It's Decision Time for Boards: Elevator Upgrades Are Coming

If your building has an elevator, you’ll have to focus your attention on it this year. Two serious upgrades mandated by New York City mean that by the end of the year your elevator must have door-lock monitoring, and by the end of 2026 it must have an extra emergency brake. But don’t be fooled by the simple-sounding terms – this is a big deal, and the temptation to throw a bit of money into what looks like a quick fix can cost you thousands down the road if you don’t understand what’s at stake.

Door-lock monitoring is the first upgrade, and it must be completed by January 1, 2020. It’s an electronic fix that accomplishes two things: it prevents the elevator from moving if a monitor detects that the doors aren’t properly closed; and it prevents the doors from opening unless the elevator car is present. The second upgrade, due by January 1, 2027, requires the installation of an emergency brake. Most elevators need both fixes, with the exception of manually operated elevators and newer traction elevators equipped with double-plunger brakes.

This year’s requirement is the less expensive. It’s a software upgrade that, depending on the type of elevator, could cost $3,500 to $8,500 for a newer elevator and $15,000 to $25,000 for an older one. The difficult business decision, however, centers on understanding what type of elevator your building has, its age, and if it needs modernization. Your decision on how to implement the first upgrade will determine the economics of the second.

“These things are coming, and boards need to make decisions quickly,” warns Alan Warshavsky, senior account executive at Gumley Haft Real Estate. Adds Thomas Thibodeaux, CFO of New Bedford Management, “It shouldn’t come down to the question of ‘Can we afford it now?’ because it could potentially cost you more money later. Compare it to an old car. Do you put in a new transmission if you think the car is only going to last another two years?”

Boards need to start asking these questions – now – about their elevators. The useful life of an elevator is 20 to 25 years. Depending on the elevator’s age and type, you need to decide whether to spend a smaller sum now for the software upgrade and a larger sum later for the emergency brake – or bite the bullet and spend a large sum now for modernization, the catch-all industry term for replacement or extensive overhaul. A cheap fix now might turn into money down the drain in a few years.