How to keep cool when your HVAC dies 🥵->😁

What rolls along the ground, smells like a locker room, and has no WiFi?

Can you guess it?? 

It’s the Amtrak train, where I’m currently 2.5 hours into a 7.5 hour journey from Philly to Norfolk. Four cars—mine included—have broken air conditioning and it’s 95 degrees outside.
      

Why don’t I just move to a car with AC? Because I paid for business class tickets, since I’m traveling with my daughter, and unassigned seating gives me anxiety. Plus the seats have footrests which are crucial when you’re five feet tall or under. Oh, and there's a free drink.

So anyway, I’m sitting here in this swamp thinking about how few things are worse than having your HVAC break down in your retail space.

At my old restaurant, whenever we had issues with our heating or cooling, we had to go up on the roof to troubleshoot the RTU (rooftop unit). Accessing our RTU required walking up two flights of stairs, crossing a parking lot, heaving my body over a four-foot wall, walking across another roof, heaving my body over a five-foot wall (again, I am but five feet tall), and thennnnnnn, finally reaching the RTU. Troubleshoot. Push some buttons. Flip a reset switch. Then do it all again in reverse. 

And of course, whenever I had to do this ninja warrior course, it was on a day that either (a) was raining, (b) I’d worn a dress, or (c) both. 

There’s no way to know exactly when your HVAC unit might act up. But hot damn…if I could be an HVAC psychic, I’d be a bazillionaire, and I would definitely not be riding this sweat box of a train right now.

Anyway, since you can’t predict or prevent mechanical issues entirely, the next best thing is to not be financially devastated when it happens. 

If you own a home, you’ve likely endured the mid-July emergency service call that ends in a surprise “replacement is the only option” $6k gut punch. Imagine what it feels like when that punch is $26k. Yep. Awful.

As a business owner, if and when you’re on the receiving end of said punch, the best outcome is for you to receive the news as painlessly as possible. Worse, of course, is that it knocks you out financially…or absolute worst, out of business entirely.

How to take the punch and keep standing? Here’s our advice:

If you’re considering a space where you’d be installing the HVAC for the first time:

💸  Be sure you’re budgeting appropriately. Commercial heating and cooling equipment is $$$$$, and next to wastewater plumbing and grease traps, it’s the most un-fun, costly part of building out a retail space. For reference, the cost of installing a brand new system soup-to-nuts in a 3,000 sf space is pretty close to buying a new BMW X5.

🏗️  Factor the cost into your lease concessions negotiations. Depending on your situation, it might make sense for the landlord to pay for and install the system, but in many cases, a tenant improvement (TI) allowance makes more sense since the exact size and layout of the system will be determined by your use and buildout plans. 

📄  Good news is, when you install a brand new system (regardless of who foots the bill), it should all be covered under warranty for at least the first year. Also, since your lease will require that you maintain a quarterly maintenance contract (this is totally normal, btw), you’ll know you’re taking good care of the system. You’ll also likely be able to catch brewing issues while they’re easy and cheap.

👷 You should always budget for monthly repairs, and the more stuff you have that runs on compressors or needs to be plugged in, the more you’ll need.

If you’re considering a space that has an existing system:

⚡ FOR THE LOVE OF ZEUS have the system checked out by a professional HVAC technician before you sign the lease, and ideally, before you finalize LOI negotiations. 

🥊 Try to negotiate a cap on total annual repairs that would clearly define how much YOU have to pay before the landlord will pay to replace the RTU. Remember the gut punch – no one wants to take it. Agreeing who’s taking which punches and when before they land help reduce the sting for sure.

🏦 If you can’t get a cap on repairs, or if your landlord won’t agree to replace the unit when it dies, you still have options. You can certainly choose to walk away from the deal, but if you’re happy with the space and the rest of the terms, it’s absolutely okay to agree to take full responsibility. BUT you really, really, really, really need to budget and save money for when you’ll need it. The best and easiest time to do this is at the very beginning. You’d add, say, $25k to your capital budget right alongside working capital. You can call the line item “HVAC reserve” or even just “Guhlllll 😵‍💫” The hard part is not spending that money on something else, so consider burying it in your backyard. Just kidding. Put it in a savings account that’s not linked to your checking account or a CD or some other vehicle that keeps you from spending it.

✅ See above 👆 re quarterly maintenance contracts. Replacing aging belts, recharging freon, and other small upkeep expenses are always worth it.

There’s no one right way to assign responsibility for the HVAC in a lease, but there is a WRONG way, and that’s to ignore the 1,000 pound (literally) gorilla on your roof and wait for it to land on you.

Since I know you’re wondering how I'm still writing, we’ve moved to the cafe car where the air is nice and cool, and the hot dogs are actually very good. So I guess there can be happy endings when the AC breaks down.