SUBJECT AREA - CONSTRUCTION VARIABLES

Construction Overview

All construction falls into two categories so this is where we will start:

1.   New Construction Premises

For new construction many landlords will offer a cash tenant allowance to help the tenant build out the space to the tenant’s specific specifications. Other landlords may offer to build all or part of the tenant-required improvements (because it is more cost effective for them), and then let the tenant provide the interior décor identification and operational improvements within their demised premises.

For new construction, a landlord may normally provide items such as:

a)  HVAC units on the roof - typically 1 ton for every 300 sq feet of space being leased, though a restaurant may require additional units to keep the kitchen area cool. Keep in mind that Landlords will typically not provide the necessary interior ductwork, especially for a restaurant, because each retailer will require a different air distribution to the offices, bathrooms, stockrooms and showrooms. Also, with new construction the HVAC distribution system is most often installed in conjunction with the ceiling grid pattern. 

b)  Gas service stubbed to the premises.

c) Electric service stubbed to the premises.

d)  Water service stubbed to the premises.

e)  Adequate sewer / drainage lines to the premises.

Remember, Retailers should know the required size of each of the service lines that they need so that the correct amount of service is installed and available. If this detail is missed, it is VERY expensive to go back and reinstall or alter any of those utility service lines. In addition, retailers should understand whether the gas, water, electric and sewer services are to be brought only to the property line, or actually to the demised premises that will be occupied. The availability of these utilities in adequate size, and in the required location, can represent another major construction expense for the tenant.

2.   Second or Third Generation (previously occupied) Premises

The tenant should compare the existing layout of the premises to their proposed store plan-o-gram since, when non-weight bearing walls are relocated, the cost is relatively inexpensive. However, relocating interior block or frame load-bearing walls is extremely expensive and usually will involve architects, engineers, steel beam supports and other costly expense items. Also, the relocation of bathroom and kitchen utility service lines within the premises is also very expensive. For example, some tenants may choose to provide bathroom access directly from the showroom floor, while other tenants may not provide bathroom facilities at all, depending upon local codes and regulations, as well as the type of business being operated.
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