Your Comprehensive Commercial Office Build-Out & Renovation Guide
If you’ve been dreaming of a commercial office renovation but aren’t sure where to start, you’re not alone. In our experience, the build-out process is something of a mystery for most business owners the first time they go through it. That’s why we created this Comprehensive Commercial Office Build-Out and Renovation Guide–to help you make sense of the commercial build-out process and empower you to plan your next project with absolute confidence.
For easy scannability and review, we’ve broken this guide into three parts:
In Part I, we run through the general steps for completing a commercial office build-out project.
In Part II, we discuss how to estimate project costs and timelines.
In Part III, we share our top tips and tricks for ensuring a smooth process and successful results.
Read on to gain a better understanding of how a successful office renovation project proceeds and to learn what to watch out for.
Part I: The 4 Steps of an Office Build-Out
Regardless of a build-out’s project specifics, this section serves as a useful general blueprint for how an office building renovation project should progress. Note that timing and requirements within each step will vary from project to project, depending on factors like:
- Local ordinances
- Site location
- Budget
- Project scope
However, the high-level sequence of events outlined below stays broadly applicable.
Step 1: Design and Planning
Design and Planning is, arguably, the most critical step in the office build-out process. The decisions made here impact all aspects of the project moving forward, including those that affect a business’ bottom line like budget and timeline.
Because of its wide-ranging impacts, there’s a lot that needs to happen during this step. So, to help keep everything straight, let's break the work down further into three stages.
Set your Scope
Before beginning any plans, you need to set the scope of your project. Having an experienced Commercial Contractor’s input at this stage will help ensure your scope is both comprehensive and realistic.
Your project scope should include details like:
- Goals – What are your wants and needs for this build-out?
- Scale – What is the square footage? What is the current state of the property? Will the design require any complex or specialty equipment/features?
- Budget – Have you considered your construction budget? What is your spending cut off?
- Timeline – When do you want/need the build-out completed by?
For a more detailed discussion of how to prepare for a commercial construction project, check out our Commercial Construction Project Checklist.
Pick your Partners
Once you have a general scope of work in mind, it’s possible to identify all the different partners you’ll need to complete your build-out. Some of the most common professionals employed for commercial office renovation projects include:
- A Commercial General Contractor to oversee the work and act as a liaison between the different parties.
- Designers and Architects to develop your design and create construction plans.
- A Structural Engineer to safely plan substantial alterations to features like load-bearing walls.
- MEP Engineers to plan and implement alterations to the mechanical, electrical, and plumbing systems.
- Additional specialists and vendors for niche components such as security, IT, signage, etc.
Generally, the first person you’ll need to hire (after a Commercial General Contractor) is a Designer or Architect, as they’ll be the ones developing your ideas into an actionable plan.
Develop your Design
Once the scope of work has been completed and a designer or architect chosen, potential designs can be developed.
Typically, this process involves drafting ‘test fits’, or rough diagrams of how a space can be renovated to accommodate all the business’ wants and needs. Often, a space can be designed with a variety of different layouts, so this process may involve many drafts and revisions before a final concept is chosen.
This is also the stage to choose materials and make aesthetic decisions. Your project team will gather flooring, paint, finish, and furnishing samples that they think will suit both your practical needs and your brand identity. This is the time to carefully explore all options. Once your selections are made, it’s much harder to change things, so do not rush this step.
Step 2: Construction Documents
During this phase, the chosen design is turned into official construction documents. These documents include both drawings and specifications for every type of work the build-out will require, such as:
- Architectural
- Structural
- Mechanical
- Electrical
- Plumbing
Unlike the drawings and documents drafted in the previous step, these final construction documents must meet detailed standards established by local regulators. These standards help ensure all the work completed for the build-out is both accurate and structurally sound. These documents will be completed by the appropriate members of the project team.
Step 3: Permits and Bidding
Once the construction documents are finalized, it’s possible to submit them for permitting and to solicit bids. Different jurisdictions have different permitting requirements, so it’s important to work with your team to determine which applications are necessary for your build-out. Work that commonly requires permits includes:
- Demolition
- Additions
- Wall relocations/path of egress changes
- Adding, removing, or relocating electrical fixtures
- Plumbing changes
- HVAC installation or replacement
While the permits are being processed, the construction documents can also be used to solicit bids from subcontractors and vendors. The bidding process starts by sending out a bid invite to subcontractors and any necessary specialists. Once all bids have been received, your general contractor will comb through them for comparison based on factors like cost, scope, experience, and references.
You will then receive one comprehensive proposal from your general contractor which includes the full scope of work for your project.
Step 4: Construction
Last but certainly not least, construction will begin. The time it takes to fully renovate office spaces depends on the complexity of the build-out. For example, at Diversified, our projects generally range from 4 to 16 weeks, but larger scale projects can sometimes take much longer. Commercial renovation projects commonly involve:
- Demolition and removal of old materials
- Framing and drywalling
- Moving or adding doors
- Relocating lights, outlets, and switches
- Updating or relocating plumbing
- Updating or rerouting HVAC ductwork
- Painting
- Laying new flooring
- Replacing ceiling tile
Once the main construction is complete, your chosen specialist vendors can then execute their designated tasks. These may include:
- Installing appliances
- Installing signage
- Installing A/V equipment
- Installing security systems
- Assembling and arranging furniture
Once all the initial work is completed, your project team will conduct a walk-through with you. During this walk-through, any incongruencies with the construction plan or sub-par work are noted on a ‘punch list’. These list items are then distributed to the various contractors and vendors responsible for their completion. Only once all problems are resolved will the final payment be issued. At that point, the project is officially complete.
Part II: What Does an Office Building Renovation Cost?
With so much variation from one commercial build-out to the next, there is no one-size-fits-all estimate to determine project costs upfront. To understand what your project will cost, it’s important to complete a detailed custom estimate. To learn more about that process, you can check out our previous blog post: How to Estimate & Plan For Commercial Renovation Costs.
For the purposes of this guide, we’ll focus on summarizing the most common cost categories and reviewing some of the trickier aspects of planning a renovation budget. We’ll also discuss the time costs and provide some tips for setting a timeline.
What Contributes to Office Build-Out Costs?
Most business owners are aware of the concept of hard costs vs. soft costs. This model is also commonly used to divide up the expenses for an office build-out. Categorizing things in this way can be particularly helpful for identifying which costs in an estimate are stable and which are more likely to fluctuate.
Hard Costs
In commercial renovation, hard costs refer to costs directly related to the physical construction process. AKA the things that are built, installed, applied, and left in place, as well as the labor hours required to complete them. These types of costs include:
- Flooring and ceiling materials
- Framing materials, drywall, and paint
- Doors, windows, frames, and hardware
- Electrical wiring, fixtures, sockets, and switches
- Pipes and plumbing fixtures
- HVAC appliances and ductwork
- Cables, A/V equipment, and security systems
To accurately estimate your project’s hard costs, it’s necessary to research pricing for each type of material and labor you’ll need. The costs in this category tend to be more prone to fluctuation depending on market conditions.
Soft Costs
Soft costs include all the work that doesn’t directly contribute to the physical construction process. In many cases, this work can be thought of as the ‘before and after’ phases that bookend main construction. Common soft costs for office build-outs include:
- Architecture and MEP design services
- Interior design services
- Permits and application fees
- SAC/WAC fees
- Vendor costs (security, IT, signage, etc.)
While these costs can also fluctuate, they tend to be more stable than hard costs and are thus easier to estimate accurately.
Hidden Expenses During Office Building Renovations
Many of the expenses incurred during an office build-out are logical, even to someone inexperienced with commercial office refurbishment. However, there are also some common budget items that aren’t as readily apparent.
One such item is a Construction Contingency. This is a sum that’s set aside at the start of a project to cover unforeseen expenses. These contingencies typically amount to between 5% and 10% of the total project cost, and they can be structured in two ways:
- Contractor Contingency - the contractor builds the fee into their prices in anticipation of unplanned costs.
- Owner Contingency - the project owner sets aside money to cover any additions or modifications made to the initial construction plans over the course of the project.
Budgeting for one or both types of Construction Contingencies is usually a smart move, since the unexpected can and will happen during the build-out process.
Other unplanned expenses can arise from changes in municipal ordinances. Since renovations take time to move from the design phase to the construction phase, it’s not unheard of for building regulations to shift in the interim. If these changes require redoing construction documents or adding new elements to the design, then they could have a substantial impact on the project’s bottom line.
How to Use a Tenant Improvement (TI) Allowance to Pay for Renovations
To offset your out-of-pocket costs during a commercial office build-out, it’s useful to secure a TI allowance as part of your lease. This allowance is a pre-negotiated sum paid by the landlord to the tenant to offset the cost of customizing the space the tenant is leasing.
It’s up to the tenant how a TI allowance is used, at least to a point. Generally speaking, costs associated with making permanent improvements to the space are covered. Think re-framing, re-painting, new floors and ceilings, etc. However, things that a tenant can take with them at the end of the lease, like furniture and IT cabling, are not covered.
Check out this blog to learn more about how to use a TI allowance for your office build-out.
Calculating the Time Cost for an Office Build-Out
An office build-out timeline is mostly dictated by the project’s complexity and local conditions. Simple projects may be completed in just a couple months, while more in-depth build-outs can take as long as a year to move from initial design all the way to completed construction.
Fortunately, the planning, design, permitting, and bidding steps aren’t typically disruptive to day-to-day operations. For most businesses, it’s really only the construction phase that impedes their work. To help you calculate any costs associated with work interruptions, your general contractor should be able to provide you with an estimate for the duration of the construction phase.
Part III: 3 Tips to Ensure a Smooth Commercial Office Renovation Project
Because of their length and complexity, it’s normal for commercial build-outs to have an occasional hiccup. What’s important is having the right resources in place to take these bumps in the road in stride. To that end, here are three tips to ensure your project stays on track no matter what life throws at you.
1. Work with Experts
Whether it’s a budget saving move or just born of an admirable DIY spirit, some business owners are tempted to cut corners when assembling their project team. However, this rarely works out.
As detailed in Parts I and II of this article, office space construction is a complex process. Mistakes come easily when expertise is lacking, and even small problems have a tendency to snowball when each step is so dependent on the quality of work completed before it.
The only reliable way to ensure a great result is to minimize mistakes in the first place, and that requires working with real experts. Bringing on a seasoned Commercial Contractor early will help ensure every member of your project team meets this standard. They will leverage their connections and experience to help secure the best team possible.
2. Follow the Plan
If you follow the steps outlined in Part I, you will have a well-vetted and comprehensive plan completed by the end of your design phase. From that point on, sticking to the plan is crucial for saving money and completing the work on time.
Of course, unexpected things can happen and sometimes, altering the plan is unavoidable. The point of this tip isn’t to tell you to despair when that happens. Instead, it’s meant to advise not getting drawn off target unnecessarily.
There’s always a chance you’ll fall in love with a new trend after starting construction, or you’ll hear a rumor about saving money by switching vendors late in the game. Unless you want to risk your project derailing and your costs skyrocketing, resist these temptations. Remember how much you liked the plan when you finalized it and stick to it.
3. Reuse and Recycle
If the budget starts looking tight, recycling and reusing may be a solution for loosening things back up. For example:
- Look into the feasibility of repairing existing HVAC systems instead of replacing them.
- If the space has hardwood or concrete floors, consider options for refinishing them.
- Instead of buying all-new furniture, think critically about what can be reused in the new design.
- You can also save by sourcing salvaged building materials and used/liquidated commercial furniture.
Finally, check to see if your municipality has Reuse or Deconstruction Grants. These grants provide funding for renovation projects that meet certain criteria around reclaiming building materials. If you qualify, you may be able to receive a set amount of funding per square foot of renovation.
Get Your Office Build-Out Started Today
Hopefully, this guide has helped illustrate just how attainable that dream commercial renovation is for your business. All it takes is the right team to help make it happen, and that team starts with Diversified Construction.
We’ve been in this business for over half a century. In that time, we’ve helped countless clients complete their commercial renovations with stellar results. We know exactly what it takes to get your dream build-out done, on time and on budget. It’s time to make that dream a reality. Get in touch with us today and let’s get started!
