LEASEHOLD IMPROVEMENTS AND CONSTRUCTION COSTS IN TODAYS MARKET: - - PowerPoint PPT Presentation

LEASEHOLD IMPROVEMENTS AND CONSTRUCTION COSTS IN TODAY’S MARKET: Current Issues and Management Challenges in a Greening Market

Today’s Discussion

• Market Influences
• Being Ready on Time
• Managing Construction Costs
• Delivery Dates
• Penalties

Market Influences

Rising Costs

• Leasing Costs
• Less multi-floor contiguous space
• Base Building: rising taxes and fuel costs
• higher density space
• Extreme growth
• Staff attraction and retention
• Construction costs remain at 2007 levels
• Technology change every 6 months – i.e. wireless
• Churn rates 100%
• Reduced credit = volatile marketplace

Building Search / Feasibility Planning

• Preliminary space planning, often of several buildings
• LEED Certified buildings – LEED CI Commercial Interiors

Being Ready on Time Managing Construction Costs Delivery Dates

• 10,000 sq. ft. requires approximately 4 days for planning
• 20,000 sq. ft. requires approximately 1 to 1 ½ weeks for planning
• 60,000 sq. ft. requires approximately 1 ½ weeks for planning
• 120,000 sq. ft. requires approximately 2 weeks for planning
• Schedule:
• The more lead time you have the better the costs

and schedule are controlled

Building Search / Feasibility Planning

High Level Generic Preliminary Budget Pricing

• Existing Buildings
• Level of existing finishes and architectural

detailing have a significant affect on the bottom line

• 13,000 sq. ft. comparison is $60,000

different

• New Buildings
• Building Efficiency:

Building A - 127,000 sq. ft. Building B - 147,000 sq. ft.

Being Ready on Time Managing Construction Costs Delivery Dates

Programming

Base Building Delivery

• New buildings under construction:
• no elevators:

schedule extension higher costs access to complete space

• loading dock not accessible
• base building occupancy permit
• no phone service
• no air conditioning or cannot be balanced

Being Ready on Time Managing Construction Costs Delivery Dates

Programming

• Construction Managers
• Experience in buildings you are considering
• Over 15 years in the Calgary marketplace; loyalty from the subtrades
• Has experience with LEED projects
• Landlord work to be completed by the Landlord
• Incorporate electrical and mechanical systems and interconnecting stair
• penings based on a Tenant’s plan layout = significant savings in

construction costs

Being Ready on Time Managing Construction Costs Delivery Dates

Detailed Planning

• Identify types of planning

expectations

• Open planning is typically less

construction cost

Being Ready on Time Managing Construction Costs Delivery Dates

• 10,000 sq. ft. requires approximately 2 weeks for planning
• 20,000 sq. ft. requires approximately 3 weeks for planning
• 60,000 sq. ft. requires approximately 4 weeks for planning
• 120,000 sq. ft. requires approximately 5 weeks for planning
• Schedule:

Modular Planning

Law Firm, Downtown Calgary

• Modular planning = future flexibility = lower renovation /

reconfiguration costs

Being Ready on Time Managing Construction Costs Delivery Dates

Design Development

Sustainability

• Materials should be

analyzed for their lifecycle, not just initial cost

• Materials need to be:
• durable over a long period of time
• made from recycled material
• recyclable
• reused on site
• designs need to use less new materials = reduced cost

Being Ready on Time Managing Construction Costs Delivery Dates

• Professional fees on a 127,000 sq. ft. project

= $1.00 sq. ft. for interior design fees Most Sustainable Materials have little or NO cost increase

Design Development

• Pre-ordering of long delivery

items

Being Ready on Time Managing Construction Costs Delivery Dates

• 10,000 sq. ft. project start 6 to 8 months

prior to move-in

• 20,000 sq. ft. project start 9 months prior

to move-in

• 60,000 sq. ft. project start 1 year prior to

move-in

• 120,000 sq. ft. project start 2 years prior

to move-in

• Schedule:

Design Development

• Shortage of materials:
• drywall vs. moveable wall systems
• less credit = manufacturers carry less inventory = longer delivery time
• less credit = risk of manufacturer closing, plan B and C alternative materials
• Shortage of labour:
• millwork – 6 weeks manufacturing time
• modular kitchens - less time to manufacture
• systems furniture instead of millwork – less time and less expensive
• modular walls, doors, hardware and glass are being used for wall construction
• r office fronts to reduce costs and installation time

Being Ready on Time Managing Construction Costs Delivery Dates

Contract Documentation / Working Drawings

• Construction employees in training
• The tighter the drawings, the more controlled the cost of

construction

Being Ready on Time Managing Construction Costs Delivery Dates

• 10,000 sq. ft. requires approximately 3 weeks for Working Drawings
• 20,000 sq. ft. requires approximately 3 weeks for Working Drawings
• 60,000 sq. ft. requires approximately 4 weeks for Working Drawings
• 120,000 sq. ft. requires approximately 8 to 10 weeks for Working Drawings
• Schedule:

Building Permits

• Process ranges from 5 to 7 weeks
• If no permit is posted, the job site can

be shut down, resulting in the schedule being compromised

• Fines add cost to the project

Being Ready on Time Managing Construction Costs Delivery Dates

Tender / Final Pricing

In the Calgary marketplace, we recommend:

• Working with construction managers to ensure quality,

cost control and meeting of schedules

• Using the industry standard stipulated price CCDC 2

2008 contract

Being Ready on Time Managing Construction Costs Delivery Dates

Tender / Final Pricing

Cost per square foot in the Calgary marketplace: New Construction

Basic space: $80.00 per sq. ft.

Being Ready on Time Managing Construction Costs Delivery Dates

Tender / Final Pricing

Cost per square foot in the Calgary marketplace: New Construction

More typical: $100.00 to $120.00 per sq. ft.

Being Ready on Time Managing Construction Costs Delivery Dates

Tender / Final Pricing

Cost per square foot in the Calgary marketplace: New Construction

High-end: up to $200.00 per sq. ft.

Being Ready on Time Managing Construction Costs Delivery Dates

Tender / Final Pricing

Cost per square foot in the Calgary marketplace: Renovation

Depending on the quality of the existing space, pricing can range from $40.00 per sq. ft. to $80.00 per sq. ft.

Being Ready on Time Managing Construction Costs Delivery Dates

Construction / Field Review

New Construction Renovations

• 10,000 sq. ft. one floor – 8 to 10 weeks
• 20,000 sq. ft. one floor – ranging from 10 to 12 weeks
• 60,000 sq. ft. three floors – 16 to 20 weeks
• 120,000 sq. ft. – 8 to 10 months depending on the extent of architectural

detailing

• Similar to new full floor construction depending on the extent of the work
• Up to 30% more time required if the space is occupied

Being Ready on Time Managing Construction Costs Delivery Dates

• Schedule:

Contract Administration / Cost Control

• Get everything in writing!
• Document daily materials being

shipped, stored in warehouses delivered to site and installed on site

• Penalties / Bonuses
• Furniture Installation:

Being Ready on Time Managing Construction Costs Delivery Dates

• 10,000 sq. ft. one floor – 3 to 4 days
• 20,000 sq. ft. one floor – ranging from 5 to 7 days
• 60,000 sq. ft. three floors – 3 weeks
• 120,000 sq. ft. – 6 weeks depending on the extent of systems furniture

• Follow instructions in maintenance

manuals to ensure the warranty does not become void

Project Closeout

• Establish yearly service agreement for
• equipment. i.e., air conditioners
• One-year warranty walkthrough

Being Ready on Time Managing Construction Costs Delivery Dates

Schedule Summary

• 10,000 sq. ft. project approximately

3 to 4 months to complete

• 20,000 sq. ft. project approximately

6 to 7 months to complete

• 60,000 sq. ft. project approximately

7 to 8 months to complete

• 120,000 sq. ft. project approximately

1 year to 1.5 years to complete

Being Ready on Time Managing Construction Costs Delivery Dates

• Lease Negotiations / Design Process through to

Furniture Installation

Benefits of Using an Interior Design Consultant

• Cost control and savings
• Market knowledge / benchmarking

/ future trends

• Experience and strength in

accurate scheduling

• Have long-term relationships with

Construction Managers and subtrades

• Client can focus on their core

business

SHAPING THE WAY YOU WORK

ONE SQUARE FOOT AT A TIME

DISCUSSION