Insights: your Tenant Improvement Toolbox

Let's pretend you are not Amazon, or Oracle, or another of the major corporations who have announced headquarters locations in Nashville, Tennessee, including the announcment of a new, large, as-yet-to-be-built tower in the bustling Central Business District.

Let's pretend you are a law office, perhaps with a music and copyright practice, with locations in Los Angeles and New York City, and you plan to open another office in the Nashville-area, maybe Brentwood, where you can see a little more sky. You don't need a massive tower. You are not a developer. You have a business, and you need an office. Your broker shows you several spaces, and you ask for some recomendations for contractors, and you get a handful of names. Who will you choose?

The first name is a company you've never heard of; the second name is a contractor who works in both L.A. and in Nashville, and the third is a traveling contractor recommended by your New York architect. You get three bids on the space you like, and their prices aren't dramatically different. The company you have never heard of came in higher than the traveling contractor, so you can eliminate them immediately, correct?

What if you knew that traveling contractor was going to call the unknown GC you just eliminated, who happens to be a Nashville-based local contractor, to be connected with subcontractors in the area? What if you knew the traveling GC's lower bid was an estimate based on averages across other markets, that they will call around until they can find someone to do the work for the price they quoted, no matter the quality of the end product? The quality of the final product will depend on who they can find for the lower price they quoted, not upon their own staff, and their past work may not reflect what you will get.

Easy enough, then: you choose the GC whose price was comparable to the name you didn't recognize, who has offices both in L.A. and in Nashville, right? They must be good because they are so large and have multiple offices across the country--just like you do. The prices are comparable, so surely the work will be as well.

Alas, not necessarily.

Within the last several years, Nashville has enjoyed a construction "boom" that drew contractors from around the country to take advantage of the flush of new business. Many lured employees from other GCs with promises of a slightly higher wage and a company truck. Many also called around to find subcontractors who were somehow available to take on more work. Some survived and flourished, some floundered. They loaded their new high-wage employees with more jobs to cover the cost of employment. They used their profits to add employees, build pretty new offices for themselves, and buy those new trucks.

None of these facts may turn you away, but perhaps you are missing some details about the local contractor that could sway your choice. For instance, how long has the local GC been in business? Perhaps they have built in the city longer than others have been around. The advantages of this longevity can include long-term relationships with trusted subcontractors. These relationships can make or break a project, as a contractor can call on a trusted sub in an emergency or on short-notice, can trust them to finish on-time, and can trust they will provide accurate pricing without change orders.

Who is managing the subcontractors? Many contractors, both the local and the late-comers, send superintendents and foremen to multiple jobs every day. The more jobs they can cover, the more that improves their bottom line. Yet consider, who is there when the inspector shows up unannounced? Who is there to receive deliveries and ensure they are correct? Who is orchestrating the symphony of subcontractors to ensure fewer delays? Full-time on-site superintedents serve as conductors, both in the musical sense to orchestrate the job, and in the sense of a train conductor who keeps things moving. Having your employees relocating to Brentwood without an office to move into, storing furniture because a space isn't ready, and paying on a lease when you can't yet take occupancy: those affect your bottom line.

What is the company culture of the local GC? Do their employees have experience spanning years, even decades? How are employees trained? Is the contractor putting profits back into their people, rewarding loyalty and quality work, or are they using profits to lure new employees with bonuses and create the facade of success while few stick around long enough to benefit from any success? Long-term employees can create long-term relationships, facilitating better communication, an eagerness to please clients, and they often possess a history with buildings, building engineers, and property managers in the area. They can make things happen. 

Finally, who is looking out for, well, you? Who can offer creative money- or time-saving solutions? Who has identified the right subs to get you into your space sooner, so you can bill clients of your own? Who will be around to answer questions and fix issues should they come up? Who can provide 360-degree photo and video tours for the executives staying in L.A. or the architect in New York who wants updates on construction progress? Who will you call when your breakroom needs a refresh? Who will remain after your lease ends, and you want the same level of service in your new build-out? Will the national contractor who arrived during a construction boom find it financially advantageous to keep an open office through a downturn? Who will answer your call?

Stanislav Lem said, "There are no answers, only choices." What ultimately works best for your company will be determined by your priorities. However, if you have a chance to work with a local contractor at a fair price, why wouldn't you?