LEASEHOLD IMPROVEMENTS AND …...In the Calgary marketplace, we recommend: • Working with construction managers to ensure quality, cost control and meeting of schedules • Using

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 InfluencesRising 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.


ProgrammingBase Building Delivery• New buildings under construction:

- no elevators:schedule extensionhigher costs access to complete space

- loading dock not accessible

- base building occupancy permit

- no phone service

- no air conditioning or cannot be balanced


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

openings based on a Tenant’s plan layout = significant savings in construction costs


Detailed Planning

• Identify types of planning expectations

• Open planning is typically less construction cost






• Schedule:

Modular Planning

Law Firm, Downtown Calgary

• Modular planning = future flexibility = lower renovation / reconfiguration costs


Design DevelopmentSustainability

• 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


• 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


- 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

or office fronts to reduce costs and installation time


Contract Documentation /Working Drawings

• Construction employees in training

• The tighter the drawings, the more controlled the cost of construction


- 10,000 sq. ft. requires approximately 3 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


Tender / Final PricingIn 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


Tender / Final PricingCost per square foot in the Calgary marketplace:

New Construction

Basic space: $80.00 per sq. ft.



New Construction

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



New Construction

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



Renovation

Depending on the quality of the existing space, pricing can range from

$40.00 per sq. ft. to $80.00 per sq. ft.


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


• 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:


- 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


Schedule Summary

- 10,000 sq. ft. project approximately 3 to 4 months to complete



- 120,000 sq. ft. project approximately 1 year to 1.5 years to complete


• 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 WORKONE SQUARE FOOT AT A TIME

DISCUSSION

Documents

LEASEHOLD IMPROVEMENTS AND …...In the Calgary marketplace, we recommend: • Working with construction managers to ensure quality, cost control and meeting of schedules • Using