What's a Project Manager?
Project managers help in all stages of your real estate project, starting from the very first step. They are accountable for the overall execution and delivery of a project. They are part of the design and planning process and help ensure seamless communication between the design parties and the construction team. Their scope of work typically includes preparing cost estimates, budgets and work timetables; interpreting and explaining contracts and technical information to other professionals; reporting work progress and budget to clients; collaborating with architects, engineers and other construction pros; selecting contractors and scheduling and coordinating their tasks; responding to work delays, emergencies and other problems; and ensuring compliance with legal requirements, building and safety codes, and other regulations.
What's a General Contractor?
When starting a home remodel or new construction project, you will probably hire a general contractor. A general contractor is a professional who is qualified to take a set of building plans and construct them as outlined. The general contractor may help perform the day-to-day building, or they may just hire workers and oversee all the work activities. In either case, the job of the general contractor is to see that your project gets built. The contractor will manage their workers and subcontractors (anyone who doesn’t work directly for the general contractor, but that they need to outsource, like a marble installation pro), order all the materials, obtain trade work permits and confirm that all the workers and subcontractors are completing their projects as planned. They typically handle all the payments to the workers and subcontractors, and send you an invoice.
What's the Difference?
The work of project managers may seem very similar to that of general contractors, but there are some critical differences. One difference is that, unlike most general contractors, project managers are not engaged in the actual construction — they are onsite overseeing the work of Contractors. Another key difference is that project managers are hired by the owner to act as their agent during the early planning phase. They validate estimates, develop scopes of work and timelines for all interfaces required (architects, engineers, environmental and other regulatory agencies, permitting, contractors, inspectors, community, etc). General contractors are usually hired after plans have been issued. Project managers are generally paid a percentage of the total project cost, while general contractors are typically paid according to the bid they’ve submitted.
What's Tenant Build-Out?
An interior tenant build-out is changing an existing commercial shell into a personalized, usable space for your business’ specific needs. An interior build-out is also commonly referred to as commercial tenant improvements, or leasehold improvements. A commercial space may be delivered in many ways; such as shell condition, whitebox, or 2nd generation with an existing build-out present. Many times, the cost of construction, and not rent, can make or break a deal. A variety of variables must be taken into account when trying to estimate the overall cost of your build-out project. Knowing these costs prior to signing a lease is critical in order to avoid unplanned expenses.
How Much Does Tenant Build-out Cost?
The cost to bring a space from shell to whitebox varies from market to market, but as a rough average it can be expected to cost somewhere around $35-45/SF. To get a space from whitebox to move-in ready, varies greatly depending on the layout and finishes. But at a minimum, it will likely cost $10-20/SF extra to make a space move-in ready. However, many high end office spaces can have a construction cost of around $100/SF in total.
What Influences Tenant Build-out Costs?
There are several factors impacting the cost of construction for a typical build-out project. One of the more critical factors influencing the cost of an interior build-out is the existing condition of the space. It is important to know the two primary types of conditions before selecting your desired option as the cost may vary drastically. The two main categories are shell condition and 2nd generation space.
After a new office building is finished and ready to be leased to new tenants, the spaces are delivered in “shell” condition. This means that no improvements have been made. In this situation, the new tenants are provided the opportunity to custom design a new space without having to remove any pre-existing structures, finishes, or mechanicals.Shell space build-outs usually involve the installation of not only walls, doors, framing, but the utilities that support the overall functionality of the property’s infrastructure.Shell space generally requires a larger budget than an existing space.
2nd generation space has been occupied by tenants previously and most of the build-out has probably already been done. Since the office space was previously configured for the vacating tenant, it could be assumed the space could be nearly move-in ready. In this situation, there is usually no need for the new tenant to completely gut the space and start over. 2nd generation projects generally require a minimal amount of work, as compared to a shell condition project. This type of project will include mostly visual changes to the space and avoids more costly changes such as plumbing, electrical, or other mechanical changes. In many cases, the cost to prepare the space for a new tenant is limited to paint and flooring and maybe moving a few walls to better align with the new tenant layout.
The larger the space, the larger the budget. The more materials required, the more labor will be required, and the more time and energy will be spent to fund the project. However, the larger the space, the lower your costs will be on a per square foot basis.
Office spaces with multiple private offices, a handful of conference rooms and several break rooms can be suitable for some employees, but not others. This type of layout means someone will be paying for all the build-out. Because every office will require walls and every conference room will require additional wiring, adding these separations can significantly raise your overall cost.
On the other hand, an open floor plan can lower the overall costs by taking away the additional walls and wiring. Having one large space that all employees share means less work and materials must be put towards the project. Less material means lower costs.
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