HVAC needs. Data centers, for instance, require an optimal humidity and temperature to ensure their server rooms don’t fritz. Specialized HVAC solutions for data centers include systems that pump refrigerant, chilled water or indirect air evaporation. Environmental sensors are exceptionally useful to a data center HVAC system for tracking humidity, air flow and temperature.
Likewise, fulfillment centers humidity and temperature levels to shelter goods from damage. In the case of centers that may employ robots or other automation technology, humidity and temperature is especially critical. Another consideration for these types of warehouses is whether they function for distribution and are trafficked by cargo trucks. In those cases, a DOAS system or OA/RA system can provides a dedicated supply of outdoor air and combat the threat of high carbon monoxide levels.
Covid-19 and digitization continue to drive the need for industrial and data center square-footage, many commercial and retail spaces are repositioning to meet these needs. But it will take more than a remodel or a white box solution to deliver an effective and strategic space; HVAC considerations are crucial, as they are for all development and construction plans.
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