Remodeling As a Tenant vs. As An Owner

Remodeling can be an exciting, but daunting task. There are many different facets that have to be considered by the commercial remodel project owner, including cost, design, decisions regarding what brands or companies that will be used, and much more.

In general, there are a handful of important things a commercial remodel project owner (whether it be a building tenant or a building owner) should keep in mind & consider:

Have a precisely planned budget with safety factors built-in for the possibility of additional costs.

• Most people know that undertaking a remodel project of any size without proper financial planning is a fool’s errand. A budget might not end up being 100% air-tight once the project gets rolling & eventually is completed, but for forecasting purposes, there is just no other way to attack a remodel if the project owner is interested in being as cost-efficient as possible.

Do your due diligence as it relates to the thorough planning, surveying, & evaluation of the project at hand.

• Once you have your budget mapped out, you need to make sure you have people and subcontractors you trust that are working alongside you and helping you make decisions that will help to avoid major hiccups & help the project to turn out in a way with which you will be pleased.

Ensure the project will, in the long-term, meet the needs that originally forced you to undergo the project.

• As the project gets rolling, there can be a tendency to let the busyness & finality of the changes taking place to get in the way of making suggestions & changing your mind, or holding on to what you originally wanted to have happen. Make sure that - as the project moves through each stage - you keep in mind what the reasons behind & plans for the remodel were in the first place.

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It should be noted that a commercial remodel differs in a variety of ways, depending on if one looks at the project from the perspective of an owner or a tenant of a particular commercial building space. Below are some of the differences between these two roles when it comes to a general commercial remodel:

Owner:

• The owner generally has to put up or front most of the money associated with the project. This results in the owner generally wanting to be as financially conservative as possible for most decisions & situations.
• The owner will also be greatly concerned with any major structural or exterior cosmetic work that might need to take place. The reason for this is they will want to ensure that if and when a tenant business owner moves out, the owner can still use the building for a different tenant business owner - potentially in a completely different industry - down the road.

Tenant:

• As opposed to the owner, the tenant generally pays for the cost of the commercial remodel in a monthly fashion to the owner, as if it were a bill of any other sort. Due to a couple facts - payments being broken up & generally smaller; the lack of permanence with it only being a leasing scenario - the tenant business owner will generally desire everything under the sun when it comes to financial decisions throughout the process.
• The tenant business owner is not going to worry too much about minimizing structural or exterior work, because they will generally be primarily concerned with what needs to happen to meet their business needs.

When evaluating a commercial remodel project from the perspective of the tenant business owner, there should be a mapped-out, well-planned strategy. Firstly, ensuring that there is sound financial planning & backing is of the utmost importance. Another important step is forecasting & proving that the end product of the business itself is going to pay off all the money that will be fronted for the remodel. Lastly, but of equal importance, is ensuring that a sound floor plan is in the works, and that every square inch is being maximized as much as possible for the business’ operations.

For a tenant business owner, there needs to be an attempt made to make as many facets of the remodel as easy as possible on his or herself throughout the process. The tenant should find a building that - in its current state before remodeling - is as close to suiting their needs as possible, allowing them to minimize the amount of change that needs to occur. The tenant should also ensure that the building has the utility supply (electrical, water, sewage, gas, etc.) that their business will require once up and running. As a tenant, you do not want to have to go add utility capabilities late in the process, as this can get very expensive. Lastly, the tenant should make sure the location they are seeking is “zoned” (municipality zoning requirements) for what their business classification is at the time of remodel.

As with any major project of any kind, there are some common mistakes & pitfalls that tenants should be actively looking to avoid. For one, the tenant should do a proper job of qualifying subcontracting bids they are receiving. For example, they should not make a habit of always choosing the cheapest bid, and on the other hand, they should do their due diligence of qualifying a subcontractor who charges more (there may be good reasons!). Avoiding relationships with subcontracting companies with bad financial strength or tenure is also a good idea for tenant business owners. The tenant should ensure all permits are filed, from the perspective of the building itself to all of the subcontracting work.

From the perspective of a business owner who owns the building space, a very common question that comes up relates to the timeline of how far in advance they should be budgeting and planning for a remodel. In general, the timeframe of planning & preparation for a remodel should begin a minimum of 6 months before the start day for smaller jobs, but a year if at all possible, especially for larger remodeling projects.

In an effort to make the owner’s remodel project significantly easier, more cost-effective, and more efficient, there are some tips of which to take note of. Firstly, buying materials in bulk is definitely cost-effective, because there are usually discounts applied on larger purchases. Value-engineering the project from a design perspective is also helpful in the long run; more specifically, making sure no stone is unturned when it comes to fixing up the building space to completely meet the business’ specific needs. Once the project is finished, it can be extremely costly to go back and make edits at a later time.

We discussed the pitfalls that a tenant business owner should work at avoiding, and the owner of the space has mistakes that should be avoided as well. For one, the owner should avoid hiring undependable specialty subcontractors that may be working on structural changes, utility changes, or other major renovations; the last thing an owner needs is for a major mistake to set the project back and prolong the process. Maybe the most important concept for an owner relates to the expectations of the project; preparing for uncontrollable events or delays - such as weather, material shortages - can ease the disruption that these events cause when they inevitably do come up.

Commercial remodel projects should be thought of as more of a marathon than a sprint. To get frustrated with a small mishap or hiccup on one day of a 3 or 4-month summer remodel is a waste of time & energy. Proper planning, whether it be from a building tenant or a building owner’s perspective, is of the utmost importance, as well as being mindful that the end goal is to have a new space that is perfectly tailored for the given business owner’s company to thrive and jump headfirst into the future.