A Developer's Guide to Commercial Construction and Buildouts

What are Commercial Construction Buildouts?

One of your first questions may be "What is a buildout?". Lucky for you, this is a very common procedure after purchasing or renting a vacant commercial lot.

A "Buildout" is any of the construction that occurs in a commercial building to make it more appropriate for a potential tenant. Another name for this process is a "Tenant Improvement" or TI.

Buildouts often involve everyone who makes decisions in a company, as they will need to approve the changes. The business owner will go over their needs for the space with an architect or internal planner to choose the type of commercial space they need. The architect will then plan what needs to go in the area, after which construction will start.

If any previous company owned the space, there may already be improvements that exist in the area. These may be walls, fixtures, or any number of other construction projects.

Builders will often have to remove existing improvements before they can construct new fixtures. This is because they are rarely compatible with the new tenants' needs.

This process needs consistent communication with many people. This can include the new tenant, the landlord, and even the local government depending on what they want to build. If any single person on this list disapproves of the changes to the location, it can put a stop to the whole project.

This means the construction company will insist on a good process in communicating this stage. If something goes wrong in communication, they may end up liable, and so they are careful about starting without confirmed plans.

How Much Does a Buildout Cost?

This is one of those questions where the answer depends on the circumstances. Usually, the cost of a real estate buildout revolves around the square footage of the building. You can expect to pay more for a larger location, and for any bespoke work that might need to happen based on the needs of the commercial partner.

Expect to get into detailed negotiations of how much a buildout is going to cost. But there is one factor that can help you with getting this process started: The Landlord.

Landlords are often very aware that their property will not work for everyone. For that reason, they will often be willing to pitch in and cover some of the costs to adapt the location to suit your needs. This is especially true if nobody has occupied the location in a significant amount of time.

You should be aware that a "Turnkey" buildout like this will mean you will have less control over what you can install. The landlord will have the ability to veto things they do not approve of. For this reason, you may be better off taking the finances into your own hands.

How Do I Start a Buildout?

One of the first steps in a buildout is to think about what you need to use the space for. Think about the exact rooms you will need will be, and what you will need to use them for. Example questions you may want to ask include:

• Will I need a breakout area for staff?
• Do I need access to water in any of these rooms?
• Do these rooms need storage areas?
• Will I need any enclosed or secure rooms, such as server storage?

After going through all your requirements, you can start to approach designers and architects. These people will be able to go through your requirements and start sketching up plans.

Over time, they will be able to have a back-and-forth with you and will be able to find the best way to make use of the space. After you determine this, you can start to approach a construction company to begin negotiations for building the space.

Is it Worth Doing a Buildout?

We cannot answer this question for you. It depends on your circumstances and what you want to do with the property. You will have to make a cost-benefit analysis yourself to determine whether you should perform a commercial buildout.

As an example, you could find a location that is perfect for you and your target market. This will not matter, though, if the construction companies or rent are much too expensive for what you wish to do. In that situation, you will have to determine whether the buildout is worth performing.

Or, you could find a mediocre location, but with great opportunities. For example, you may find the landlord and local builders can help you make exactly what you want.

If you are able to share the cost of any buildout in commercial construction with a landlord, this will change again. It may make the whole project worthwhile by saving you a lot of money up-front.

What Is My Next Step?

You should now have a good idea of what it takes to start a commercial construction project and how to plan for one. But if you are planning any buildouts in the future, you may still have questions. Lucky for you, our specialists are on hand to provide you the answers you need.

So, if you want to go over your ideas and get a quote on how much it would cost to do the buildout you need, pick up the phone now. We would be happy to help.