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As much as 920,000sqm of Dublin offices may suffer further
falls in values if their air conditioning systems are not
upgraded within the next five years.
However, some tenants could try to avoid contributing to
the cost of such upgrading by moving out of affected buildings
before the upgrading takes place.
According to Tony Grant of CB
Richard Ellis, buildings which use an air-conditioning
system containing R22 must be updated - or their components
replaced - in order to comply with new air conditioning regulations.
Most buildings built before the year 2000 are likely to use
air-conditioning systems containing R22 and these may become
un-lettable, when existing tenants vacate, until the problem
is dealt with.
The EU
Ozone Regulation came into force in 2000 and it has
already banned the use of ozone depleting HCFC refrigerants
- such as R22 - in new systems.
The Regulation will ban the use of R22 as a 'top-up'
fluid for maintenance between 2010 (for virgin fluid) and
2015 (for recycled fluid). This is of crucial importance for
many companies and means that all users of R22 and other HCFC
systems need to consider alternative refrigerants or the purchase
of new equipment.
For some landlords there is the risk of extended void periods,
resulting in loss of income at a time of increased costs.
On the other hand, prospective occupiers who are shopping
around for office space may automatically rule out non-compliant
buildings.
However some existing tenants may be obliged to bear the
cost of upgrading, so they need to check the terms of their
leases. For example, in a multi-let building where the landlord
maintains plant and equipment, but recovers the maintenance
cost for same through service charges, the landlord may undertake
the upgrade and those costs will then be included in the service
charge bill.
In a single let occupancy the entire responsibility may be
placed on the tenant - and, as such, this issue needs to be
addressed now rather than closer to the EU legislation deadline
on R22.
Mr Grant says upgrade costs will depend on many factors -
primarily, whether the premises requires just a gas replacement
option or a full scale replacement of the entire kit, which
could add up to €10 per sq ft on top of any other refurbishment
costs undertaken to modernise a building.
In terms of costs, both landlords and tenants need to start
investigating this issue now - as, the closer the issue is
left until to the 2015 deadline, the more costly an upgrade
is likely to prove.
Source - The Irish Independent
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