You work hard for your money. So why throw it away on commercial property repairs?
Maintenance expenses can quickly derail a property owner’s finances if they aren’t careful. One month your property is fine. The next month you’ve got a cracked parking lot, a roof that sprung a leak, and an HVAC unit that wheezes more than it blows cool air.
It happens to the best of us.
Unfortunately, most property owners under-budget for maintenance. Which means larger expenses down the road.
The good news is that preventative maintenance isn’t complicated. With the right budgeting, property maintenance should be completely predictable. Here’s a breakdown of everything commercial property owners should plan for when it comes to maintaining their property.
Table of Contents
- How Much Does Commercial Property Maintenance Cost?
- Asphalt Resurfacing Costs
- Other Commercial Maintenance Budget Items
- Creating a Commercial Property Maintenance Budget
How Much Does Commercial Property Maintenance Cost?
Expect to spend between $1.60 and $2.80 per square foot per year on commercial building maintenance. In the US.
That might not sound like a lot. But keep in mind most people don’t budget for maintenance until it becomes a problem.
And that is…
The most expensive way to maintain your property.
Did you know that every dollar of deferred maintenance can turn into $4 of capital renewal expenses down the road? Read that sentence again. Every single dollar.
Maintenance isn’t optional. Putting off maintenance only increases the price tag later.
The easiest way to save money? Implement a preventive maintenance program. Properties that utilize preventive maintenance measures reduce costs by 12% to 18% over reactive repair work.
Asphalt Resurfacing Costs
Parking lots take a lot of abuse. Heavy vehicles, UV rays, rain, snow, heat… they dump on your parking lot every day.
You’d be surprised how much of a difference asphalt resurfacing can make.
By resurfacing your asphalt pavement you can extend its life by up to 15 years. For 40% to 60% of the cost of replacement.
Here are the numbers:
- $1-$5 per square foot for asphalt resurfacing
- $5-$12 per square foot for asphalt replacement
- $10,000 – $50,000 for a typical 10,000 sq ft parking lot
But before you can resurface your asphalt, your existing surface needs to be patched up.
Any cracks, potholes, or damaged areas in your asphalt should be addressed with asphalt patching and repair by professionals like Asphalt Coatings Company before applying a new coat of asphalt. Otherwise, the new layer won’t bind to the existing asphalt.
If your parking lot has:
- Cracks all through the pavement
- Fading or oxidation
- Potholes or even just depressions in the asphalt
- Pooling water due to poor drainage
- Doesn’t feel smooth when you walk on it
It’s time for asphalt resurfacing.
Remember, large cracks used to be small cracks. Small cracks used to be holes in the pavement sealcoat. Catching these problems early is your best defense against expensive repairs down the road.
Conduct a walkthrough of your property once a month and note any changes you see.
Other Commercial Maintenance Budget Items
Parking lots aren’t the only thing on your property that need maintenance. Take a look at these common budget items for reference.
HVAC Systems
Your HVAC system is going to be one of your largest expenses when it comes to property maintenance. These systems run year-round. They don’t get weekends and holidays off like your tenants do.
Expect to budget for filter changes every quarter, inspections every year, and replacement every 15 to 20 years if you want to avoid skyrocketing energy bills and disgruntled tenants.
HVAC Maintenance Budget: $500-$2,000 per year
HVAC Replacement: $15,000 – $50,000 depending on square footage
Roof
Commercial roofs should last you 20-30 years with proper annual maintenance. Make sure to get your roof inspected every year to ensure there are no small problems becoming big.
Roof Maintenance Budget: $300-$1,000 per year
Roof Replacement: $5 to $15 per square foot
Landscaping
Keep your grounds cut and clean. Overgrown landscaping is a sure fire sign that your property is neglected.
Expect to budget around $200 to $500 a month for regular landscaping maintenance. You may pay additional for seasonal clean-up and irrigation repairs.
Painting & Sealcoating
Commercial property exteriors should be repainted every 5-10 years. Parking lots should be sealcoated every 2-3 years to prolong the life of your pavement.
Parking Lot Sealcoating Budget: $0.08 – $0.30 per square foot
Commercial Painting Budget: $1-$3 per square foot
Plumbing & Electrical
It’s easy to forget these systems until something goes wrong. Don’t wait until your water heater dies on a weekend to find out your maintenance company doesn’t do after-hours work.
Annual inspections keep you from getting woken up in the middle of the night with an emergency call. Expect to budget $500-$2,000 per year for preventative maintenance. Emergency repairs will cost you much more!
Creating a Commercial Property Maintenance Budget
Now that we’ve covered all the big ticket items it’s time to get down to brass tacks. How much should you actually be budgeting?
The general rule of thumb is 1% – 2% of your properties value every year.
So if you own a $2 million building you should be budgeting $20,000 – $40,000 a year on maintenance.
But that’s just a baseline. Every property will have different maintenance needs.
New construction won’t need as much maintenance as a property that is 50+ years old. A building in Alaska will have different maintenance costs than one in Florida.
Age of Property
Older buildings have been around longer and will typically have more maintenance expenses.
Climate
Hotter temperatures, freeze/thaw cycles, heavy rain or snowfall can all impact how much you spend on maintenance.
Type of Tenants
Think about what kind of tenants you have in your building. Heavy warehouse or industrial use will wear out your property quicker.
History of Maintenance
If you just purchased a property that wasn’t maintained during the past decade, expect to spend more now to catch up.
Maintenance Schedule
Instead of waiting for things to break, have your maintenance company perform these inspections and services regularly.
Quarterly
- HVAC filter changes
- Parking lot condition
- Landscape assessment
Annual
- Roof Inspection
- Asphalt Conditions
- Electrical System Checks
- Plumbing Inspection
Every few years:
- Asphalt Resurfacing: Every 12-20 years
- Sealcoating: Every 2-3 years
- HVAC Replacement: Every 15-20 years
- Roof Replacement: Every 20-30 years
Emergency Maintenance Fund
No matter how well you plan, there’s always going to be that one water heater that decides to die on you five years early. That’s why we recommend keeping an additional fund of 10% – 15% for those unexpected repairs.
Pulling Your Maintenance Budget Together
Nobody gets excited about setting budgets for asphalt resurfacing and HVAC repairs.
Except the property owners that do it.
The properties that look professionally maintained and run like well oiled machines? Budget for maintenance.
The properties with potholes in the parking lot, roof repairs, and constant upkeep emergencies? Don’t.
Maintenance is expensive when you let things go. Preventative maintenance really is the smarter way to budget for your commercial property.
Here’s a quick recap:
- Budget 1%-2% of property value per year for maintenance
- Resurface your asphalt before small cracks become large holes
- Maintain your property regularly to prevent emergency repairs
- Keep an emergency fund for… well… emergencies
- Track all your work for better future budgeting
Property maintenance can be the dividing factor between a property that retains tenants and one that constantly looks for new ones. It can be the difference between a customer pulling into your parking lot or driving straight to your competition.
Budget for it.