Ways to keep tenant improvement costs down

Many sectors of our economy here in northern Nevada continue to improve and recover from the recent economic downturn. Businesses across the board are adding staff and resources, which leads to growth and expansion. It is rare that a new space be perfectly suited for your needs, so there may be some work or updating needed. If you find yourself running out of room and needing to grow or you are just ready for a move, here are some tips to help keep costs down on your tenant improvement (TI) work.

Hire a licensed and bonded general contractor. You may receive a referral from your landlord or your broker but the key is to find a contractor that understands your needs, your timeframe and most importantly your budget. I know you are thinking you have a handyman or someone else you know that can offer the “good guy discount” but often times this is a disaster waiting to happen. This route usually requires money up front or a deposit to procure materials and non-licensed contractors generally do not have the resources to adequately staff the project, which leads to completion delays. You end up wasting more time chasing them down or micro managing the process than focusing on your own business, which ultimately costs you money. The worst case scenario is that they do not complete the project and you are left paying for attorney fees and spending more time and money to bring someone else in to finish the work.

Know what you need in terms of space and take time to plan. This is not to say that you shouldn’t take into account future growth or expansion but be smart regarding your lease space and efficiencies. While saving money on the initial improvements and upfront cost is important, you can ultimately save more money through leasing the proper amount of space and through efficient space planning and design. Hire a user-friendly architect or a design build contractor to assist with the design process. They will find efficiencies with sinks, waste lines and restrooms that you may not find on your own. A good project team will be able to assist you with cost efficient layouts, material selections and help control project costs through properly designed space.

Have good clear communication amongst all parties. This includes the owner, broker, user, general contractor (GC), owner vendors, etc. This communication up front will set clear expectations regarding scope, price, schedule, and tenant fit up or move-in. Most of the time these items are covered in lease documents or in the initial request for proposal (RPF). On occasion these documents are not shared with the GC so scope gets missed which leads to the dreaded words “Change Order”, which in turn leads to cost increases. Be sure to share this information with your GC and then sit down and review the scope and the bid. You can save yourself headache and money by maintaining clear lines of communication throughout the project.

Be engaged and ask questions. You can and should ask questions regarding materials, warranties, operating costs and durability. The old adage “you get what you pay for” holds true for construction as it does in other industries. Lower up front cost may actually cost you more money in maintenance and replacement later on down the line. The difference between a 26-ounce carpet and 28-ounce carpet is pennies per square foot but the durability could mean the difference in years. If you are responsible for your own utility costs, inquire as to the efficiency of rooftop conditioning equipment and light fixtures. NV Energy is still offering nice incentives to businesses through their Sure Bet program. This program offers rebates for high efficiency equipment and LED lighting. Ask during lease negotiations for these costs to be passed through to you if you are responsible for ongoing utility bills. Be informed and do your research. Ask questions and be engaged but do not get in the GC’s way. “Time is money” so be engaged, answer your GC’s questions but then let them do their job so you can focus on yours.

A TI project can either give you the space you need for the budget you have or in many cases, it can mean lost time and money. Approaching any project with qualified people is the first and most important step in making the process run as smoothly as possible.

Matt Clafton is the vice president and general manager of Alston Construction. With more than 25 years of experience as a general contractor, Clafton oversees both ground up construction and tenant improvement work for companies across northern Nevada. For more information visit www.alstonco.com or call 775-827-4631.