November 26, 2021

Making the Most of Your Tenant Improvement Budget

Over the years, Rubicon has worked with many commercial property owners on projects to try to please specific tenants for tenant improvement. Oftentimes, we see commercial property owners bending over backwards to try to solve a problem with a specific tenant in the final stretch of a lease renewal. One of our most popular services involves serving as the general commercial contractor of tenant improvement Projects to help make spaces better suited for existing tenants and more appealing to prospective tenants. These projects can also increase your income per square foot, but before you begin, think about ways to make the most of your project’s budget.

Value Engineering

This is a concept we love to start with when we sit down with new commercial building investors—value engineering. It’s one of the things we pride ourselves on in taking on a project. How can we make your tenant’s space look first-class but still maintain a sensible budget for the application that makes sense for the ownership group? Rubicon will always look for materials and installation methods that can reduce costs but still give you a luxe look at an affordable price.

Value Engineering (VE) is a structured approach to improving projects with the aim of achieving better value for money. It can help reduce costs associated with tenant improvement by identifying and eliminating unnecessary features, functions, materials or processes from the project.

This cost saving technique can be used in all stages of a building project – from design to construction – to ensure that only necessary components are included. VE is not about cutting corners on quality; it’s about focusing spending on the most important parts of the project while reducing waste where possible.

For example, selecting an alternative material that offers similar performance but at a lower cost can allow funds to be allocated towards other aspects of the build such as energy efficiency or increased functionality. By applying Value Engineering principles during the tenant improvement process, businesses can ensure that they get maximum value out of their investment.

Ultimately, Value Engineering is a tool to help ensure that projects are completed on time and within budget while still delivering the desired outcomes. By considering cost-effective alternatives in the design phase, businesses can save money while optimizing their tenant improvement project.

It’s important to keep in mind, however, that VE should be used judiciously and with precision; it is not an excuse for cutting corners or compromising quality. When applied correctly, Value Engineering can help make tenant improvement projects more efficient and cost-effective without sacrificing functionality or reliability.

Here is some more information on Value Engineering from the GSA.

Calculator, pen and printed paper on top of a table calculating the cost of tenant improvement

Choosing Your General Contractor

This simple step can be a nightmare for any business, whether you hold one commercial building or thousands. We’ve written entire blogs about choosing contractors for various stages of your project. Make sure that you check references for any contractor you will be using on your project. Don’t forget to ask if they have worked on projects of similar scope, budget and timeline. Make sure that they are licensed and bonded and ask for a copy of their commercial liability insurance policy. Most importantly, think about the tenant with whom they might be interacting throughout the project. Make sure they are a good fit or designate a solid go-between to facilitate communication during the project.

As a general contractor, you can provide a variety of services to help with tenant improvement projects. This can include anything from evaluating existing building systems and proposing upgrades, to providing full project design services. Additionally, you can work closely with tenants to provide cost-saving solutions that meet their needs while also staying on budget. As part of the tenant improvement process, you should be able to guide the tenant through all aspects of the project, including working with local authorities for permits and approvals as necessary.

Additionally, your team may be able to arrange financing for materials or contract labor in order to make certain improvements more attainable for the tenant. A good general contractor will have extensive experience in construction management and understand how best to manage a tenant improvement project from start to finish. With their guidance, you can be sure that the tenant will have a successful project with minimal disruption and hassle.

In summary, general contractors are an essential component of any tenant improvement project, providing expertise and assistance to ensure success. By working together, you can make the entire process easier while also ensuring that the tenant’s needs are met. With their help, tenants can feel confident that they have chosen the right contractor for their project.

Consider Less Expensive Upgrades

When we meet with building owners about tenant improvement projects, we always try to ask what problems they wish to solve? Then we talk about budget and timeline. Your tenant improvement project doesn’t always have to be a huge project. Sometimes even simple upgrades can help keep tenants happy. Maybe their space just needs a new coat of paint. Perhaps you can consider upgrading things like building insulation or even street-facing windows to help lower energy costs. Consider moving to key card door locks instead of keys to reduce lock-outs. Don’t discount simple upgrades.

Upgrading the interior of your rental property can be an effective way to improve tenant satisfaction. However, such upgrades can also be expensive. Here are some tips to help you make cost-effective tenant improvements that don’t break the bank:

1. Upgrade the appliances with energy efficient models as they tend to pay for themselves in utility savings.

2. Replace old and outdated fixtures such as light switches and ceiling fans with modern options that won't require extensive rewiring or remodeling.

3. Install a fresh coat of paint on the walls to give your rental unit a much needed facelift without spending too much money, time, or effort. This is one of the least expensive yet most effective ways to improve the look and feel of a rental property.

4. Invest in durable flooring materials such as laminate, vinyl, or ceramic tiles which are both affordable and long lasting.

5. Remove any excess clutter from the rental unit and replace with tasteful decorative items that can help make it look more attractive.

By following these tips, you can upgrade your rental property without spending too much money on costly tenant improvements. Doing so will not only help keep your tenants satisfied, but also help you save on expenses in the long run.

We hope you’ve found these tips helpful for your next project. We’d love to meet with you to discuss how Rubicon can take the lead on your next project—big or small! Contact us today.