Development - Ownership

Trends in Tenant Construction

Merrell B. Ashley AIA, LEED AP, director Rand Construction Corp., Alexandria, Virginia, spoke at another NAIOP Solutions Series program titled "Trends in Tenant Construction."

Here are some of the critical points he made:

Construction discounts available. Buildings owners undertaking tenant improvements should still be able to negotiate lower-cost contracts. This trend should probably continue for another six months or until construction picks up in individual markets.

Longer order times for materials. Ashley said that trend applies to even fairly standard materials. For items that generally take six weeks to get, plan on eight to 10 weeks.

Merrell Ashley

Merrell B. Ashley

Incorporating LEED into tenant construction. Ashley said that new LEED standards were recently introduced and the changes that were made were simple and directed toward energy efficiencies—those things that really matter. Tax incentives and utility rebates are spurring LEED. LEED is beginning to be mandated, which will drive more people toward it. In the future, there will be penalties if you don’t built to LEED standards.

More products and more choices available. There are more products and more choices than ever before. Ashley said that products are more energy efficient than they were even two years ago and suggested disregarding the naysayers regarding LEED. "Remember when the Americans with Disabilities Act came out? No one wanted to build ramps, no one wanted to build accessible bathrooms. Yet 23 years later here we are building ramps and accessible bathrooms. LEED is the wave of the future. If LEED is not feasible for you, there are other options such as Energy Star for Buildings and Green Globes."

Getting the LEED project started right. Evaluate the project. The more complex the project, the more you need a LEED consultant. Pick a LEED leader upfront to have one point of contact. Have a team do due diligence to understand critical costs. LEED decisions need to be made early and tracked often as part of the design and construction process. Be aware and beware of anyone making guarantees as to LEED credit and level of achievement.

LEED results: good news. Ashley said that there is really good news emerging about LEED projects. He noted that there is now a lot of data coming out on space built in the early 2000s and a lot of it is coming back better than anticipated. "I predict a surge is going to occur with LEED," he said. "Tangibles such as higher productivity, fewer sick days and return on investment" will push its incorporation into projects.

Take precautions with who you hire to do the work. Given the severity of the economic downturn, Ashley said that when you hire a general contractor to do tenant improvements, undertake due diligence on that GC to make sure he is paying his bills. Also, make sure the GC is doing the same type of due diligence on his subs. Lastly, Ashley suggested that all such projects be bonded. It costs a little money but it protects you.

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