Real Estate Owner-Operators

What is the True Cost of Water Leaks in Owner Operated Buildings?

Real estate owner-operators need a deeper understanding of the cost of water leaks in order to protect their portfolio - and their bottom line.

Water leaks in commercial buildings are inevitable. But they’re far from a minor inconvenience: undetected, they can quickly turn into expensive disasters. The true cost of a water leak goes well beyond just fixing the visible damage; it also includes the impact on operational expenses, property value, and even tenant satisfaction.

Here’s how we’d suggest you quantify the cost of water leaks in your commercial real estate portfolio:


1. Start with the more obvious costs

These are the costs that probably don’t have a dedicated line item in your facilities management budget - but they probably should.


Repairing the leak
The most immediate cost is repairing the physical source of the water leak - the damaged pipes, fixtures, and related building materials required to restore it back to standard operating conditions.


Unless you’re extraordinarily lucky (or employ early water leak detection), most water leaks cause some kind of mess that needs to be cleaned up. For example, you may need to dry out affected areas; shampoo carpets, rugs, or furniture; invest in mold remediation; or engage services of a commercial deep-cleaning company.


Repairing associated property damage
Water leaks can cause extensive damage to building structures, including walls, ceilings, floors, and electrical systems. The cost of repairing or replacing damaged property can be substantial, especially if the leak affects critical infrastructure, or high-end finishes and appliances.


Fixing or cleaning up after water leaks might be part of someone’s job description, but if you want to understand their true cost, you need to understand how much time someone spends performing these tasks. Of course, you’ll also want to add in any external specialist labor you bring in.


Business interruption & loss of revenue
Water damage can lead to business interruption and tenant displacement. You may also need to bear the cost of re-housing a tenant while repair and remediation are undertaken. All this results not only in a loss of revenue, but also potential additional costs.


2. Add in other costs that are often forgotten

In our experience, these costs are seldom considered when quantifying the cost of a water leak:

Higher utility bills
Water leaks can lead to significant increases in utility bills. A single, small leak can waste as much as 10,000 gallons in a year - enough to fill a mid-sized swimming pool! Multiply that over multiple small leaks, and you’re talking about potentially losing hundreds of thousands of gallons of water every year, resulting in higher water bills for building owners.


Greater energy consumption
In addition to wasting water, leaks can also increase energy consumption in commercial buildings. For example, water leaks in hot water pipes can result in the continuous - and unnecessary - heating of water, leading to higher energy bills.


Increased health and safety risks
Water leaks can cause a number of health and safety risks for building occupants. Water leaks can create slip-and-fall hazards, leading to potential liability issues for both tenants as well as building owner-operators. Standing water and excess moisture can promote the growth of mold and mildew, which can trigger respiratory problems and exacerbate allergies and asthma.

The costs associated with the increased health and safety risks are incurred both in the attempts to mitigate the risks and prevent harm; as well as any liabilities incurred if incidents do occur.


Reputation & tenant satisfaction
Water leaks can also impact the reputation of commercial buildings and affect tenant satisfaction. Persistent leaks and visible water damage create a negative impression amongst both tenants and visitors, leading to decreased occupancy rates and difficulty attracting new tenants.


Now you understand the true cost of water leaks: What next?

Knowledge is power. Once you’re armed with a deeper understanding of how much water leaks are actually costing you, you’re ready to evaluate water leak detection solutions with business performance in mind.

As an owner-operator, you want to be sure that the water leak detection solution you select is the right business investment. It needs to be the right technical solution, but it also needs to fit your budget, have a short payback period, quick time-to-ROI, and ultimately contribute to the profitability of your commercial real estate portfolio by limiting the cost of damage and downtime due to water leaks.

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