Tenant Improvements: How to Estimate Project Cost
You just signed the lease agreement. Now, like most tenants, you will potentially need to renovate the space. Your staff starts buzzing about all the improvements to make, but you only see dollar signs piling up.
Sound like a familiar scenario? Most tenants face this predicament with every new leasing agreement. Avoid letting the renovation project get away from you before it ever begins. This happens through an understanding of the project scope, costs and responsibilities.
You need to outline the following:
- List of Improvements
- Design Costs
- Construction Costs
- Required Permits
A simple redesign can become a nightmare without a proper outline of expectations. It can grow in complexity, cost and complications. And by the end of the project, it turns out much larger than you ever expected.
Avoid this headache by laying out cost estimates in the beginning. Today, we’ll present a brief guide for implementing tenant improvements. We’ll look at these estimates for a potential build-out and for the Furniture, Fixtures and Equipment (FF&E).
Cost Estimates for the Potential Build-Out
These standard improvements consist of typical purchases you will make. Landlords provide a Tenant Improvement Allowance (TIA) that covers a portion of these upgrades.
- Carpet & Paint, unoccupied space: $5-7/sf
- Carpet & Paint, occupied space: $8-10/sf
- New Construction, warm shell space: $30-45/sf
- New Construction, cold shell space: $35-50/sf
- Minor Remodel of 50% or Less, unoccupied space: $15-25/sf
- Major Remodel: $35-50/sf
This pricing model includes the base expense. High-end upgrades cost more and may not fall under the conditions of your TIA.
Cost Estimates for FF&E Tenant Improvements
Tenants should anticipate an additional budget for FF&E. You generally can’t use your Tenant Improvement Allowance (TIA) for this part of the upgrades. So, plan it into your budget to avoid unforeseen expenses down the road.
Basic estimates include:
- Office Furnishings: $0-35/sf
- Systems Furniture (Cubicles): $1,500-5,000/cubicle
- Cabling: $1-2.50/sf
- Moving Costs: $1/sf and $250/cubicle
Each tenant will need their own version of these solutions. And that’s where a qualified project manager comes in handy. They will guide you through the complex design and construction process. With their help, you will stay on budget, create a beautiful space and see minimal business disruption.
Are You Ready for the Project?
An understanding of project details keep you on track and under-budget. And the help of a world-class project manager will take your tenant improvements to the next level.