Should You Use the Landlord’s Project Manager for Your Office Build-Out or Hire Your Own?

Once your new lease is signed, you’re more than likely going to need to build out your new space to meet your needs.

In most cases, landlords will require you to enlist a project manager to oversee this build-out process to protect their assets and avoid a DIY disaster.

Most will want you to use their project manager, for a fee, which will be built into your lease contract.

A savvy tenant rep broker, however, will negotiate into the lease the right for you to hire a project manager of your own choosing instead.

In this article, we will explain why it can be important to bring in your own project manager rather than employing the landlord’s on-hand project manager.

Read Now: The Ultimate Guide to Hiring a Project Manager for Your Office Build-Out

Make Your Interests the Priority, Not the Landlord’s

Simply stated, a landlord’s representative will answer to the landlord, while your own representative will answer to you.

It is in your best interest to hire a project manager who will have your interests at heart.

Your own project manager will work to ensure that you get the most value out of your tenant improvement allowance and keep any out-of-pocket costs to a minimum.

Rather than considering just what will add the most long-term value for the landlord, they will consider what will make the most practical sense for you as their client.

Typically, a landlord’s project manager will focus primarily on the design and construction aspects of the project and do not concern themselves as much with other vendor costs that fall on the tenant, such as cabling, signage, moving, etc. However, your own project manager would be responsible for managing these vendors, unless you request to handle them yourself.

Your Own Rep Won’t Cost You More

Just because a landlord offers to provide you with a project manager, doesn’t mean this service will be free. Typically in Austin, a landlord will include a 3% to 5% project management fee in the contract if they manage the build-out process.

The landlord’s proposed rates will usually fall in line with the standard market rates and, in some cases, may even be higher! Meaning they are in line with what a project manager of your own choosing would also charge.

If you do negotiate the right to hire your own project manager, it is typical that the landlord will still ask or require a 1% to 3% “oversight” fee. This fee is meant to protect the landlord from the risk that of you bringing in an unqualified project manager. Again, a savvy tenant rep broker can be of assistance when trying to mitigate this cost as well.

Read Now: Cost to Hire a Project Manager for an Office Build-Out or Renovation (Fees/Rates)

Project managers are aware of this potential oversight cost, and can often work with you on their fees so that it does not cost you any more to bring them on to the project.

For example, recently an AQUILA tenant rep client who had already been working with AQUILA project management during the site selection process secured the right to use their own project manager with a 1% oversight fee from the landlord.

The landlord had originally asked for a 5% fee for use of their project manager. So to bring the costs in line, AQUILA project management brought their fees to 4%, resulting in the same cost to the client.

Now that you know why it is important to bring in your own project manager for your build-out, here are some helpful resources to learn more about the process of hiring a project manager: