Finding office space is not easy. It can be challenging to manage costs. This includes building the office suite, choosing furniture, and moving. Tenants believe that budgeting is done after the lease has been signed. It may be more important to create budgets before lease terms are negotiated with multiple landlords.

 Why? Understanding the costs involved in building out each space you are considering will allow you to compare the proposals from landlords. In addition, you will be able to see how much each tenant improvements allowance will stretch and get more information about the concessions and rental packages available.

Here are some industry-recognized tips, tricks, and percentages to help you estimate the main costs of engaging professionals, designing, building, and moving into office space. These costs are for a typical office suite, including offices, workstations, conference room, and kitchen.

Engineering and Architecture Costs

Architecture fees are usually expressed in square feet and are influenced by the cost of the job and the cost of materials and labor. The price per square foot goes up as the job becomes more complex and more extensive. A typical office suite costs between $3-5 per square foot for architecture.

The engineering drawings that show the plumbing, electrical, and mechanical systems are the "behind-the-scenes" part of construction plans. These drawings show the wiring, conduit, and piping that will be installed in the space. These fees are usually expressed in square feet and have the same price drivers as architectural drawings. For example, the typical MEP fee for an office would be $1.50 to $1.50 per square foot.

A structural engineer is needed if your job involves heavy-duty mobile partitions or stairs. These fees are usually paid in one lump sum. Because the scope of work can vary greatly from one project to the next, these fees are the most difficult to budget. This means that the structural fee is usually less than the MEP and architectural fees. In addition, it typically only involves one or two structural elements per buildout and not several items throughout the job.

Construction Costs Will Exceed 75% Off Your Budget

This will account for around 75% of the total cost of the job. You should pay close attention to this cost. It is often more art than science to generate this number, as you only have a rough idea of the space and a plan. It is common to include three different information streams in order to create a budget.

Request An Estimate From A General Contractor: 

While getting a budget estimate from an outside general contractor in your area is helpful, it should not be relied upon alone. GC estimates tend to be conservative. It is better to have a budget that is $10,000 higher than the actual cost than one that's $1,000 lower. Subcontractors who gather data from suppliers give bids to general contractors. These estimates typically reflect current labor costs and materials, which can change greatly from month to month.

Create your budget using the space plan, square footage estimates, and unit costs. Professionals measure and count all elements of a project using a process known as a "takeoff." This will give you an accurate estimate of the scope of your project. However, materials and labor costs are constantly changing, so this information is also useful.

Use figures From Previous Jobs With Similar Attributes To Help You Prepare A Budget: 

You can find a job that is very similar to yours and use it as a starting point. Then, adjust the costs to match the job. In many trades, such as drywall, mechanical, and electrical the cost of larger jobs is typically lower. For line items, GC's "general conditions" or "supervision," smaller jobs may be more costly per square foot. These tasks can cost the exact same amount on a job that is 10,000 feet in size as a job that is 50,000 feet. It is important to have a detailed database of costs and experience so you can determine the impact on costs. This information will be invaluable for any project manager.

Construction Permits And Hiring An Expeditor

A permit expediter is a person who will help you navigate your plans through approval processes in major metropolitan areas. This is one of the most valuable investments you can make. For a reference, the cost for their services in Washington, D.C. is only $1,500. Prices vary depending on the type and jurisdiction of your building permit. Check the website of the local jurisdiction where you are building. As a guideline, you should budget 2% of your total construction costs to cover any inspections and permits that may be required.

Some jurisdictions allow you to hire a third-party consultant to review your drawings before submitting them to the municipality. This third-party review can help you get your permit sooner if your project is late. The cost for this service is approximately $0.25 per square foot.

Voice And Data Cabling

This category covers all wiring required for your computers and phones to function. This cost is usually expressed on a per square foot basis. For example, a typical job would have a voice and data budget of between $2 and $3 per sq. foot.

Security And Access Control Systems

These magnetic locks and card readers are usually not within the scope of the general contractor's services. However, it is possible to simply count how many doors will have card readers. The first door will cost approximately $5,000, and each one after that door will cost approximately $3,000.

Audio Visual Systems

The AV system includes TVs, video conference speakers, ceilings, and digital schedulers to conference rooms and huddle rooms. The cost of an AV system can range from a modest amount for a simple job to a huge sum for complex ones. A placeholder cost of $4-$7 per square foot is a good starting point. As a tenant, you need to meet with an AV designer before creating a budget.

Furniture And Liquidation

Another category where prices can vary widely is furniture. The cost of all new furniture can range from $20 to $30 per square foot. The furniture cost will go down to $0. If all the furniture is being moved from their old locations and repurposed, it will cost $0. It is important to get a feel for what furniture will cost before you buy.

You will need to dispose of all furniture that was owned by your landlord before you can plan on buying new furniture. It doesn't matter how much you paid for furniture in the past, nor what condition it is in. Your existing furniture is likely to be of little or no value. You can find someone to take it away for free, but it is likely that you will need to pay to have it removed.

Moving

The good news for you if you are planning to purchase all new furniture is that moving costs will be minimal. Most likely, it will cost less than $1 per square foot to just move your contents. Moving costs for all furniture will run between $2 and $3 per square foot.

Landlord Fee

To manage the project, your new landlord will usually charge 1% of the hard costs. This usually involves reviewing drawings and ensuring that construction rules are adhered to.

Signage

For signs on exterior buildings, expect to spend around $35,000. The sign's size, height, connections details, and complexity will all impact the overall cost. While interior signage will be less expensive, a professional sign for a reception area might cost about $5,000.

Project Manager

Small offices with a floor area of less than 5,000 square feet, or projects that are relatively simple, may be able to manage the move and buildout while still running your business. Don't attempt to do it all for larger projects. This is a complicated task. A project manager who is competent will usually pay for their own expenses in three ways. They will assist you in solving problems before they become serious problems. Second, they can help you solve problems cost-effectively before they become costly. Third, vendors will be able to perform better if the PM is able to hire them for future projects.

There are many ways project managers can charge for their services. You can ask for a lump sum or charge per square foot. Or you may base your payment on a percentage. Budgeting is a matter of personal preference. The PM fee should be between 3% to 5% of the total job cost.

Budget Contingency

Budgets must include a contingency plan. It should be able to cover two things. You should first account for items that you don't have a detailed plan for because there is no design. This will add approximately 5% to your construction costs. Unexpected items like unexpected reroutings of MEP items will arise once construction begins. Unexpected items should be considered at 5% of the budget.