Creating an efficient workspace doesn’t end with finding a perfect location. Once you’ve found a suitable commercial space, you have to customize the space for the operational needs of your business. This is known as tenant build-out or improvement.
Leasehold improvement varies greatly and can include alterations of the doors, ceilings, windows, walls, painting, IT and electrical, HVAC, and other building details. It can also entail major renovations like building additional private offices, restrooms, conference rooms, and production areas; installing partitions for display and individual workstations; and improving interior design and finishes to suit the brand.
Tenant build-outs are often an intensive process. You need to have a good team on board. Basically, you need an architect to design the space, a contractor to carry out the plan, and a project manager to coordinate all aspects. They work together to achieve the desired set up of the client, at the same time, comply with local building regulations and restrictions.
Outfitting a workspace involves a significant amount. The cost varies depending on where the site is located. But generally, the average cost is around $196.49 per square foot. Depending on the lease agreement, the costs can be charged wholly to the landlord, the tenant, or split between them. How the costs are shared depends on the negotiations, market trends, type of leased space, and complexity of the project.
Considering the costs of tenant build-outs, one of the concerns of tenants is how to cut the costs. Here we take a look at some ways to save money on this project.
Cut Your Tenant Build-out Costs
Negotiate the tenant improvement allowance
Work with your real estate broker to negotiate the tenant improvement allowance. As a tenant, your goal is to get the landlord to agree on a stated dollar amount that they will shoulder. With this, you’ll have greater control over the project instead of just the landlord.
Likewise, discuss other expenses associated with the project, such as building permits, development charges, taxes, and other regulatory fees. Ensure that you have a clear understanding of who’s paying these expenses. Again, if you can get the building owner to pay for it, you’ll be able to save.
Specify your needs
Discuss with the architect your specific needs. Consider the occupants, clients, and others who may be using or dropping by your space. Efficiency, utility, and productivity are the topmost concerns when it comes to. Scrap off unnecessary details which are only added costs.
Maximize existing features
When making the floor plan, incorporate existing or built-in features of the space. This can help reduce major constructions that are often costly. Discuss with the architect ways to maximize inherent features of the space, such as columns, windows, partitions, electrical, HVAC, etc. For example, you can use repurpose existing partitions and turn them into an enclosed office.
Look for alternative
You can get huge savings by having multiple options. Once the design is done, request a quotation from different contractors. Different contractors have different suppliers. Compare their offers to find the most reasonably priced contractor. And even when you already have a contractor, you can request alternative materials. The general contractor can also get bids from sub-contractors for additional savings.
Get a project manager
Even if you have great management skills, don’t get tempted to “DIY manage” the build-out. A project manager is an important member of your construction team. According to tenant build-outs experts from AFS General, a project manager requires proficiency with construction management, organization, and budgeting. If you’re already managing the day-to-day operations of your company, adding the tasks of a project manager can be daunting.
Although hiring a project manager means added cost, having one ensures that the project proceeds as planned and follows the budget. It avoids unnecessary costs and wastages, thus saving your money. Project managers also allow you to stay focused on your core functions.
Choose space that requires minimal improvements
Ideally, you should select an already built-out space or one that needs minor improvements. This should greatly reduce the cost of leasehold improvement, as compared to building from scratch. Look for leasable locations that have recently been vacated. You might be able to reuse existing features; hence, you don’t need to invest in new ones.
Consider reusing furniture
Recycling and reusing furniture is another way to cut the cost of tenant build-out, especially if the space has been previously occupied. For example, you can repaint the ceiling instead of demolishing it and installing a new one. You can reuse existing workstations rather than relocating them. Maximizing the previous build-out can save you significant money. You can also visit salvage shops to look for furniture and office fixtures that can be reused in your space. Talk with your contractor on how you can incorporate reusable items in your improvement project.
Hopefully, this post gave you insights on how to keep your leasehold improvement costs to the minimum. Managing a construction project can be overwhelming, especially if you’re juggling it alongside regular business activities. Hiring a reliable construction team can help simplify things. They can also guide you on ways to cut costs.