Rule of thumb hvac costsRecently I was asked, “is there a reliable ‘Rule of Thumb HVAC Costs’ psf for operating warehouse air conditioning?”

The limited information offered to me to help determine an answer, were as follows:

“30,000sf of 22′ clear standard warehouse to be climate controlled to approximately 76 degrees. The air conditioning systems are well maintained, relatively new but not state-of-the-art and have received annual estimates between $1psf to nearly $2psf.”

The short answer is no, there is no “Rule of Thumb”[1] for this type of estimation. As a Landlord Representative advising my client; below I will explain the recommended points I use to understand operating expenses related to heating and cooling when pursing an acquisition for lease up and long term holding investment.

Building Assumptions

To begin creating reasonable assumptions of the HVAC systems and the operating expense of roof top units (RTU) described, one must understand the following to determine the rate which a building’s envelope sheds/retains heating and cooling. It is but one thing to simply heat and cool a building, it is yet another to overcome an inferior building envelope.

The following must be taken into consideration:

  • Front, rear, side building elevations/orientation relevant to compass north, south, east and west.
  • U Values and R Value interactions in relationship to various building materials
  • Building construction (pre-engineered steel, concrete tilt up, masonry/bearing bar joist, etc.)
  • Thickness and type of insulation of building envelope (roof, wall and foundation).
  • US Climate Zones of building location.
  • Buildings ability to shed/absorb heat merely by its roof (primary) and wall color. Lighter the color (silver), higher the SRI (Solar reflective Index), higher the possible tax credit.
  • Surrounding terrains offering limited protection (wide open, shorelines, desert, conifers etc.)
  • Buildings overall height (not just eave height), length and width.
  • Building roof slope, single slope, gable (center ridge), flat roof, etc.
  • Locations and size of man doors, overhead doors, windows, wall/roof louvers and their respective insulation values.
  • Accurate building “Use”, determining occupancy load which determines fresh air requirements which effects equipment sizing and performance. Fresh air needs to be tempered.
  • The building envelope working as a unit; weather tightness of all penetrations and openings.

Utility Assumptions

The above bullet points are meant as a checklist to be provided to a competent licensed HVAC contractor to perform a load analysis on the building. Once the load analysis is calculated, from accurate values as described above, you will then be able to determine energy needed to achieve the required BTU (British Thermal Units) for heating and tons required for cooling the building to a predetermined temperature range, in the scenario above remember was 76 degrees. Digging deeper there may be several energy types effecting the calculation determining the end result.

All RTU’s use electric to some extent.

  • Electric Units – the type and phasing available (480v, 240v, 3ph, single phase etc.) will determine the units efficiency which in-turn will determine kilowatts needed for operation.
  • Natural Gas and Liquid Propane Units – is usually measured by volume and is stated in cubic feet. Minimal electric will be needed to operate blower fans for circulation.
  • Geo Thermal/Chillers Units – minimal electric will be needed to operate blower fans for circulation. Primarily electric but could have other resources for backup.


Bottom Line on HVAC Costs

So whats the point to this madness?

The point is……I recommend that my clients hire a licensed and qualified HVAC contractor to run a software analysis to determine BTU needed for heating and tons required for cooling, The analysis should include a full understanding of all existing equipment; its efficiency, life expectancy, expected future performance and verifying proper equipment sizing.  Under sizing will not heat properly, over sizing will not cool properly.

Accurately determining psf operating costs of HVAC and RTU’s are sensitive to:

  • Areas of the country
  • Exposure/orientation to the elements and terrains
  • Utility rates of resources
  • Natural resources available
  • Costs of maintaining the equipment on a quarterly filter service/semi-annual analysis.

And the only future assumption of operating expenses would be that of a history of buildings with all of these items in common, on the same street being served by the same utility rates.

Your landlord/client will be satisfied once you outline this matrix of diligence, placing the property under advisement that you have determined the most viable solution of determining heating and cooling building costs.

Wishing you the best success,
Brent W. Sears, CCIM SIOR, CRE$

[1]        A rule of thumb is a practice or procedure that is developed from experience and common sense and has nothing to do with scientific or technical knowledge. It was first used in English around 1692. The expression alludes to making rough estimates of measurements by using one’s thumb, the distance to the first knuckle usually being about one inch. The plural form is rules of thumb. There is a story about this phrase’s origin involving wife-beating that is quite implausible and not worth going into. Suffice it to say that it is a bit of modern folklore. The real explanation of rule of thumb is that it derives from workers who knew their trade so well that they rarely or never fell back on the use of such things as rulers. Instead they would measure things by, for example, the length of their thumb; they measured, not by a rule(r) of wood, but by rule of thumb. The term was already in metaphorical use by the late 17th century.

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