Choosing the Best Commercial Water Heater for Your Facility

Categories: Maintenance | Plumbing

Whether your building's water heater is nearing the end of its lifespan or you’re in charge of choosing one for a new facility, finding the right type is integral to your day-to-day operations. Considering the average lifespan of a commercial water heater is around 12 years, facility managers need to find a water heater that will fit their facility’s needs for years to come.

With all the options available, choosing between a gas or electric water heater and deciding if you want a tank or tankless option can be challenging.

Table of Contents

Factors to Consider

Space Constraints

Before choosing a system, assess your mechanical room or installation site. Storage tank water heaters, especially high-capacity models, require significant floor space and clearance for maintenance access. When replacing an existing water heater, ceiling height and doorway dimensions can restrict options.

For space-constrained facilities, a wall-mounted tankless system can offer compact installation, often freeing up valuable square footage. However, tankless units may require upgraded venting and gas line sizing to handle demand, especially when installed in multiples.

Fuel Type Availability & Infrastructure Compatibility

Fuel type isn't just a matter of preference, it’s dictated by existing infrastructure, utility availability, and regional energy costs.

Gas is often preferred for large facilities due to its lower cost per BTU (the energy required to raise the temperature) and fast recovery times. However, confirm gas line sizing and capacity. Many commercial tankless units require a higher BTU per hour input.
Electric water heaters are easier to install and maintain, but you must ensure your facility’s electrical panel can handle the load, especially if installing multiple high-wattage units.

Insulated water heater in a commercial building

When replacing a unit, verify whether the new heater’s requirements match existing utility infrastructure or if electrical/gas upgrades are necessary.

Operational Benefits & Performance Priorities

Choosing the right commercial water heater means aligning system capabilities with your facility’s most pressing operational needs.

Consistent Hot Water Supply: If your facility has high or unpredictable demand for hot water, choose a system with fast recovery rates and sufficient storage or output capacity.
Energy Efficiency & Utility Cost Control: For facilities looking to reduce long-term energy expenses or meet sustainability goals, efficiency should be a top priority.
Water Quality & Temperature Control: If your operation involves hygiene-sensitive processes or precise water temperature requirements, system control and consistency are key.
Low Maintenance Requirements: If your team has limited maintenance bandwidth or if you want to reduce service costs over time, opt for a system known for reliability and simplified upkeep.

Cost: Upfront vs Lifecycle

Price shouldn’t be evaluated only at purchase. Consider:

Upfront Costs: Storage tank systems typically have lower initial costs but may come with higher ongoing utility expenses due to standby heat loss.
Lifecycle Costs: Tankless and high-efficiency models may require higher installation investments but pay off in fuel savings, lower maintenance, and longer service life.
Incentives: Check for utility rebates, state-level energy efficiency programs, and accelerated depreciation tax benefits, particularly when installing ENERGY STAR-rated units.

Pro tip:

Conduct a Total Cost of Ownership (TCO) analysis across 10–15 years to compare options fairly.

Serviceability & Maintenance Resources

All commercial systems require maintenance, but how much and how often can vary significantly.

Tank Systems typically need periodic flushing to prevent sediment buildup, especially in hard water regions. Anode rods should be inspected annually.
Tankless Units require descaling and filter cleanings at least once or twice per year, depending on water quality and usage.
Vent Systems (especially with gas heaters) must be checked for buildup, corrosion, or blockages that could trigger shutdowns or safety hazards.

A plumbing technician performing service on a commercial hot water heater.

Additionally, ask yourself:

Do you have in-house maintenance staff, or will you rely on third-party service contracts?
Can your building accommodate routine shutdowns, or do you need systems with modular redundancy?

Compatibility With Existing Equipment

When replacing a commercial water heater, overlooking existing specs can create serious installation issues or even code violations.

Current equipment:
- If you’re replacing an existing electric water heater, ensure the new model matches the voltage and wattage of the old model.
- If you’re replacing an existing gas water heater, match the diameter of the exhaust vent and the fuel type with the new model.
Electric Heaters: Match voltage (e.g., 208V, 240V, 480V), phase (single or three), and wattage to avoid circuit overload or inefficient operation.
Gas Heaters: Ensure the flue size and material (single-wall vs. double-wall) are appropriate for the new unit’s BTU rating. Check gas line diameter and pressure; undersized piping is a common cause of underperformance.
Storage Tanks: If retaining existing tanks or combining with new tankless systems, make sure the connections, temperature sensors, and control systems are compatible.

Performing a pre-installation site audit with a licensed mechanical contractor can help you catch these issues before they become potential problems.

Comparing Water Heater Types

Below, you’ll find information about different types of water heaters — gas vs electric and storage tank vs tankless water heater options.

Download the Commercial Water Heater Comparison Sheet

Gas Water Heaters

How it Works:	Best For:	Benefits:	Considerations:
Natural gas or propane is used to heat water	Facilities that need a reliable hot water source at a lower monthly cost	Cost-efficient Quick recovery Stays running during power outages	Needs more ventilation Has pipes that need access to the outdoors Gas line and flue vents need to be checked regularly to remove any buildup

Electric Water Heaters

How it Works:	Best For:	Benefits:	Considerations:
Electricity from your building is used to heat water	Facilities that don’t rely on a constant hot water supply and don’t have the time to keep up with regular maintenance	Few maintenance needs Low upfront costs More environmentally friendly	Takes longer to heat water If you lose power, you lose hot water Slightly higher monthly costs Electrical elements can potentially impact water quality

A plumbing technician servicing a commercial hot water heater tank.

Storage Tank Water Heaters

How it Works:	Best For:	Benefits:	Considerations:
A large physical tank continuously heats the water being stored	Facilities with a large usage of hot water that need it immediately and have space for equipment	Less maintenance is required Fewer costs to purchase and install Hot water is always ready	Energy may be wasted by heating the same water Once the stored water is used, you have to wait for the water to be heated again Used in conjunction with traditional gas or electric water heaters

Tankless Water Heaters

How it Works:	Best For:	Benefits:	Considerations:
A small unit heats water on demand without storing the water	Facilities with space limitations that need a lot of hot water, but don’t need it the second it’s requested	Water is heated on demand Creates an endless supply of hot water Takes up less space than a water heater with a tank Energy efficient	The upfront cost can be higher More preventative maintenance Short requests may not be enough to pull hot water Water quality may be impacted Used in conjunction with gas or electric water heaters

Meeting the Hot Water Needs of Your Facility

Finding the right water heater ensures your facility’s water needs are met in a way that works for you. Considering the fuel type, features, costs, resources, and your building’s space and current equipment are all important when choosing a commercial water heater.

A gas water heater is suitable for a facility that needs frequent, reliable hot water, although its pipes will need access to outdoors. On the other hand, electric water heaters are great for facilities that don’t rely on a constant hot water supply but are looking for fewer maintenance needs.

Deciding on a storage tank water heater is a good choice for facilities with ample space that need a lot of hot water at a moment’s notice, but can offset the small costs of reheating the same water that isn’t used before it cools down. Tankless water heaters fit the needs of facilities with space limitations that require much hot water but don’t need it immediately and have the resources for more preventative maintenance.

Knowledge on the Go

To view the full comparison between gas or electric and tank or tankless water heaters, download our:

Commercial Water Heater Comparison

Commercial Water Heater FAQs

What is the best commercial water heater for a small facility?

The best water heater for a small facility depends on your hot water usage patterns and available space. Tankless water heaters are often a smart choice because they provide hot water on demand without taking up much room. They're energy-efficient and can be mounted on a wall, making them ideal when floor space is limited. However, if your building needs hot water immediately and consistently, a smaller-capacity storage tank system might offer more predictable performance. A professional assessment can help determine the right fit based on your flow rate, peak demand, and available utilities.

How do I choose between a tank and a tankless water heater?

Start by evaluating your facility’s hot water demand, space availability, and maintenance resources. A storage tank water heater stores and preheats water, making it a reliable choice for facilities that need large volumes of hot water available at all times. On the other hand, a tankless system heats water only when it’s needed, which can reduce energy usage and save space, but may require more frequent preventative maintenance and may not be ideal if you need immediate, large-scale hot water all at once. Your decision should come down to performance priorities, budget, and operational needs.

Do tankless water heaters save money in commercial settings?

They can, especially over time. While tankless systems often have higher upfront costs, they tend to counteract these costs with long-term savings. Since they only heat water when it’s needed, you're not paying to keep a tank full of hot water 24/7. For facilities with fluctuating demand or off-peak usage patterns, this efficiency can translate into noticeable utility savings. Just keep in mind that tankless units may require periodic descaling and may need multiple units installed to meet high demand.

What size commercial water heater do I need?

Sizing a commercial water heater correctly is critical to both performance and efficiency. The size you need depends on several factors: your peak hourly hot water demand, the temperature rise required, how many fixtures or appliances need hot water, and whether you're using a tank or tankless system. For tank systems, this often means calculating gallons per hour (GPH). For tankless, it’s more about flow rate in gallons per minute (GPM) at a specific temperature rise. A licensed mechanical contractor can help you perform a load calculation to ensure your system is properly sized to avoid both underperformance and unnecessary costs.

How long do commercial water heaters last?

Most commercial water heaters last 10 to 15 years, depending on the model, fuel type, water quality, and how well the unit is maintained. Gas units tend to have slightly shorter lifespans due to combustion-related wear, while electric systems often last a bit longer. Regular preventative maintenance, such as flushing tanks, replacing anode rods, and checking venting or electrical connections, can significantly extend the life of your system. When performance starts to dip or energy bills rise, it might be time to evaluate replacement options.

Our Water Heater Services

RBI is a premier full-service plumbing, mechanical, service, controls, and design-build company. We provide custom services tailored to meet your needs and requirements at each stage of your building’s journey. From helping you choose the best commercial water heater for your facility to providing service and preventative maintenance for years to come, we’ve got your back.

Learn about our Water Heater Services