Planning and executing your build out means you gain an attractive space which showcases your brand while attracting premium personnel and pleasing your growing customer base. The problem arises when cost seem prohibitive to the execution of your plan. Of course, with a bit of savvy lease negotiation your tenant improvement allowances provided by your landlord can cover the bulk of the cost involved.
Turnkey versus Tenant Build Out
As the name implies, a turnkey build out project means the tenant picks of up the key, unlocks the door, and finds new, tailored office space. During lease negotiation a turnkey build out is worked out, resulting in funding and execution by the property owner based upon the tenant’s specifications. The tenant delivers a design to the lease negotiation, then tenant and landlord discuss the details until an agreed upon build out plan is reached.
Turnkey build outs may include light fixtures, phone jacks, closets, walls, electrical, and other items with carpet, flooring, colors, finishes, and other design details chosen by the tenant. Turnkey build out are often tenant-centric, but there can be downsides. Because the landlord funds the process, he or she may be tempted to save money by cutting costs, choosing lower quality materials (carpet, paint, flooring, etc.) for the project. Along the same vein, the landlord may choose the contractor with the lowest bid rather than the one with the reputation for quality workmanship.
On the other hand, tenant improvement build outs put the tenant in control. The tenant can hire the best architect and contractor and purchase premium quality finishes, watching his or her budget throughout the process. Also settled upon during lease negotiations, the landlord and tenant agree on a dollar per square foot allowance, which means the tenant must provide accurate projections for the cost of the needed improvements.
In most cases, tenant improvement build outs are often the better choice for tenants, while turnkey build out make the most sense for companies particularly in cases of smaller office spaces. For tenants negotiating shorter leases, turnkey is often the better choice.
Calculating the Costs
In truth, there no easy way to calculate costs across the board because of differing markets. New buildings cost more, while older buildings can cost less. If premium finishes are desired, the cost will be higher. Build outs for unique functionality like labs, medicine, and more will result in higher costs than ordinary office spaces. If union labor is required, the cost of the build out will go up.
Understanding these facts, and various economic climates in different regions, here are some averages to help you gauge the cost of your build out. For standard offices and finishes (paint, carpeting, tile, standard lighting, etc.) costs estimates are $40 to $55 per square foot. Mid-range office build outs with mid-range finishes (carpet, paint, fabric wall coverings, glass or hard ceiling, etc.) are on average $55 to $80 per square foot. Executive offices with high end finishes (new wood doors and sidelights, premium carpet, custom reception areas, credenzas, etc.) can run anywhere from $95 to $150 per square foot. This does not include the cost of furnishing the newly renovated offices which costs $20 to $70 more per square foot.
It is also important to remember, costs can also vary seasonally, a result of fuel and shipping costs. The market, suburban to urban, also plays a role in costs. Even so, this somewhat broad range can help you during the early planning stages, but it is best to consult an architect, contractor, or full service build out company like Perillo Construction prior to heading into your lease negotiations. Doing so, means you will have the help of an experienced professional to estimate actual costs and plan requirements.