Five Things to Look For When Comparing Different Buildings
When C Suite corporate clients take time out of their busy day to tour buildings with their brokers,
they can end up very confused. However, the three main factors that usually surface are; the specific
location, the address of the building and their proposed layout of the space within the buildings.
These factors are very important when taking into consideration your employee’s commute and the
productivity of your staff. But there are other key factors that should be reviewed when analyzing
the differences between these options.
Buildings, even those built in the same era or timeframe, are not all the same and sometimes there
can be significant hidden differences between them.
Here are some tips and areas to focus on, when comparing buildings and your proposed office space.
Understanding the “Gross Up” Factor – how much useable space are you really getting?
The difference in the BOMA Usable and Rentable Areas of your space is called the “Gross Up Factor”.
Whether its a case of the actual floor plate having less efficiency in its design, or that the building
itself just has more common area, the net result can impact your financials significantly. The bottom
line is, some buildings are just designed or built less efficiently. And yes, the tenants usually make
up that difference within the rental structure, although some landlords will adjust the gross up
factor, but only in very competitive markets. Thus, finding a building with a lower “Gross Up” factor
can save your company significant amounts of money over the duration of the lease. So here is an
example:
A tenant is considering leasing 10,000 square feet of useable space in a building, but this building
has a 15% gross up factor. Accordingly, they will actually be paying rent on 11,500 square feet
defined as rentable area. If they are paying for example, $40/per square foot per year on a 5 year
lease, you would end up paying $300,000 for space that is not available for your use during the 5
year period.
While paying for what is called “common area” is normal in larger commercial buildings, we
recommend that our clients aim to find buildings that have a "gross up factor" of no more than 8 10%.
Elevator Speeds and their Effect on Your Workforce
The elevators in a building can be an expensive upgrade for landlords to undertake, so it is often one
of the last areas selected for capital expenditures and upgrades by building owners. Clients should
always be thinking of the effect a slow elevator can have on the productivity of their employee’s.
Analyzing the total number of elevators in the building, cab sizes, average elevator speeds and the
building's population, are important factors to consider when comparing different buildings. For a
company with 50 staff members, imagine if they each had to wait an extra minute in the morning
when they arrive to work, an extra minute each way when they leave for lunch and an extra minute
when they leave at night. That is 4 minutes per employee – times 50 employees and the company
would be looking at 3.33 hours of lost productivity each day!
HVAC Systems – Heating, Ventilation and Air Conditioning your Space
All HVAC systems are designed to heat, ventilate and cool interior spaces based on the expected
“loads”. In an office building, internal heat loads are produced by the lighting systems, the people
and a variety of electrical equipment within the spaces, along with building elements such as
windows. Older buildings were not designed for the same number of people per square foot that a
modern office building fits in.
Similar to the issue of elevator speeds, the replacement of the HVAC system is an expensive capital
cost for landlords to take on, so often times the HVAC system of older buildings can be inadequate
for modern corporate requirements.
Signing a lease in a building that has an HVAC system that cannot properly heat and cool your staff
can result in “surprise” costs related to upgrading the system’s capacity for your particular needs.
The best way to understand what can be expected from the HVAC system would be by asking the
landlord and/or their engineers to provide this information. Always ensure that these building
standards are identified and detailed in your lease agreement.
Power and Lighting Systems
The first step in this analysis would be for a company to understand what power requirements they
currently have and what will they need in their new office location. So the types of questions to ask
are: What are our electrical requirements? What are our IT requirements? Will we need a
standalone server room? What are our company’s operating hours? What kind of lighting is needed
in this new location and will we need more or less? What other major pieces of equipment will we
be using that will consume power?
Secondly, comparing these requirements to what each building has will then help you get a better
picture of whether that building will meet your needs. In most buildings, a company will be asked to
pay for any additional power requirements they may have over and above the building’s standards.
So we encourage our clients to do a thorough analysis on this hidden cost centre.
New Ontario Accessibility Requirements
With new legislations in place for public buildings and all commercial buildings, there are a variety of
ways in which these new requirements can result in a client incurring unexpected expenses in order
to comply.
For example, today all doorway openings have to be wide enough to accommodate wheelchair
access. Most doorways were not built to these specifications in the past. If a company begins to
renovate their space and has existing door openings smaller than this; they will more than likely
have to replace all of the doorways to comply with these new requirements.
Requirements for barrier free washrooms and smaller vestibule entrances are other areas that will
need to be dealt with. If the interior designer is not aware of these code items and does not specify
it, the building inspector can and will request that these areas be addressed to meet the current
codes. Of course this will add extra time and costs to your project that was not carried for in your
initial budget.
For more information contact:
Michael Fleming
VP Business Development
[email protected]