New Materials and Design Trends Can Cut Time and Money From Project Budgets.
Nationwide many office tenants are focused on either sprucing up and staying in their current space for the next two to three years until the economy turns or pursuing short-term lease deals that may improve their cash flow and upgrade their office environment at the same time. Concurrently, property owners are trying to please tenants while sustaining revenue streams by not sacrificing too much rent or paying out too many tenant improvement dollars. Yet today many tenants expect landlords to pay for retrofits that make their space efficient and appealing.
This power struggle plays out daily in the competitive leasing market, but hiring a construction manager who can evaluate the costs, effects, and risks of proposed tenant improvements can streamline the process for owners and tenants. With this approach, both tenants and landlords cover their collective risks while transacting lease deals that work for everyone.
As a result of the tight tenants' market and property owners' desires to deliver office space driven by cost pro formas, a turnkey approach with a construction manager can fit a defined scope of work into a limited budget. By working together upfront, landlords and construction managers can define turnkey deliveries that incorporate both tenants' environmental requirements and landlords' need for cost-effectiveness. While prospective tenants look for a variety of features in their new space, some of them do not automatically fit into the TI formula. Construction managers can identify cost-effective alternatives to high-end products and specialty items such as millwork, tile, glass, and lighting. This value-design process offers cost savings without sacrificing design and functionality.
Innovative Materials and Techniques
A steady evolution of new products and materials streamlines the retrofit process. Above and beyond the cost savings, many materials contribute to interesting, pleasing office environments and shorten the retrofit schedule.
The key to delivering cost-effective turnkey projects is to focus these materials in critical areas to maximize their effect. Some innovative materials and techniques that save money, reduce construction time, and increase office comfort during retrofits include the following:
Lumisite panels introduce light without reducing privacy. Many high-technology companies used these translucent panels in the mid-1990s to improve their office environments.
Clerestory, a well-known technique for introducing light into a building's interior, involves placing glass windows at the top of exterior walls to allow natural light into interior office partitions without compromising privacy.
Knockdown frames are more cost-effective than welded frames, expedite the construction schedule, and maintain the desired space aesthetics.
Aluminum frames are the most cost-effective knockdown frames and are applied after the walls are finished.
While the material cost tends to be the same, indirect light fixtures are more user-friendly than direct fixtures because they prevent glare and hot spots on computer screens.
Coordinating each floor's furniture layout with the power-source plan reduces wasted outlets as well as installation and material costs.
Being selective with soffits and using acoustical tile ceilings has the same effect at a fraction of the cost of drywall or “hard” ceilings.
Custom-built credenzas and reception desks are comparable in price to those supplied by furniture dealers.
Providing natural sunlight and optimal thermal comfort through careful design of the heating, ventilation, and air-conditioning equipment and controls system, as well as minimizing irritating odors by choosing carpets, composite wood products, and paints with low levels of volatile organic compounds, contributes to a healthier, more comfortable office environment, as well as higher worker productivity.
Technology also has caught up with the mechanical trades, saving both time and money. Computer-aided design is speeding up the entire design and construction process. A construction team's ability to share details and drawings electronically via programs like AutoCAD creates tighter tolerances in the field, improves quality, and shortens turnaround times for submittals, mock-ups, and requests for information.
Powerful, portable computing systems and laser cutters allow sheet metal and sprinkler contractors to speed up the fabrication process and reduce error and waste. For example, sheet metal detailers can work closely with project engineers to coordinate AutoCAD drawings and feed the information directly into a computer-driven cutter to fabricate exactly what is needed on site. A closely coordinated team can cut all of the sheet metal for a typical commercial floor in about one day. Sprinkler contractors also use AutoCAD drawings to precisely prepare a project's pipe structure. Automatically attaching pre-threaded pipe fittings also speeds up installation.
The Schedule Makes the Difference
Since a project's schedule greatly affects the bottom line, a construction manager can realize cost savings by improving efficiencies, closely managing subcontracted services, and shortening the overall time frame.
After developing the master project schedule — a detailed time line that captures all of the architect's, owner's, contractor's, and subcontractors' activities — a construction manager's first task is to complete a procurement schedule. This schedule checks material availability and verifies that a product can arrive on site by the required date. If the specified material is not available, the team either must make adjustments or select an alternate product that meets the design intent and program while staying within the original budget and schedule.
Given that a large percentage of the construction budget is labor costs, strong schedule management is a primary way to save money on a retrofit project. A good construction manager can shorten a project's schedule without incurring premium overtime costs by efficiently sequencing the subcontractors' work. This helps projects in two ways. First, shorter schedules mean fewer days that accrue general conditions costs. Second, efficient schedules mean more-effective use of labor and the chance to complete more work in a given time period, which allows subcontractors to price jobs aggressively. In addition, by completing projects as quickly as possible, landlords can realize rental revenue sooner.
When considering a turnkey versus a more-traditional approach to project delivery, landlords and tenants must consider the time and budget control associated with each delivery model. In the traditional approach, the client hires a designer to develop fit plans for each space and then bids the completed design out to a number of general contractors. This approach could take 10 to 12 weeks. If the bids are over budget, drawings are amended to reduce the cost and the project is either rebid or negotiated with the low general contractor bid. The second process could take another four to six weeks, with no guarantee that the budget will be met.
On the other hand, by hiring a construction manager tenants and landlords can reduce delivery time and be more certain about the budget's outcome. The construction manager can work concurrently with the designer to update budget information and guide the process to a successful conclusion. When speed to market counts, hiring a construction manager is the best option.
Trending Toward Efficiency
Today's tight economy is driving tenants away from overspending their TI dollars and moving them toward more-efficient office space plans that keep renovation costs at or below the allowances. In addition, many companies demand TI allowances that include everything from office furniture to local area network upgrades, which is referred to as the zero-sum approach.
Therefore, many landlords want the construction management team to assess tenants' needs early on and provide turnkey deliveries for fully functioning space as part of the lease agreement. The key to the zero-sum approach is to utilize as much of the existing building infrastructure as possible. The construction manager can evaluate the condition of the existing infrastructure and recommend ways to fully utilize existing conditions. With this approach, the construction manager assumes the risks of the design team and consultants, which helps both landlords and tenants: Landlords deliver high-quality products in cost-effective time frames, and tenants get more for their TI dollars.
Whatever approach tenants and landlords choose, the key to any successful retrofit is due diligence. The due diligence process ensures that retrofit or renovation strategies meet the tenants' needs and identifies potential hidden costs that could lead to dissatisfied tenants, as well as create problems for landlords. Most hidden costs lie in the building's infrastructure and its ability to meet tenants' needs, whether they are simple improvements or complex retrofits involving air circulation requirements, connectivity demands, new mechanical, electrical, and plumbing systems, and HVAC upgrades.
Minimally, due diligence should examine the mechanical and electrical infrastructures, as well as determine structural loads and constructability constraints. A building analysis also evaluates the property for compliance with existing building codes. In many states, new energy codes for tenant improvements are imposing efficiency restrictions in lighting, air conditioning, and fresh air changers, as well as requiring new fire alarms.
Construction managers can provide property owners and tenants with many timesaving and cost saving benefits. In the current tenants' market, owners are wise to consider hiring a construction team to select less-expensive, energy-efficient materials, manage the schedule, and perform due diligence for office retrofit projects.