The Ultimate Guide to Your Office Build-Out or Renovation

Do you want to build out your office space but don’t know where to begin? Building out your office space can be overwhelming, but hiring a project manager who can help you make a plan and lead you through the process can keep you on track.

Here is the process that a project manager will help guide you through, from design to move-in.

 

1. Design

Ideally, you should begin your design process during the site selection process, before you even sign a lease. You will work with a design team to define your vision, develop concepts and eventually finalize construction documents that you can use for bidding and permitting.

Discovery

During the design discovery phase, you will define the scope of your project. Then, you will find architects, engineers, and other consultants that fit the needs of your project.

Conceptual Design

In this phase, your project team will begin providing test fits, budgeting, and scheduling. 

Project Planning

Your project manager will then put together a preliminary budget and schedule for the project based on these test fits. All of this will help you make a comparison of your options and assist you in your lease negotiations. Knowing what a project will cost can also inform how much tenant improvement allowance you will need. This will help your tenant representation broker in the negotiation process.

Design

Upon execution of your lease, you will then immediately move into the design phase of your project. This typically includes the schematic design, design developments, and completion of construction documents which are necessary for bidding and permitting. While working closely with your architect and engineers to finalize these plans, you will also be selecting all your finishes and equipment.

2. Bidding and Permitting

During this stage, the construction drawings will be submitted for review to your local municipality’s building department. At the same time, your project manager will be able to send out the construction drawings for competitive bidding to the contractor community.

In Austin, a permit is required any time you plan to “erect, construct, enlarge, alter, repair, improve, remove, convert, move, or demolish” a building or space within the City’s jurisdiction. This means most build-outs will need a permit from the City of Austin before beginning construction. Speak to your project manager to determine whether or not your project will require a permit.

If your project is located in the city of Austin, your project manager will recommend hiring a permit expediter to help you get through the City’s permitting process as quickly as possible. The permitting process for a typical build-out usually takes six to eight weeks, but other factors such as jurisdiction, time of year, and scope of work can affect that timeline.

In some cases, there are projects with reduced scope and size that can qualify for a permit more quickly – sometimes within a few weeks. Your project manager will know how long it will take to get a permit for your project based on this information.

Want to learn more about the permitting process in Austin? Read our article The Expert’s Guide to Getting a Permit for Your Office Build-Out in Austin, TX to learn more.

3. Construction

Construction usually begins once your construction drawings are complete, a contractor has been selected, and a permit is in hand (if needed).

The schedule for your construction can range from a few weeks to several months depending on the scope of the project.

The process may include:

• Demolition
• Framing and drywall
• Ceilings
• Finishes
• Millwork
• Mechanical
• Electrical
• Plumbing

Once construction is complete you will be able to install any necessary furniture, fixtures, and equipment (typically referred to as FF&E) prior to move-in.

Also note, that if your project has been permitted, you will be required by the city to pass all final inspections and receive a certificate of occupancy.

Also, prior to move in, you will want to do a final walk-through with the project team to identify any issues with the construction. This is known as generating a punch list that your project team must complete to satisfy the contract and language in the workletter of the lease.  After the issues are corrected, you will do a final walk-through with the project team to make sure everything on the punch list is complete. The general contractor or vendor responsible for each punch list item is required to complete or correct each issue before they receive the final payment.

Read the full article here: What Is the Office Build-Out Process?

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The build-out process can be lengthy and the total time it takes depends on the scope of the build-out.

Shell Condition Build-Out Schedule

Shell space refers to the unfinished area within an office building. It requires the installation of various interior components to transform an empty suite into a functional office environment. These components typically encompass the following:

• Framing and drywall
• Doors, frames, and hardware
• Ceilings
• Finishes
• Millwork
• Mechanical systems
• Electrical
• Plumbing

Shell space build-outs typically take up to eight months.

Here is a sample timeline for a 20,000-square-foot shell condition space requiring a Class A quality finish out.

Approximate Timeline for Build-Out of Shell Space
Design/Architecture	10 Weeks
Bidding & Permitting	6 Weeks
Construction	16 Weeks
Total	32 Weeks (8 Months)

Second-Generation Space Build-Out Schedule

Second-generation space, also known as 2nd Gen, is characterized by pre-existing features such as ceilings, millwork, and plumbing. When undertaking a build-out in these types of spaces, the primary objective usually revolves around attaining a refreshed aesthetic.

Second-generation build-outs are typically completed more quickly than shell spaces because there are fewer renovations to be done.

Here is a sample timeline for a 20,000-square-foot second-gen space requiring a Class A quality finish out:

Approximate Timeline for Build-out of Second-Generation Space
Design/Architecture	6 Weeks
Bidding & Permitting	4 Weeks
Construction	10 Weeks
Total	20 Weeks (5 Months)

Ultimately, the time it takes to build out your space depends on the condition of the space and the scope of the project.

Read the full article here: How Long Does It Take to Build Out or Renovate Office Space?

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Estimating the cost of an office build-out can be a daunting task due to its complex nature. Obtaining quotes from construction companies and vendors can be particularly challenging for inexperienced individuals.

Project managers, well-versed in pricing, play a pivotal role in assembling budgets and bids for numerous tenant improvement projects and office build-outs. Thus, hiring a project manager is strongly recommended, given their familiarity with the process.

What Will Be Included in Your Office Build-Out Costs?

Budgets for office build-out projects are broken down into five major categories: hard costs, soft costs, owner’s contingency, project management fees, and vendor costs.

Hard Costs

Hard costs primarily encompass the tangible renovations required for the space. These expenses typically dominate the budget allocation; however, estimating them accurately can be challenging without comprehensive project details in place.

Common hard costs include:

• Paint and flooring
• Electrical
• Plumbing
• Mechanical
• Framing and drywall
• Doors/frames/hardware

Soft Costs

Soft costs are generally more straightforward to estimate. They encompass the expenditures and services associated with project design and permitting. The overall cost will vary depending on the project’s scope.

Common soft costs include:

• Architectural designs
• Mechanical, electrical, and plumbing design (MEPs)
• Permit expediting 
• Other design consultants (structural and civil)

For a more in-depth look at soft costs versus hard costs, read our article Quick Answer: Hard Costs vs. Soft Costs for Office Build-Out Budgets.

Vendor Costs

Vendor costs encompass miscellaneous expenses that are contingent upon the scope of your project.

Vendor costs can include:

• Furniture, fixtures, and equipment (FF&E)
• Cabling
• Security
• Moving
• Signage
• Audio-visual

Owner’s Contingency

A proficient project manager incorporates a contingency provision to accommodate unforeseen expenses.

In “shell” condition projects, the contingency allowance typically ranges from 5% to 10% of the total project cost. However, remodels often require a higher contingency allowance of 10% or more due to the likelihood of encountering unforeseen issues in second-generation spaces.

A Project Management Fee

The project management fee is generally 3% to 5% of managed costs but can vary depending on the project scope and projected total cost of the project.

Engaging a skilled project manager may appear as an additional expense; however, their expertise can ultimately yield cost savings on your overall project expenditure and prevent costly errors.

What Can Affect Your Office Build-Out Costs?

1. Space Condition: Distinguish between second-generation and shell space, as shell space typically requires substantial enhancements and a larger budget compared to minor adjustments for second-gen space.
2. Space Size: Smaller spaces demand fewer materials, while larger spaces offer lower costs per square foot.
3. Finish Quality: Choose between high-quality wood and simpler laminate options, considering the necessity for your business and the associated cost implications.
4. Office Layout & Amenities: The inclusion of numerous private offices or conference rooms can increase expenses due to additional walls and wiring, whereas open floorplans generally result in lower costs.
5. Timeline Management: Proactive planning aids in budget adherence, while delays or significant changes mid-build can incur substantial costs.

Read More: Things That Affect the Cost of Your Office Build-Out

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Consulting a project manager is essential for accurate cost estimation during your office build-out. But, the aforementioned guidelines serve as a valuable starting point for your budgeting process.

Using Your Tenant Improvement (TI) Allowance to Pay for Your Office Build-Out

A tenant improvement (TI) allowance is money given from a landlord to a tenant to help pay for the improvements in an office space. The lease agreement includes a negotiated amount for this allowance, along with a comprehensive breakdown of its approved utilization. Typically, this covers the mentioned hard and soft costs; however, most vendor items will not be covered.  Your TI allowance usually includes improvements that will increase the value of the building for the landlord. Refer to the work letter in the lease to confirm exact usage.

In Austin, typical TI allowances vary but usually depend on a few variables outlined below.

Size of Space

The extent of your tenant improvement (TI) allowance can be influenced by the size of your space. Landlords prioritize minimizing vacancies and maintaining consistent rental income, making larger leases more advantageous to them. As an incentive for tenants to commit to longer lease terms, landlords may offer substantial TI allowances.

Read Next: Tenant Improvement Allowance Questions, Answered

Lease Length

Landlords seek longer lease commitments from tenants to minimize vacancies and enable sufficient time for the recovery of their initial TI allowance investment. Consequently, a larger TI allowance is more probable in these cases.

Lease Type

TI allowances differ based on the type of lease, whether it’s a new lease, expansion, renewal, or sublease. Typically, new leases and expansions receive higher TI allowances, while renewals and subleases receive considerably less.

While these guidelines provide a helpful estimation, external factors such as market conditions can also influence the actual amount of the allowance.

Read the full article here: Cost to Build-Out Office Space: How to Plan and Budget

1. Hire a Project Manager for Your Office Build-Out

Engaging a project manager streamlines and potentially reduces costs.

Project Managers Give Valuable Pre-construction Advice

Early engagement of a project manager enables informed decision-making and facilitates a seamless construction process. With their expertise in building codes, regulations, vendor management, and more, consulting a project manager proactively mitigates potential setbacks and prevents costly complications.

Project Managers Can Help You Negotiate TIs

The tenant improvement (TI) allowance plays a significant role in your project. As mentioned earlier, it is a budget allocated by the landlord to accommodate tenant customization requirements. TI allowances commonly cover construction expenses and essential architectural and engineering fees, as specified in the lease agreement.

Experienced project managers possess extensive build-out experience and can offer preliminary project budgets. These budgets facilitate your broker’s negotiation of a TI allowance that aligns with your project scope, enabling a cost-effective office build-out that minimizes out-of-pocket expenses.

Project Managers Help You Stay Organized and On Schedule

A project manager meticulously establishes comprehensive timelines with predetermined deliverable dates and milestones throughout the build-out process. They assign responsible parties for each task, effectively preventing delays that can result in holdovers and postponed move-in dates. These delays can incur expenses and potentially necessitate the relocation from your current space before the new one is ready. Ensuring timely project completion within budget is a challenging endeavor, expertly handled by a project manager.

Project Managers Have Market and Budget Expertise

Project managers possess extensive market knowledge derived from their experience with numerous build-outs. They are well-versed in market rates for various office build-out requirements and maintain established relationships with reliable vendors. Leveraging this expertise, project managers assist in maximizing value for your company throughout the project. They ensure competitive rates for proposed work and collaborate with trusted vendors and contractors to deliver quality outcomes.

While budget constraints may limit fulfilling all desired elements, project managers excel in optimizing budgets and identifying alternatives to achieve the desired aesthetic. They employ value engineering techniques, which will be discussed further.

2. Start Early, and Have a Plan to Avoid Costly Delays

Initiating the design and planning phase of your build-out at the earliest opportunity is crucial (Chapter 1 delves into the design process in detail). Early commencement of these activities allows for a distributed timeline, minimizing the impact of unforeseen delays.

Obtaining permits promptly is equally important. As discussed in Chapter 1, the permitting process demands substantial time, necessitating proactive planning to avert delays.

Careful selection of your construction team, including contractors, specialty trades, consultants, and vendors is essential to avoid complications. Opting for the cheapest option or neglecting proper vetting can result in costly consequences and delays. When hiring a project manager ensure careful consideration is given to selecting the right candidate.

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3. Use Value Engineering

If your initial build-out budget appears insufficient, engaging in a discussion with your project manager about value engineering is advisable.

During this discussion, you will review the original budget with your project manager to identify elements that are now unnecessary or underestimated. Based on these findings, your project manager will formulate a plan to implement necessary changes while minimizing project delays.

Relying on their expertise, your project manager will assist you in determining which aspects of the project should be scaled back or eliminated, while identifying feasible alternatives.

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4. Consider Leasing Furniture Instead of Buying It

Opting to lease furniture can yield significant cost savings compared to purchasing. When the build-out budget lacks funds for buying new furniture, leasing provides access to high-quality options. Additionally, leasing becomes a prudent choice when a company’s growth trajectory is uncertain, preventing the accumulation of excess furniture. According to office rental furniture company CORT, leasing becomes more advantageous if the intended occupancy of a space is less than 24 months.

Read Now: Reasons to Consider Renting Versus Buying Office Furniture

5. Go Wireless

Significant cost savings in your office build-out can be achieved by transitioning from standard data cabling to a wireless office network.

Read Next: Save Money on Your Office Build-Out by Going Wireless

By adopting cell phones and laptops for employees, substantial savings can be realized. Procuring a reliable and robust wifi plan and implementing cell phone reimbursement programs for employees are necessary. Although some areas like conference rooms and the front desk still require cabling, the associated costs are considerably reduced.

Read the full article here: Tips to Save Money on Your Office Build-Out

Engaging a project manager can provide significant advantages and alleviate stress during your office build-out. We highly recommend considering their expertise for large-scale projects.

Throughout the preceding chapters, we have emphasized the benefits of hiring a project manager including:

• Pre-build-out planning assistance
• Negotiating a larger TI allowance
• Cost savings in your office build-out
• Time efficiency during the build-out process
• Mitigating delays
• Streamlining the permitting process
• Assembling a trusted build-out team
• Implementing value engineering for optimal results
• Creating comprehensive project timelines
• Ensuring organizational efficiency

With these insights, you are well-equipped to confidently navigate the intricacies of an office build-out.

To delve deeper into hiring a project manager, we invite you to read our comprehensive guide, “Ultimate Guide to Hiring a Project Manager for Your Office Build-Out.”

For further discussions regarding your specific office build-out or inquiries about other types of build-outs, we encourage you to schedule a consultation with one of our expert project managers.

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