A Mass Replacement Of Elevators Is Getting Underway

Most New Yorkers don’t think twice about an elevator unless it's broken. But they will be forced to consider them more as thousands are due to be replaced in the coming years.

In the five boroughs, there are more than 70,000 elevators, moving riders up and down the floors of subway stations, office towers, retail hubs and residential skyscrapers. 

It costs as much as half a million dollars and takes about a full year to replace each one. It’s a cost that landlords may soon have to cough up.

An elevator’s life span is typically between 20 and 25 years, and a large swath of systems are reaching their prescribed expiration date. Of the 23 million units in existence, more than 7 million are already 20 years or older, according to manufacturer estimates. In the coming years, even more will need to be replaced.

In New York, a convergence of factors — new policies, public health standards and the march of time — has accelerated the need for elevator modernization and replacement.

“I've been in modernization for most of my career, 30 years, and I've never seen the market like it is today,” said Joe Bera, vice president of modernization sales and fulfillment of Schindler Elevator Corp., one of the largest elevator manufacturers in North America. “This market has been growing about 5% a year for the last five years.”

That rising death toll is largely because of the Americans with Disabilities Act.

Passed in 1990, the ADA placed more requirements on elevators, ranging from where in a building an elevator must be to the dimensions of the car and its interior control mechanisms. The legislation led a majority of landlords to upgrade their systems to ensure compliance.

That was further compounded by a 2000s construction boom that reshaped Manhattan’s skyline and brought new skyscrapers and supertalls to the city.

Otis has long been preparing for this moment. The company, whose history traces back to the inventor of the elevator, is the largest global manufacturer and servicer. Its service portfolio consists of 2.3 million units, 10% of all elevators in existence, Otis told investors earlier this year.

The company has experienced a surge in need for equipment to be replaced. Last year, its modernization orders were up 17%, even after increasing the prior two years, according to an investor presentation.

The recent wave of modernizations has even included the Eiffel Tower, where Otis is in the midst of a major machinery overhaul.

To help tackle the forecast growth, the company increased its inventories, which consist of raw materials and finished goods, by $65M in 2022, according to its annual report. It also has hired 2,000 new mechanics since 2020, an Otis executive told Bisnow. 

“The big push is, ‘How do we get that growing backlog into process?’” said Crawford Green, Otis vice president of modernization acceleration in the Americas. “So we don't have a clog in the funnel.”

The natural aging of elevators can be tracked and prepared for decades in advance. However, a flood of unexpected office renovations, as well as new policy, can come as a surprise. 

The work-from-home revolution spurred by the pandemic has led to a flight to quality in office buildings. In the first half of this year, availability in New York City’s trophy buildings ticked down 10 basis points to 12.2% and fell from 19.3% to 18.8% at Class-A buildings. More than 1M SF of Class-B space became newly available over the same period as tenants made the move toward higher-quality space, according to JLL data.

To retain and attract new tenants, office landlords have spent hundreds of millions to renovate their lobbies alone, a huge portion of which has involved upgrading the elevator. 

New systems offer touch screens and, in larger buildings, cars that service fewer floors and move users faster. New models, some of which are already used in Asia, can sync with delivery robots or use artificial intelligence and facial recognition to get customers to their floors without a push of a button.

“[Landlords] have to keep up with the times to attract that younger, more desirable crowd,” VDA Elevator Consulting Senior Vice President of Business Development Michael Balsamo said. “And that younger crowd really wants to see all the bells and whistles.” 

Multifamily buildings have also made upgrades as residents spend more time at home and seek out better-amenitized buildings, Freestone Property Group President Prashanth Rayapudi said.

“A lot of the [benefits] are not financially driven,” Rayapudi said. “Improved safety or improved efficiency, when tenants are not constantly facing disruption, that obviously helps overall building value for the tenants. It also helps with retention.”

Rayapudi added that landlords have turned to modernized elevators as ways to reduce emissions under New York’s Local Law 97, which mandates efforts by landlords to reduce greenhouse gas emissions by 40% between 2006 and 2025. 

A 2023 study found that elevators make up 2% to 10% of an average building’s total energy consumption, but in high-rises, elevators can account for as much as 25% of total consumption. New elevator models can save up to 30% of that energy.

New York has also made several other legislative changes that target elevators directly, some of which have been retroactive. In 2020, the city updated its rules on door lock monitoring systems. Starting in 2027, elevator brakes must have additional protections.

“Those two codes, from 2020 and 2027, are really hitting the market very hard right now, and it's forcing building owners to really get on the wagon for the modernization process,” Balsamo said.

In other cases, landlords are forced into updating their elevators simply because replacement parts become obsolete, making repairs more costly, if they are even possible. 

“There are secondary markets. There are ways to skin that cat, but it becomes more and more expensive,” Dynasty Elevator President John Mezzo said. “That is another driver for modernization.”

In part, equipment disappearing from the market is the result of consolidation in the industry as companies have merged. 

It’s an obstacle that even large companies like Schindler and Otis, which have been buying up smaller firms — and made their own decisions to stop producing parts — must deal with, especially since they service elevators from other brands, too.

“When we can no longer get the part and it becomes an issue of having to use refurbished parts, that's when obsolescence becomes something that we start to talk through with our customer,” Schindler’s Bera said. “It can surprise a customer pretty quickly.”

Still, one of the largest issues for companies big and small is finding a specialized workforce that can do these replacements and modernizations, which require more skills than repairs and maintenance. 

Schindler has a development center in Ohio where each mechanic trains. As the company has seen more demand, it has focused more on installation and modernization training, Bera said.

Smaller firms are doing similar recruiting, hiring and training as they prepare for the onslaught of business.

Mezzo had just gotten off a call with his new hires before speaking to Bisnow, he said. In those trainings, he ensures that new employees know the timelines for completing various licensure tests and filing documents to the city. It’s an exercise that has become more and more frequent for him. 

“We've been hiring mechanics almost every month,” Mezzo said. “We just had our fifth birthday. We've doubled every year since we started.”