Heat Pump vs Furnace in New York: A Scenario Guide for Commercial Buildings

There is no one right answer to heat pump vs furnace

Every fall, I get a version of the same question from a property manager somewhere in the New York metro area: 'Should I replace my gas furnace with a heat pump?' My honest answer is always 'it depends.' That sounds like a dodge, but it's what you say when you've seen a heat pump save a condo building a ton of money and also seen one become an expensive headache in a different building.

In my role coordinating commercial HVAC equipment orders in New York, I've handled 400+ rush orders over 8 years. I'm the person who gets called after the emergency, not before. And the one pattern I keep seeing is this: people start with a completely reasonable question — heat pump vs furnace — but they skip the first question, which is 'what do I already have?'

This guide is scenario-based, because that's the only honest way to do it. If you're outside New York or your utility rates are different, your math will be different than mine. More on that at the end.

Scenario A: You already have ductwork and a gas furnace

Here's the counterintuitive one. If the gas furnace is 20+ years old and the building has carbon limits, a heat pump can absolutely be the right move. But if the furnace is 8 years old and running fine, replacing it with a heat pump just because 'heat pumps are the future' is often a bad total cost of ownership (TCO) decision. I'll say that even though I sell heat pumps.

Why? In New York, delivered electricity rates are high. Con Edison commercial electric rates are roughly $0.22–$0.26/kWh as of late 2024, and delivered natural gas for commercial customers runs somewhere around $1.30–$1.60/therm in many service territories (check current rate schedules before making a decision). With those rates, a high-efficiency gas furnace can still have a lower annual operating cost than a heat pump, depending on the building and the COP. The gap widens when you add the cost of changing refrigerant lines, replacing the coil, or upgrading the electrical service.

So if you're in this category and someone tells you 'just swap the furnace for a heat pump,' ask for a written load calculation and a 10-year energy comparison. If the heat pump wins by less than 15% over the furnace, the real-world savings may not show up once you include maintenance and service calls.

(If you're searching for 'Gree HVAC New York,' you're probably looking for a local installer who understands this math. Some will do it well; some will not. Ask for the load calculation first.)

Scenario B: Through-wall PTAC units, especially hotels and motels

If you have metal sleeves in the wall and old PTAC units, the speed of the decision changes. During a busy season, a broken PTAC in 20 rooms isn't a capital project; it's an emergency. For this situation, heat pump PTACs are the classic play because one unit covers both heating and cooling, and you're not running new ductwork.

Here's where I have a strong opinion, and a scar to go with it: be careful with refurbished units.

A refurbished Gree PTAC heat pump can look like a steal. But I watched a 42-unit motel in the Northeast try to save money with refurbished units over a two-year stretch. The upfront savings disappeared in labor, callbacks, and one unit that arrived with a coil leak after the first cold snap. The motel's manager kept saying, 'We paid $600 for that instead of $1,300.' By the end, the average TCO per installed unit was higher than the new units would have been, and they had less reliable heating.

That's not me saying every refurbished unit is garbage. I can only speak to the units I've seen, and some rebuilders are careful. But the price gap usually tells you less about the unit and more about what was not fixed. If you buy refurbished, get the warranty in writing and know what it covers. Labor is almost never covered, and labor is the expensive part.

And once you install a heat pump PTAC, the thermostat matters. This is where I see the most avoidable mistake.

The Honeywell Home thermostat issue that drives me crazy

Many heat pump PTACs use their own wall-mounted control, but ducted heat pump systems — like the ones being retrofit into older buildings — often get a Honeywell Home thermostat. The thermostat itself is usually fine. The problem is the O/B terminal configuration.

I said 'O' on a job once. The system needed 'B.' On a 20°F morning, we had cold air blowing through the building. The thermostat was a perfectly good Honeywell Home model; the installer just skipped a five-minute setup step. In my first year, I made the classic spec error: I assumed every heat pump used the same thermostat wiring as a gas furnace. That call cost me a snowstorm service trip and a very unhappy client.

So if you're buying a heat pump, make sure the controller or thermostat is compatible with the heat pump's reversing valve, and that someone is responsible for checking the O/B setting before the unit is commissioned. This is not a 'heat pump vs furnace' argument — it's a 'fire your installer if they don't do a startup check' argument.

Scenario C: No ductwork, no gas line

If you're dealing with an old building with hydronic baseboard heat and window AC units, a gas furnace isn't an option without serious construction. Heat pump mini-splits or VRF systems become the least-bad option, and in many cases they're the genuinely good option.

In this scenario, heat pumps aren't competing with furnaces — they're competing with electric resistance heat, which in New York is almost always the highest operating cost. A cold-climate heat pump can cut that operating cost by more than half. That's where the TCO argument for heat pumps gets strong, because you weren't going to install a gas line anyway.

One caveat: a mini-split system will not magically fix poor insulation or a leaky building envelope. If the building is drafty, the heat pump will still heat — but at a higher cost than a furnace would have, because the heat loss is the same no matter what is producing the heat. Fix the envelope first, or at least know what you're signing up for.

Gree's commercial split and VRF systems show up in a lot of these no-duct buildings. They're not magic either. They work when installed correctly, and they struggle when the controls are skipped or the building is left leaking air.

Scenario D: The mechanical room with compressed air

This one is outside the usual 'heat pump vs furnace' article, but I'm adding it because it burns people all the time. If your building has any compressed air equipment — an auto shop, a lab, a brewery, a commercial laundry — there is a small appliance that is not technically HVAC but shares the same fate: the refrigerated air dryer.

A refrigerated air dryer removes moisture from compressed air before it reaches your tools. It's not a heat pump, and it's not a furnace. But it adds both an electrical load and a heat load to a mechanical room. I once saw a 150-SCFM refrigerated air dryer get dropped into a closet that was already tight on cooling. The room temperature rose enough that the HVAC system started short-cycling. Nobody accounted for the dryer's heat until after the complaint.

If you're doing any kind of HVAC quote for a commercial tenant, ask if they have a compressed air system, and if they have a refrigerated air dryer. If yes, make sure the load calculation includes it. Same for the hot water heater, the dehumidifier, and the office espresso machine. They all matter.

How to tell which scenario you're in

Here's the shortcut I use when a client asks me 'heat pump vs furnace?' without giving me a building description. It's not fancy, but it works.

• Do you already have metal ductwork and a gas supply line? That's Scenario A. The cheapest-looking option may be the one that requires the least change.
• Do you have through-wall sleeves with PTAC units? That's Scenario B. Time matters more than price.
• Do you have no ductwork and no gas line? That's Scenario C. A heat pump is the usual answer, but only after the envelope is checked.
• Does the building have a compressor or an industrial process? Add Scenario D to whatever else you're planning.

I realize this sounds like a decision tree, and it is. But here's the thing about decision trees: they force you to look at your own situation instead of asking the internet for a universal answer.

There is no universal answer to heat pump vs furnace. There is only a right answer for your building, your utility rates, your carbon penalty risk, and your maintenance staff. If someone gives you a one-word answer without asking a single question about the building, they're selling a product, not a solution.

And whatever you choose, put a few hundred dollars into a proper thermostat setup and a real startup commissioning. Those two things will do more for your comfort than switching fuel types ever will.

Honestly, I'm still not sure why the HVAC industry treats thermostat setup as optional. My best guess is that it's an installer culture problem, not an equipment problem. But that's another article.