What is a Build Out? Everything You Need to Know about Commercial Retail Build Outs

What is a Build Out? Everything You Need to Know

What is a build out? If you don’t know anything about retail construction, the build-out process can be difficult. Read on to learn everything you need to know.

Your online business has grown and you think now is the time to consider a physical retail space. According to the International Council of Shopping Centers (ICSC) having a brick and mortar location can actually increase your online traffic.

The best way to venture in the physical retail space is to look for a space that is perfect for a build out. What is a build out? Can’t you simply buy a space and move in? Not quite.

We’ve put together a guide to help you get started with your first commercial retail build-out project. We will explain the process timing and some important topics you need to consider.

What is a Build Out?

A lot of commercial real estate buildings begin as a large empty space with not much more than four walls and windows and doors. The space then gets finished to meet a particular business’s needs.

This process of finishing the building is referred to as a “build out” in the commercial real estate development industry.

Tenant and Landlord Negotiations

Before you can begin any build out, you need to have the approval of the landlord or owner of the building. You will need to agree on what improvements will get done to the building.

You need to decide who will pay for the changes. Then which party will take charge of the work getting done. Finally, you will need to know what you are allowed or required to remove on the day you decide to vacate the space.

Before you begin anything, you need to have these details worked out and included in your lease. These agreements need to be in writing so there is no confusion later on.

Landlord Takes Control

If you agree to have the landlord take control of the build out, it makes the process turn-key for you. They will manage the architectural plans and contractors. You will save time and money not having to manage the project yourself.

The downside is that you also may not have any say in the materials or timing. This puts you at the mercy of the landlord.

Tenant Takes Control

Taking over the build out yourself gives you complete control. When you handle the build out you get a say in design, scheduling, and materials used.

Zoning and Permitting

You and landlord now agree on what is going to get done, who is in charge, and who’s paying. Construction can’t start just yet though.

Before any work starts, zoning and permitting approvals need to be obtained. Zoning is how we make sure that certain types of businesses are located in the right areas.

This is why you see property zoned for industrial, commercial, or residential. No one wants to buy a home and end up with a factory next to them.

Permitting approval ensures that future building plans conform to building codes. The codes make sure that structural and safety standards get achieved.

Hire a Professional

You cannot move forward with your project without these approvals. The best thing you can do is hire a professional contractor who has familiarity with the county and city offices.

The permitting process can take months, and that’s knowing the people and the system. Having an experienced contractor will help your project go through the process smoothly. They can inform you of the local regulations because they work with them on a daily basis.

Under Built

Commercial construction can get costly quick and it can get tempting to cut corners on materials. Remember that lower quality materials won’t last and send a message about the quality of your brand.

If you are doing a retail build out, this could undermine the shopping experience for your customers. Your customers may not specifically notice and think about the cheap materials, but they will get an overall impression of the quality.

If you find that the cost of the entire build out is too much consider dividing the project into phases. This lets you ease up on the bottom line without sacrificing quality.

Over Built

It can get tempting to try and achieve all of your dreams in your build out. You need to create an honest list of items you need vsindustry want.

Remember that major changes like structural, plumbing, and flooring will bump up the budget fast. These changes may not be worth it if your lease is only a few years.

The longer your lease is in a space, the more likely you will want to make expensive major changes. Compare the financial investment of the change to the influence that change has on your business.

Hiring a professional contractor can help you create a design suitable for your use and time in the space. This can help you save money by providing suggestions from their experience.

Architect

The architect will create plans for you to approve and discuss with the landlord. Once you and the landlord approve, the architect will create the construction documents for permitting.

This process can take two to three months. This is assuming there aren’t many changes to the plans and everyone readily agrees.

Permitting

The permitting phase can vary greatly depending on your plans and the municipality. A good starting point is four to six weeks.

Construction

This phase begins as soon as the contractor obtains permitting approval from the local government entity. The time construction takes depends entirely on the size of your project.

If you have a basic small office build out it can take as little as two to three months. If you have a detailed 15,000 square foot retail build out it can take six months or more to complete.

Finishing and Fixtures

Once the major construction completes, the finishes and fixtures are next. This phase involves installing fans, lighting, or faucets. It can also include installing your retail furniture like shelving or cashier’s area.

This phase typically takes two to three weeks. However, it can take longer if you decide to do a walk through and request additional changes.

Your Commercial Build Out Plan Elements

The build out plan involves more than just where you want to place desks or display shelving. It also includes the technical parts of your space like electrical, plumbing, and HVAC.

Design

If you have no experience in building design work, it is well worth it to hire an architect. This will take up about 20% of your budget.

However, it will save you more than that in mistakes and time later on. An architect will give you a design that works and complies with code.

An architect firm will know how to combine both your desired customer experience with building requirements such as ADA requirements.

They will help you utilize existing electrical and plumbing to help save money on the construction phase. Why move the bathroom if you can design the space to work with where it is currently located?

Electrical

The best way to keep the budget down is to use the existing electrical wiring. This isn’t always possible though.

Maybe the wiring is old and needs replacing. Maybe your business has additional power supply needs such as a hair salon or dog groomer.

Let’s assume you can use the existing wiring, you may need to add on to it. This happens if you want custom “on brand” lighting to highlight your products.

Keep in mind that making major changes to the electrical requires additional permitting. This will add time and cost to your project.

Plumbing

Is there a bathroom in the space? Do you need a bathroom? Can the bathroom stay where it is located?

Before you decide to move the bathroom, see if you can give it a fresh coat of paint and work the rest of your design around it. This will save you a ton on your budget.

If there is no bathroom, how will this affect your business? If it is a retail location, you may not have the option of choosing to not have a bathroom.

With no bathroom, your customers will leave if they require one. Your employees will also have to close the store so they can leave to use one elsewhere.

Another thing to consider is if your buildout is happening in a larger building. When this happens, you may not have a choice of where the bathroom is located.

This happens because the plumbing is already in place for the surrounding retail spaces. Your build out will need to tie into the existing system.

Ceilings and Floors

What you do with the ceiling and floors should be all cosmetic. Hopefully, you negotiated for the landlord to be the one responsible for maintaining the structural integrity of the main building elements, including the ceiling and flooring.

Your budget should include the finishing you plan to do on the floor. This could involve varnishing the existing concrete, carpeting, or tiling.

HVAC

The best way to avoid HVAC costs is to have the landlord take responsibility for this system. You could also agree to pay for it, and then request free or discounted rent in exchange.

The thought process here is that the HVAC system is a major part of the existing building. The landlord would need to maintain it anyway. It is not a specific change to suit your business.

This expense can be relatively small requiring just the upgrade of an AC unit. Or it could be quite expensive requiring replacement of the entire duct work.

Millwork

A typical retail space will use about 20% of your budget for the display fixtures. The cost of your display is factored by the quality, materials, and space you are going to outfit.

Using a common wood will be a cheaper option than a rarer wood like Brazilian teak. A simple square or rectangle space will be cheaper than a space with lots of corners and bends.

It will take more time and materials to custom build your display fixtures to fit around the unique shapes of the space. This is where a professional can help save you money.

They can make sure your space has a creative design to work with the shape. This will reduce the amount of effort needed to create the fixtures.

Painting

When you get to the painting stage it means you are almost done with the project! When it comes to painting, flat will be cheaper than going with a semi-gloss. The darker the color you choose, the more coats it will take to make it look even and good.

Start Your Build Out Process

By now you should have a good idea about what is a build out. The best thing you can do is enlist the help of a professional to set a budget. Once you have a number, you can start to look for spaces that suit your needs.

Look for retail spaces that are already zoned for your particular use. This will narrow down your search.

Once you find a potential space, discuss with the landlord any potential changes you wish to make. You’ll want to negotiate with the landlord to help save you money by having the landlord take responsibility for at least a portion of the changes.

If you intend to make major construction and structural changes then your best option is to hire an architect. They will guide you through the design process so your build out complies with the local codes.

After you have a design everyone agrees on, it’s time for permitting. The permits are your contractor’s ticket to start work.

After the construction, the final touches will get done. Then the only thing left is for you to move your business in and open your doors for business.

We’ve made the process sound rather quick but remember that it can take several months for completion. You will also want to pad your budget and schedule for any unforeseen problems.

Feeling a bit overwhelmed about? That’s ok, let us guide you through the process.

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