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Insights: your Tenant Improvement Toolbox

Interior Construction Pricing: When to Expect It In A Week, Not A Day

By

Ismena Galanos

Quick pricing has its place, but let us show you when you'll need to offer more time.

Need pricing in a hurry? Not so fast...


If you are a broker or tenant thinking you only need general build-out pricing for a space, or a quick estimate per square foot, consider: how will you know how much to offer or ask for in a tenant concession or plan for in a purchase?


As contractors, we have seen many tenants not have enough in their budget for their desired finishes after not having had a full construction price calculated, one that included all the details of what the space needed as well as what the tenant wanted. For small businesses, especially, this can be heartbreaking and result in needing to cut some of the desired changes or try to find the cheapest general contractor available, which results in its own issues. In the best case scenario, the work done isn’t fabulous but at least it gets done. In the worst case, the GC may disappear before the job is finished. We have been asked to finish a space after a contractor disappeared mid-build-out.


As with knowing the date when food expires, knowing accurate construction costs can prevent a lot of problems.


Memorize the three points below if you're a business owner or a broker to remember why accurate pricing requires more than a couple days of work.


1. Contractors need to see the space, if possible, or a drawing of it at the very least. A broker’s sketch is better than nothing but not ideal. Architectural drawings or a space plan are best. Drawings and especially a site visit allow the contractor to see potential problems, examine what in the existing space will need to be changed (like pulling up carpet or eliminating a ceiling grid, for example), and allow contractors to see if there are errors in the space plan. Spaces often change without new space plans being drawn.


2. MP&E, or mechanical, plumbing, and electrical, is better calculated by subcontractors who do the work. If they can get in to see the existing HVAC, plumbing, and electrical, they can give accurate pricing. For small subs who don’t pay someone to do the pricing, more time to get to the space to see it or look at the plans will likely result in a more competitive price in the end.


3. Depending on the size of the project, it can take a while to put accurate pricing together. Yes, some people use software to give you a budget—people who can fit software inaccuracies into the pricing. If you’d like to not make room in your budget for errors made by estimating software, then a contractor who takes the time to look at every aspect of the plan and do those calculations will be a better match for you. Additionally, a contractor doing hands-on pricing with an architectural drafting ruler can see if there are errors in the floor plan. They can also choose from competing MP&E subs based on what their pricing covers and offer alternate options that may save even more money.


In middle Tennessee, especially, give contractors time to visit a space or examine plans to provide pricing. This market is still busy, and while there may not be as many deals being completed this year as in prior years, interior contractors will still be doing work: not only build-outs, but they may also be reducing a tenant’s square footage or freshening up a vacant space.


There are some occasions when a quick price may make sense:

· If you’re a property manager, and it’s only for budget season: you can’t know what a tenant will ultimately want, but you can give the building owner an idea of how much to plan to spend.

· If you’re getting a basic budget to know if a space makes sense financially with the lease rate when a final decision hasn’t been made.

· If you’re checking on the estimated build-out price of multiple suites or spaces to narrow down options for a client.

· If the tenant will only be changing finishes, meaning there is no MP&E to price out nor walls to build or tear down.

· When the tenant is okay with standard finishes for which a contractor can create a budget based on the average prices of things like carpet and paint.


When should you especially not settle for a 2-day budget and give time for more accurate pricing? When you are getting the final pricing on a space, or when you’re proposing how much of a build-out cost should be covered in a lease or sales agreement, you definitely will want to know what needs to be fixed and what needs to be updated, which truly requires a site visit for the contractor.

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Commercial Industrial Construction, Inc.

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101 Space Park South Dr.

Nashville, Tennessee  37211

615-781-9550

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