Design and construction of a new office space, no matter the size, is a complex process. It is very time consuming and can be a full-time job for any tenant employee for the duration of the project, which can be upwards of one year. A project manager who is hired to assist a tenant usually offset the fees by saving the tenant thousands of dollars in both project costs as well as the tenant’s productivity costs.
Larger tenants understand the value a project manager offers, but why do tenants leasing space under 10,000 sq ft believe they can handle the construction and relocation themselves?
Contrary to the smaller tenant’s belief, hiring a project manager for any tenant unfamiliar with timeframes and construction costs is important so they do not end up wasting money in rent before their office space is ready to move into or end up paying for items that landlords would typically cover. Whether it’s 3,000 sq ft or 30,000 sq ft, the challenges are the same.
The tenant may hire their own architect and contractor and take on the responsibility of managing the design and construction of the office space. But a project manager is a professional that oversees the entire project including the architect and the contractor.
Often large landlords take responsibility for the entire project process known as turn-key, and have their own architect, contractor, and project manager. A landlord’s team will typically complete the process more quickly than a tenant’s team, because the landlord’s team is highly motivated for the rent to start as soon as possible, and this cannot happen until the space is ready for the tenant to move into it. This approach is less risky for the tenant. On the other hand, when the landlord runs the process, the tenant has less control over design and construction. The landlord’s architect and contractor are representing the landlord’s interests, not the tenants.
Just because a landlord has a pre-established team does not mean the tenant cannot negotiate to utilize their own team. If the tenant hires an architect or project manager who understands how to negotiate with large landlords, the tenant can get the best of both worlds. And in either scenario, the landlord will usually contribute the same amount of dollars to the project, whether or not the tenant hires their own team or the landlord does. All the tenant has to do is ask.
Landlords will not typically proceed with signing a lease that is contingent upon a build-out until they understand the cost of the project. The tenant should do the same if they plan to take responsibility for the design and construction. It’s important to know what the cost of the project is and the construction timeframe will be before a lease is signed and the rent commencement date is determined.