COVID-19 pandemic’s impact on US businesses and real estate

Zoltan Karpathy
Operations Manager, BSRIA Worldwide Market Intelligence

Nobody can predict with a high degree of certainty how long the current COVID-19 pandemic will last and what will be the full impact on the economy. We are witnessing US states, including Florida, opening up and having to tighten measures again as the virus flares up.

To contain the pandemic regulations started to push businesses towards investments to increase health safety and prevent spreading the COVID-19 virus. While necessary to fight the pandemic and speed up the recovery, businesses sometimes suffer temporary loss of productivity when the measures are implemented.

Another hike of investment as the direct consequence of the economic shock triggered by the pandemic is often related to the need of diversifying suppliers; and purchases from a variety of suppliers are often done with less favourable prices. Increasing inventory levels of critical raw materials/components/products are also becoming an issue.

Verticals served by the HVAC&R sector have been hit at various levels of degree by the COVID-19 pandemic. Venues, such as live entertainment, sports, restaurants and travel-related establishments are likely to struggle due to concerns over contracting the virus, even when they become fully open. It is expected that consumer will shift away from these types of spending to alternatives such as durable goods, which in turn can have a positive effect on housing in the future.

Nevertheless, on the residential side, housing starts plummeted by 43% in the three months from February to April, even though several US states allowed construction sites to operate. Sales of existing homes also declined, with April’s transaction level at three-quarters of the February level. Residential construction is expected to slow down in the medium term, as consumers are unable or unwilling to purchase new houses, even though mortgage rates are very low.

Economists are drawing up various scenarios and assess likelihoods of these potential outcomes. According to Deloitte the most probable scenario is that the US economic recovery will not take place at least until the middle of 2021; growth can return to the pre-COVID level by the end of 2023, but the economy will not be able to achieve full employment again until 2025.

In the context of such uncertainty, manufacturers active in the HVAC&R and Building Controls sector are facing a wide range of unknown factors:

  • customers building up stock for an eventual second COVID-19 wave;
  • concerns over debt payments;
  • increasing payment periods;
  • increasing raw material prices;
  • pressure to maintain the price of their final products/solutions.

In terms of the product mix, HVAC companies started to receive more enquires for certain types of filters, more emphasis on increasing volume of fresh air and generally an increasing focus on Indoor Air Quality.

This goes hand in hand with the fact that the current situation is also encouraging building owners and businesses to offer a safe working environment, in which employees trust and feel comfortable. Therefore, increasing investment levels can be expected to make commercial buildings ‘smarter’ and more efficient to use, with the uptake of solutions such as contactless access control, occupancy analytics, employee tracking services, proximity sensing and analytics (using indoor location mapping solutions) and Indoor Air Quality (IAQ) sensing and monitoring, alongside air purification and disinfection solutions.

The COVID-19 pandemic has a significant impact on the real estate market, challenging the building owners and operators at unprecedented levels. According to JLL, the effects in the short term, will be the accelerated large-scale uptake of home working, leading to problems for traditional offices, but also co-working centres and flexible offices, putting a strain on the sustainability of certain flexible space business models. Social distancing considerably increase the space allocated for individuals which means that many flexible offices will record very low space utilisation rates and could even remain nearly empty.

The COVID-19 pandemic has challenged the role of the traditional office and it reinforced the need for the office to act as a communal space which encourages innovation and collaboration, while nurturing company culture. A future solution seems to be an increased focus on technology enabled workplaces which can be used for collaborative meetings and hosting clients.

To assess the full impact of COVID-19 on the US HVAC&R sector, BSRIA will publish an update of its market studies at the end of September 2020.

To find out more about BSRIA HVACR & Controls market studies contact us at:

• America sales enquiries: BSRIA USA: sales@bsria.com ¦ +1 312 753 6803, http://www.bsria.com/us/
• China sales enquiries: BSRIA China: bsria@bsria.com.cn ¦ +86 10 6465 7707, http://www.bsria.com.cn
• All other sales enquiries: BSRIA UK: wmi@bsria.co.uk ¦ +44 (0) 1344 465 540, http://www.bsria.com/uk/

Refrigeration Part 1 – Choosing the right refrigerant

Salim Deramchi, Senior Building Services Engineer at BSRIA

Salim Deramchi, Senior Building Services Engineer at BSRIA

Refrigerants are a key component for air conditioning and refrigeration. Since the 19th century there have been many refrigerants developed and used but none of them has as yet become the industry standard.

As an industry we should not consider reducing F-Gas emissions as just complying with legislation to meet government set targets, but reducing them will also have a positive effect on operating costs.  We can make cost savings through efficient operation and we can also help enhance market reputation by being more environmentally friendly.

To have a good understanding of this we need to look at:

  • Available refrigerant types
  • Our selection criteria
  • How we evaluate the available refrigerants

Traditionally commercial businesses have been using R12, a CFC, and R502a CFC/HCFC. In addressing the ozone depletion problem, most manufacturers have adopted either R404A a HFC blend or R134a. However, both are potent greenhouse gases (Nicholas Cox).

So the industry needs to look at future solutions which might be natural refrigerants, although some design change might be required on the equipment used. The following refrigerant replacements all require system and operational changes to current practice:

20140213_132647_resizedIsobutane (R600A) is a hydrocarbon , and hence is flammable. The thermodynamic properties that are very similar to those of R134a. Isobutane presents other advantages, such as its compatibility with mineral oil and better energy efficiency and cheaper than that of R134a. The use of isobutane requires minimal design changes, such as the relocation of potential ignition sources outside of the refrigerated compartment. Operational changes will also be required.

Propoane (R290). With a boiling point of -42C, propane is an excellent alternative to R22 as it requires similar working pressures. An added advantage is that except for added safety measures because of its flammability, virtually no design change is required in systems when switching from R22 to propane. The combination of its good thermodynamic and thermophysical properties yields systems that are at least as energy efficient as those working with R22. The use of propane is increasing in countries where regulations allow it.

Ammonia (R171). Ammonia has been continuously used throughout modern refrigeration history. Despite its numerous drawbacks, it is toxic and flammable in concentrations between 15.5% and 28% in air. It is not compatible with copper, thus requiring other materials of construction. Its thermodynamic and thermophysical properties also yield very efficient refrigeration systems. Because of its acute toxicity, stringent regulations apply for ammonia systems, which require close monitoring and highly skilled engineers and technicians.

20140213_132339_resizedCarbon dioxide (CO2) is not a new refrigerant. Rather, it was ‘rediscovered’ in the early 90’s. The use of carbon dioxide as a refrigerant has gone back well over a century. Its application was abandoned in the mid-50s, with the widespread use of the CFC refrigerants, which were more efficient, more stable and safer. Due to its low environmental impact, low toxicity and non-flammability, CO2 is now regaining popularity from refrigeration system designers when an alternative to fluorocarbons is being sought. (Ahmed Bensafi and Bernard Thonon)

So there are alternatives on the market and technology development is tackling this issue it is now up to the designers and operators to specify something new to move the industry forward. With F-Gas regulation 2 coming we need to get ahead of the game.

We have tried to cover some of the available refrigerants seen in the market and we will be evaluating and discussing the selection criteria in our future blogs.

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