Asset Lifecycle Considerations
An assets’ Life Cycle is something that is rarely considered in the property development industry. The value of Life Cycle management only comes into play when an asset becomes a longer term investment and only then do the owners whine about the developer and why they didn’t think about it when they built it.
Well it’s a simple answer to why they didn't think about it….Capital Cost. It costs money to use better and longer lasting products, or implement measures that will save on operating costs. Of course operating costs are not the domain of the developer, it’s his role to reduce capital costs and bring scope to the minimum requirement so as to maximize return on equity.
Really……????
Whilst I understand the reasoning behind building the cheapest product for the maximum return, I find it extremely short sighted, is a poor image for the development industry, and creates unnecessary operational and especially energy costs in the future. But as an industry we all seem to strive for the lowest common denominator because that’s what our economic system dictates.
The Green Building requirements are the best example. Things like the utilisation of recycled concrete are a great idea but are just not economically viable, and only governments can afford to enforce these requirements because they are the only ones who will pay double the going market rent. But this is not what I’m talking about. I’m referring to just simple things like ..
Take some time to explore new materials that provide enhanced operating efficiencies
Technology in Building Management Systems
Simple structural efficiencies
These simple elements in isolation are often not seen as cost efficient or providing a sufficient return on the extra investment, but that’s because most of the time the property is not marketed to those elements. I am a firm believer that there is growing evidence of tighter yields and Cap Rates for property that provides energy efficiencies and considers the long term maintenance and operable values in the early concept design phase.
It doesn't work all the time but our society is becoming far more conscious of the impact we have on the future, especially in the areas of energy costs and health related issues, and hence the value of incorporating these elements is growing exponentially.
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