By: KeyCrew Media
A chiller that has been running 20% harder than its twin for three years does not necessarily belong on the same replacement schedule. But in many commercial real estate portfolios, financial reports may treat them identically. That gap between age and actual condition is where capital can get wasted, according to Bill Douglas, CEO of OpticWise and co-author of Peak Property Performance®, who argues that equipment age is not always a reliable indicator of when replacement is actually needed.
The Fifteen-Year Rule That Does Not Always Hold Up
The dominant logic in commercial real estate CapEx planning can be overly simple, Douglas says: equipment gets replaced when it reaches a certain age. A chiller turns fifteen years old, it goes on the replacement schedule. An HVAC unit on an apartment building roof hits the same milestone, and the same outcome follows. The calendar drives the decision, not the condition of the equipment.
This approach can produce two costly errors. Owners may replace equipment that still has years of useful life remaining, wasting capital. Or they may discover mid-crisis that a unit they assumed was fine needs immediate replacement, creating emergency costs and tenant disruption.
“Financial reports tell you the age,” Douglas says. “Operating data tells you the condition.”
His illustration is concrete. Take two chillers in the same building or portfolio, both installed at the same time. Financial records treat them identically, with the same age, same depreciation schedule, and same replacement timeline. But operating data may show that one has been running 20% harder for three years because building controls were never optimized. The other has been operating within normal parameters throughout. These are not the same asset, and treating them as such can produce real financial consequences.
What Operating Data Changes About the Decision
Knowing which unit is stressed and which is not changes both ends of the replacement timeline. Douglas walks through the practical implications directly.
“You might not have to replace it for two more years,” he says. “But at the same time, you might have to replace the other one two years earlier because you’ve been taxing it. But you can do it without an outage. You can do it during regular hours. You can do it without interrupting your tenants – so it’s a much better investment that way, even if it’s moved up.”
Deferring a replacement by two years on a unit that does not need it yet preserves capital and avoids unnecessary disruption. Accelerating a replacement on a stressed unit, but doing it on a planned schedule rather than in response to a failure, can help reduce emergency repair costs, limit tenant impact, and allow for competitive vendor selection rather than emergency procurement.
Douglas connects this to how operating data changes expense management more broadly. The symptom of a problem might be higher utility costs or unexpected maintenance spending. Without operating data, asset managers may respond to symptoms rather than causes.
“If you can get to the root cause, then you can address that, and it affects your income significantly, as opposed to seeing the symptom,” Douglas says.
The Expense Benchmarking Trap
Douglas also cautions against over-relying on external benchmarks when diagnosing expense variances between comparable properties. National averages for utility costs can be of limited use when comparing a Florida asset to one in Michigan. Climate, usage patterns, and equipment configurations can make external comparisons unreliable guides for internal decisions.
His preference is internal benchmarking, comparing similar systems across properties within the same portfolio.
“Portfolio consistency is where continuous improvement begins,” Douglas says. “And you can’t do that without the data.”
Nobody owns buildings more similar to your own than you do, he argues, which makes portfolio-level comparisons more actionable than industry-wide averages. For asset managers trying to explain why two similar properties have different expense profiles, the answer often lives in operating data, including occupancy changes, equipment schedules, vendor configurations, or utility rate shifts, rather than in how those properties compare to a national average.
OpticWise’s Approach to Evidence-Based CapEx
Douglas positions OpticWise as an attempt to give asset managers the operating data layer that makes evidence-based planning possible. The company focuses on connecting the data generated by building systems, including HVAC, controls, sensors, and networks, into a format that asset managers can use for decision-making rather than leaving it siloed within individual vendor platforms.
“Managing the CapEx schedule is all about the data, the operating data,” Douglas says.
The practical starting point he recommends does not require a full platform deployment. He suggests asset managers begin by identifying which operating systems on their properties are generating data, whether that data is accessible, and whether it can be compared across the portfolio. That assessment, Douglas argues, is the foundation for any shift away from calendar-based replacement logic.
He frames it as a 90-day exercise built on the first stage of the PPP 5C™ framework, Clarify: what you own and control in your data and digital infrastructure, where the data originates, who owns it, and whether it can be reused across the portfolio.
“You probably won’t have a transformed portfolio in 90 days,” Douglas says, “but you’ll know where your biggest blind spots are.”
About OpticWise
OpticWise is the data and digital infrastructure partner for commercial real estate, founded in 2004. The company helps owners and operators turn fragmented, vendor-controlled building technology into governed, owner-controlled data and digital infrastructure designed to support value across a portfolio. Learn more at opticwise.com.
Bill Douglas is co-author of Peak Property Performance®: Game-Changing AI and Digital Strategies for Commercial Real Estate from Fast Company Press. Learn more at peakpropertyperformance.com.
