I’ve been thinking about a building in which we recently did a sale, where we represented the buyer. He was purchasing two combined units and the building had a concerning policy: it would not allow owners to upgrade the electrical service to apartments in the building.
Mind you, this is a building in which properties regularly sell for $3, $4 and $5 million or more. I started to wonder: How has anyone renovated to an extent that they were able to add washers and dryers, use the top-of-the-line appliances, or create central air conditioning? I don’t have an answer!
I thought back a couple of years to another sale in which I represented the other side. The seller was an elderly woman who was moving into assisted living. One of the determining factors was that the woman had left the gas on on the stove, and nearly caused a fire.
In that situation, when we went to sell, the buyers needed to know they could turn the gas back on. Sounds easy, except that many, many gas lines in that building had failed inspection. And that building’s board determined that any gas lines that failed would not be repaired- and would have to move to electrical appliances.
Mind you, this isn’t the end of the world, unless you’re a buyer who really wants to cook with gas (I mean, doesn’t everyone want their lives “cooking with gas”? But I digress). Or you’re in a situation where the building ALSO won’t allow an owner to upgrade the electrical service…
I started to envision the problems coming down the pike. The fact is, buildings will have to absolutely allow for electrical upgrades. Otherwise you’re gonna be in a situation where you can’t have gas appliances AND you can’t have electrical appliances. Cooking in your apartment seems to be a fundamental right of ownership, no?
Alas, it gets worse. You’re also bumping up a situation where the fire department, the bane of all construction, may not allow owners to run electrical service up the fire stairs of these older apartment buildings, either, which is what the more savvy buildings had been doing to enable ne electric service. In this case, buildings will have to allow for electric channels to be run outside of the building, running up the outside brick wall.
Will they permit that to happen? Will neighbors complain about it being unsightly? Will Landmarks push back in certain areas because the channels are visible? I can imagine bickering between a lot of different parties with a lot of different, competing interests.
What I know for sure is that it’s a very interesting problem that few are talking about, and one that needs to be tackled head on, so we don’t have any issues when the city all of a sudden outlaws gas appliances.
The tiny problem with all of this goes beyond aesthetic or safety considerations. It veers into the practical, too. Who is going to pay for all this? Some buildings have tried to push the cost of running a channel for electrical service onto whoever happens to be renovating their apartment. Imagine wanting to do a renovation on a high floor, and not only having to power your new system in your apartment, but being held hostage by a co-op board. That is, being told that you can’t get your renovation approved unless you cover the additional costs to do the building’s electrical work? Not every buyer is going to bit the bullet and agree to that (though one of my clients did, bless their hearts).
What Will Buildings Do
The reality is that buildings are staring down monumental costs that they cannot afford, and cannot defray in full. Luckily, I would like to offer a few ideas for how buildings could pay for this new electrical work.
There’s a world in which buildings could make up a ton of revenue if they charged extra fees for washer dryer use. No one would deny that washers use more water, and those costs are currently distributed across the entirety of all apartment owners. Could they charge a monthly fee on top of regular monthly chargers?
To take it step further, could they charge a $20,000 washer dryer fee to allow people to install them in the first place? I know of at least one building that does this? And I’m certain people would pay it rather than not be able to have a washer dryer
Along those lines, you could just foresee a number of different ways that buildings could leverage the desire for new owners paying $3-5mm+ for apartments to upgrade their units- to bolster reserves and pay for these upcoming necessary gas-to-electric upgrade costs. Washer/Dryer fees, central air conditioning fees, and the like are just a few ideas.
Another way could be to derisk these aging buildings from big capital expenses. Here’s an example: if a person decides to do a central air conditioning in their apartment, the building permits it- provided the owners take on any future responsibility for damage to their apartment from anything coming in from the facade (think water seepage through the brick work). This happens currently in buildings where once an owner replaces their windows, the windows become the owner’s responsibility. But if you do not upgrade your windows, the costs are still borne by the building.
I think a lot of buyers and owners would gladly take that trade if they have the right to do the renovations they want to do. At the end of the day no one is gonna spend $5 million on the apartment if they have through the window air conditioning. At least I wouldn’t. Would you?
- Scott @ Magnetic.
