How Much Should I Budget for Office Renovations? – DEV

‘How much should I budget for office renovations?’

It’s a pretty common question. After all, you need a budget for your business plan, to help focus your search for space or to compare different leasing options. Unfortunately, many variables can influence the cost of renovations (aka ‘leasehold improvements’ in commercial leasing lingo).

Consider the following:

How big is the space? Economies of scale can influence pricing.

What type of building is the space in? Office, retail, industrial?

Will the space office be open-concept or will it be wall intensive with many individual offices?

Does the space have improvements that you can reuse like existing walls, HVAC (heating, ventilating, air conditioning), plumbing, and electrical distribution?

Do you have special requirements like a lab, infrastructure for medical equipment, high-density filing, or secure storage?

Are you required to use unionized construction labour at the building?

What quality of finishes do you want?

The list of variables can go on and on because no building, space, or tenant are the same.

For example, in the last eighteen months, I have seen leasehold improvement costs range from a low of $10.00 per sq. ft. to a high of $130.00 per sq. ft.

All that being said, you have to start the budgeting process somewhere – so you may find it helpful to learn what I have seen from recent leasing assignments.

In the table below I have classified leasehold improvements as ‘Building Standard’, ‘Upgraded’, and ‘Premium’ based on the level of finishes used in the construction of the space.

I have provided a budget range for each classification assuming a complete re-build, for an average size Ottawa tenant (3,000 to 5,000 sq. ft.), with a mixed layout of open concept area and closed offices.

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In addition to the quick overview in the table above, I’ve also included images of what I consider ‘Building Standard’, ‘Upgraded’, and ‘Premium’ leasehold improvements.

‘Building Standard’ Finishes

$30.00 to $50.00 per sq. ft.

Standard T-Bar ceiling, ceiling tiles and lighting, limited glass, painted doors and frames, broadloom carpet.

Standard T-Bar ceiling, ceiling tiles and lighting, broadloom carpet.

‘Upgraded’ Finishes

$50.00 to $70.00 per sq. ft.

Exposed ceiling, rigid ductwork, upgraded lighting, some glass, carpet tile flooring.

T-Bar Ceiling, upgraded indirect LED lighting, mix of drywall and glass office fronts, aluminum door frames with aluminum trim, carpet tile flooring.

‘Premium’ Finishes

$70.00 to $100.00 + per sq. ft.

T-Bar ceiling, upgraded smooth finish tiles, LED and recessed lighting, full glass wall office fronts, carpet tile flooring.

Exposed painted ceiling, specialized HVAC, LED pot lights and fixtures, glass walls, polished concrete floor.

Hopefully, this general overview will provide you with a good starting point for a leasehold improvement budget. For more detailed questions send me an email at jeff.daniels@royallepagecommercial.com.