The Ultimate Guide to Your Office Build-Out or Renovation

Building out a new office space can be an exciting yet daunting process, especially for companies going through it for the first time. 

Companies starting their first office build-out will find this a valuable resource for demystifying the process and setting realistic expectations. By understanding the full scope of work, timeline, and costs associated with outfitting a new space, you can confidently manage the project to meet your business needs and budget.

In this chapter, we will explain what happens in each step of the build-out process, including:

• Design
• Construction Drawings, Permitting, and Bidding
• Construction

 

1. Design Process

The design process will likely begin before your lease is signed. This is when you will work with your design team to define your vision, develop concepts, and eventually finalize construction documents that you can use for bidding and permitting.

Design Discovery

The design discovery phase involves defining the scope, assembling the project team, and beginning the design process while site selection is still underway.

During this process, you will engage the architects, engineers, and other consultants necessary for your project. Your tenant representation broker should be able to refer you to recommended design teams and will likely help you engage a project manager to lead the entire process.

After this, your project team will begin the process of providing test fits, project budgeting, and scheduling.

The entire process is outlined in the following sections.

Defining the Scope

The scope will outline the goals, requirements, and deliverables for the project. This includes things like:

• Total square footage
• Target occupancy headcount
• Special spaces – conference rooms, lobby, amenities
• Infrastructure needs – IT, A/V, security
• Budget and schedule targets
• Sustainability objectives
• Branding and cultural elements

Assembling the Team

With a defined scope, you can engage the necessary design consultants, including:

• Architect – develops the overall space plan and interior design
• MEP Engineer – designs HVAC, plumbing, electrical, fire protection
• Structural Engineer – evaluates any needed structural modifications
• IT/AV Consultant – designs telecom/A/V systems and infrastructure
• Additional specialists as needed – lighting, acoustics, etc.

Your project manager can refer you to qualified firms and consultants. Engaging an experienced project manager to run the process is highly recommended.

This newly formed team starts the design process by visiting potential sites and developing test fits, preliminary budgets, and schedules for each location under consideration. This information helps compare options.

Test Fits

Test fits are a crucial part of the site selection process. They help you visualize and evaluate how well a space can accommodate your company’s needs.

Once you have an architect and project manager (if you hired one) on board, they will work with you to produce test-fit drawings of the shortlisted spaces. This involves creating rough floor plans showing proposed layouts and positioning of key elements like:

• Workstations, desks, and seating
• Conference rooms and huddle spaces
• Breakroom, cafe, and other amenity spaces
• Reception area, lobby, and circulation
• Support rooms – printing, IT closets, storage, etc.

The architect studies the existing base building conditions and works within the given parameters of each space. They configure the layout to optimize workflow and spatial efficiency. Different options are developed based on number of employees, department groupings, preferred workstyles, and any special requirements unique to your company.

The test fits help you visualize how well a space can actually accommodate your headcount and spatial needs. They provide an early gauge of what construction will be required – demolitions, walls, finishes, MEP, etc. This gives a general idea of the tenant improvement budget required.

Reviewing multiple test fit options allows you to provide feedback and give direction to the design team on which layout works best. The final test fit becomes the framework for design once you are ready to move forward.

Preliminary Budgeting and Scheduling

During the test fit process, a project manager can develop preliminary budgets and schedules to help compare build-out costs and timelines across the spaces you are considering.

Budgets

For each test fit option, the project manager can create a preliminary budget based on the proposed layout and scope of work. This factors in estimated costs for required construction, furnishings, AV/IT, security, signage, permitting fees, etc.

Comparing preliminary budgets for different spaces will help you determine which option aligns best with your overall project budget goals. It also allows you to negotiate an appropriate tenant improvement (TI) allowance in your lease to sufficiently cover anticipated build-out costs.

Schedules

The project manager can also produce a high-level schedule for each test fit scenario to estimate durations for design, permitting, and construction. This helps give a sense of how long the build-out would take to complete for each space.

Having schedule estimates during the site selection process enables better decision-making on timeframes. It ensures the space can be delivered according to your business needs and occupancy goals.

Design Development

Once the lease is signed, the design team will take the approved schematic design and further develop it into the design development phase. This involves refining the spatial layouts, material selections, and design details.

The architect will create design studies to explore different options for the office layout. This includes developing further test fits to optimize the workspace configuration and determine desk, meeting room, common area, and support space quantities and sizes. 

The selection of interior finishes begins during design development. The architect will present finish options like flooring, wall treatments, ceilings, millwork, and furnishings. Color schemes, artwork, and graphic displays may also be developed.

Engineers assist with building system designs for mechanical, electrical, plumbing, AV/IT, security, and lighting. Any specialty lighting, acoustical treatments, or environmental graphics are specified. Signage and wayfinding systems are designed.

It is crucial that the project team and tenants are heavily involved at this stage. The design team will present options to gain feedback and consensus on the layout and finishes. This ensures the design suits the client’s functional needs, brand identity, culture, and goals. Changes are still relatively easy at this phase before construction drawings are produced.

The end goal is for the client to approve the final design development package, which sets the direction for documentation and construction. This includes floor plans, interior elevations, finish schedules, furniture plans, and technical system designs.

 

2. Construction Drawings, Permitting, and Bidding

Construction Drawings

Once the design is agreed upon, but before construction can begin, the project team must produce the final construction documents that will be used to bid out the project with vendors, submit them to the city for permitting, and as a reference during the actual construction process.

The construction drawings include detailed plans, sections, elevations, and specifications for all aspects of the buildout. This includes architectural drawings showing floor plans, ceiling plans, interior elevations, finish schedules, and construction details. Structural engineering drawings may be required for any structural modifications. Mechanical, electrical, plumbing, and fire protection drawings will show all related systems.

The construction drawings must adhere to all applicable building codes, regulations, and accessibility standards. They should accurately represent the final built design, dimensions, materials, and assembly methods. The specifications will outline standards, procedures, materials, quality control, and performance criteria.

The detailed construction drawings are a crucial step that transitions the design from conception to physical construction. They act as the blueprint for the entire buildout process. Careful coordination between the project management, architectural, engineering, and contractor teams is essential to produce a clear, comprehensive set of construction documents.

The bidding and permitting stage begins when the complete set of construction drawings is finalized and ready to submit for pricing bids from general contractors and subcontractors. The drawings are also submitted to the local building department for plan review and permitting. This ensures the design meets code requirements.

Permitting

When Permits Are Needed

Permits are required in Austin for construction, renovation, demolition, or significant modification of commercial spaces. This allows the city to review plans and ensure compliance with building codes and safety standards. Always consult with a project manager to determine if your specific plans require a permit.

Permit Expediters

Your project manager will likely recommend that you hire a permit expeditor. Permit expediters act as liaisons between the project team and city officials to streamline the process. They compile all necessary drawings, forms, fees, and documentation for submission. Expediters communicate with reviewers to resolve any questions or issues with permit applications. Their expertise results in a more efficient review and approval process.

Timelines

For standard office build-outs, permitting typically takes six to eight weeks in Austin. Exact timeframes depend on factors like city review backlogs, code changes, construction volumes, and staffing levels. Permitting may take longer for complex projects or major renovations. Rush fees can help expedite simple permits.

Fees

Permit fees are based on the valuation of construction. Other charges may apply for plan reviews, inspections, and other administrative tasks. All fees must be paid before the permit is issued.

Starting any work before obtaining permits can risk denial and lead to fines, work stoppages, or rework. Proper permitting is crucial for all commercial construction projects.

Read More: The Expert’s Guide to Getting a Permit for Your Office Build-Out in Austin, TX

Vendor Bidding & Selection

While permits are being processed, it’s time to solicit pricing and select the vendors who will execute the build-out. A project manager can guide you through this process:

RFP

The project manager sends out a request for pricing (RFP) or bid invitation to reputable general contractors and subcontractors in your area. RFPs are also sent to vendors for IT, security, cabling, furniture, etc. as needed.

The RFP includes the final construction drawings and specifications. It requests a detailed bid for completing the defined scope of work.

Review and Selection

The project team reviews the competitive pricing received and evaluates each vendor based on bid cost, qualifications, experience, and references.

The team selects the vendors that provide the best overall value – contractors and subcontractors for each trade, plus any additional suppliers or providers.

 

3. Construction Process

With the construction drawings finalized, your permit in hand, and the team hired, the physical construction process can begin.

Depending on the scope of your project and the initial state of your space, this process can vary greatly and might include:

• Demolition
• Framing and drywall
• Ceiling
• Finishes
• Millwork
• Mechanical, electrical, plumbing (MEP)

The timeline for this phase can range anywhere from a few weeks to several months, depending on the project’s scope.

For reference, a Class A build-out of a 20,000-square-foot shell space would take an estimated 32 weeks to complete, while the same build-out of a second-gen space would take about 20 weeks.

Vendor Items

Once construction is complete, the final vendor items will be installed to outfit the space before move-in. This includes audio/visual equipment, signage, and furniture.

The AV vendor will install any audio/visual systems specified in the plans, such as video conferencing equipment, projectors and screens, speakers, and microphones. They will test all systems to ensure they are functioning properly.

The signage vendor will install any interior and exterior signs, including lobby directories, office and conference room signs, wayfinding signs, and branding elements. Signage helps create a professional look and makes it easy for employees and visitors to navigate the space.

The furniture vendor will deliver and install all specified furniture, fixtures, and equipment (FF&E). This includes workstations, private offices, conference room furniture, lobby furniture, kitchen appliances, and more. The furniture will be assembled and placed according to the furniture plan.

Punch List

The last step before you occupy the space is a walk-through with the project team. During the walk-through, they will identify anything that does not match the construction plans or that is not up to standard.

These items are added to a “punch list.” The general contractor or vendor responsible for each item is required to complete or correct each issue before they receive the final payment.

Typically, the punch list will be completed either during or after move-in. If small items need to be corrected, work can be done around employees during working hours. If there is larger or louder work that needs to be done, timing can be negotiated to include weekend and after-hours work.

After the punch list is completed, one final walk-through should be done to confirm that everything was addressed, meets the construction drawings, and is to your satisfaction.

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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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