An age old question for long-time building owners inevitably arises after several years of having an existing building onsite. The structural integrity of the building will weaken over time as natural wear and tear erodes away elements of the material that keeps it in place […]
forcing building owners to answer a vital question. Is it best to renovate the existing structure or tear it down and build anew? For many building owners or managers, the answer to the question comes down to overall cost. Is it more cost-effective to renovate the existing building? Or have the renovation costs added up enough that a new commercial construction project is warranted? That’s the decision that only building owners can make. Besides, the cost of retail of renovation will likely be different from the cost of retail construction. But which is the better route to take?
If you’re a building owner, you may be wrestling with that question as you read this. To help you come to a decision, we’re going to walk you through how to calculate the best possible option for your particular needs.
The average cost of renovating a 1200 square foot commercial space
Let’s begin with renovation costs. How much does it cost to renovate a typical commercial office space, and where can you find savings?
In any renovation project, you can follow a standard set of best practices that comes in the form of a commercial renovation checklist. If you follow a standardized checklist, the project will run more smoothly, quickly, and in a more cost-efficient manner.
Most office managers calculate the average cost per square foot by multiplying the length and width of the office space. Afterwards, they apply a standard cost per square foot. On average, the renovation cost per square foot falls in the range of $200. Therefore, for a 1,200 square foot office space at $200 per square foot, you can anticipate a renovation cost of approximately $240,000. Then, you need to take that number and multiply the number of offices that will be part of the renovation project to get your total cost to account for in your budget.
New commercial construction costs
Now, let’s compare those renovation costs to the cost of developing a new commercial building from scratch. One of the first things you need to do is determine if you can make do with the amount of real estate you have at the existing location, or if you need more space to develop your new building.
Once you know how much space you have to work with, you can start to calculate the average construction cost per square foot to forecast the budget for the development. On average, the commercial construction costs can range from $20 to $40 per square foot.
That may seem low compared to the renovation costs you can anticipate. But remember that the renovation costs cited above are for one office space within an established building. These commercial construction costs are for the whole building. Therefore, the number will definitely add up into the high six figure. Alternatively, in all likelihood, the outcome will be a seven figure range.
Advantages of renovation
With the anticipated costs on hand, you can start to analyze the other benefits of renovation vs. new construction. When it comes to renovations, they are typically less expensive than a full new development. That is, unless the building has fallen into such a sad state of disrepair that the renovation costs dwarf the cost of a brand new development.
Renovations are also much faster than new developments. Speed is a key factor, especially if the building is a commercial office space. The sooner the renovations are complete, the sooner that tenants can move in and start paying rent on the leased space.
There’s also the option to customize the look and feel of an office space with a creative renovation. You can play around with the layout or request an addition to the established space that will still be much cheaper and much faster to complete than a brand new development. Some tenants may even request a customized renovation to match their unique brand identities, which is a cost you can earn money back on through rent or using shared financing with the tenant to pay for the renovations.
Advantages of new construction
Suppose the state of an existing building has become dilapidated. So much so that construction of a new building is your best option. This actually grants you several freedoms that renovating on an existing site does not provide.
For one thing, you don’t have to remain in the same location. If environmentalism is important to you – as it has become very important in today’s world – and the site of your existing building has some toxicity issues, you could abandon the site and select a more eco-friendly environment to rebuild where you can also improve your brand reputation. You’ll have to conduct an environmental assessment of any new location you select, as well as secure the proper zoning requirements, but you can start completely fresh if you choose to do so.
Another huge benefit for starting a new building fresh is the ability to select a site that’s near public transit. This is especially valuable if your building exists in a major city where thousands of people regularly use transit. You can select a location for your building that’s transit convenient, attracting a higher quality of employee talent and also supporting the goal of being environmentally conscious. A building near transit lines means fewer people need to drive into work, thereby saving carbon emissions from flowing into the atmosphere.
There are benefits and there are drawbacks to both renovations and new commercial construction, which you’ll have to weigh and determine which option is best for your needs. In any event, you can partner up with a turnkey construction company that builds iconic landmarks to make the project as cost and time efficient as possible.
Looking for a commercial construction and renovation expert? We can handle it from start to finish so you can focus on the growth of the brand. Get in touch with the experts at (905) 696-0486 or email [email protected] for more details.