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Toronto office space. Toronto industrial space. Commercial real estate Toronto


Selecting a Space Planner and general Contractor 

Selecting a Space Planner Because the space planner’s role can be crucial, it is important to hire one who fits the needs of the project. Solicit proposals from a variety of space planners, especially those who work for both tenants and landlords because they will understand the concerns of both. Find a space planner who meets the following criteria: Understands the building codes and the approval process in the jurisdiction of the project. This understanding is critical to the timing of the project. A space planner who is unfamiliar with these items can slow the leasing process down, resulting in extra costs. Works within the necessary time frame. It is important that the space planner be available to meet with tenants as quickly as possible to determine their needs and to translate that information into a preliminary space plan. The faster the planning, the better the chance of renting the space. Understands what kind of tenant the building is likely to attract. The space planner should be knowledgeable about how particular businesses use space. The layout of a law office, for example, will differ significantly from that of a software developer or an association. If the building will lease to attorneys, find a space planner who specializes in law offices. Understands marketing and selling. The space planner must be able to present the space plan in a positive and persuasive way, emphasizing the specific advantages of the space and the plan in terms of cost, function, and aesthetics. Has a good relationship with other space-planning firms in the city. Space planners who are friendly with each other can address problems instead of creating them. In one case, the tenant’s space-planning firm refused to admit that it had made an error that caused a design problem. The landlord’s space planner had no relationship with the tenant’s planners and could not persuade them of the error. The problem killed the transaction. It is essential that people be able to communicate with one another. How important is it to select a space planner with computer-assisted design capabilities? It depends on the building. If the building has one basic floor plate to which most floors conform, computer-assisted design will be very helpful. If, however, the floors are different from one another, computer-assisted design is only useful. In either case, CAD helps to make changes more accurately. When you have identified approximately six firms that seem to meet the basic criteria, provide each with a request for proposal (RFP) specifying what information should be included in the proposals and how that information should be organized. Include a request for the following information:  Company history  Work o The age of the firm o Its principals and their backgrounds o A description of the type of work performed within the company. (Some firm’s offer space-planning services only, while others also provide architectural design and furniture procurement services.)  Work process. This should present the firm’s view of the role of space planners in the leasing process and should discuss how the space-planning team will interact with other members of the landlord’s team.  Space-planning team assigned to the project. This should identify the individual responsibilities of each member. The firm should provide individual resumes for team members so that you can determine their qualifications. A reference list for each will reveal the range of clients represented.  Firm references. These references will indicate the types of clients and projects the firm has previously handled and will allow you to determine whether previous clients have been satisfied with the firm’s work.  Current projects. This section should detail the current projects and responsibilities of each team member, the duration of these obligations, and how any time conflicts will be resolved.  Scope of services. The space-planning firm should provide a general outline of the phases involved in the design process, noting what work is to be accomplished during each phase. The scope-of-services outline will help you examine how each firm organizes and tackles the various stages of designing space. The outline can also be used after selecting a firm to list your expectations of the firm and to provide a means of accountability. Give the firms a reasonable deadline for their responses. This will be the first test of their ability to meet deadlines and can be a very good indicator of future behaviour. Selecting the General Contractor After all necessary approvals have been obtained, the complete set of construction documents is submitted for bid to contractors. Depending on the scope of the work, soliciting bids can take from two to eight weeks. Once initial bids are received, negotiations occur, or if the bids are considerably over budget, the tenant may revise the construction documents to reduce the cost. For example, a specification calling for stained, wooden shelves may be changed to high-density plastic laminate to keep a project within budget. The following issues are negotiated as part of the lease – if the landlord’s contractor is to do the construction – or with the general contractor if one is selected by the tenant.  Number of subcontractors from each trade who will be solicited for bids  Markups and fees  Item substitution  Work schedules  Draw schedules  Shop drawing approval periods, and  Change order approval periods. If the tenant selects the general contractor, the leasing agent should make sure that decisions are made and procedures established, as follows:  Determine the approval process. Landlords typically want to approve a tenant’s selections (the architect, engineer, general contractor, and even subcontractors) and plans (construction documents, specifications, and work schedule).  Spell out the draw schedule in the lease.  Predetermine the lease commencement date so that a tenant delay does not cause the landlord to lose money because of late occupancy.  State in the lease how the contractor will be paid. Will the landlord pay the contractor directly or will the landlord pay the tenant, who then pays the general contractor? If the tenant is paying the contractor, spell out lien release provisions that must be followed to ensure that no liens are filed.  Determine the rules and regulations for construction at the building. Part of the contract with the general contractor will require that the contractor abide by the rules and regulations of the building, and these rules should be negotiated at the lease stage. Although this is not typically a problem, a vigilant broker should obtain the landlord’s regulations for construction and communicate them to the tenant, especially if the tenant is responsible for construction. The tenant then includes these rules and regulations as part of the bid package. If the landlord selects the general contractor, the leasing agent should recognize that the tenant will want to retain approval rights and be involved in the process. Typically, tenants want open-book review rights review rights and the right to have particular subcontractors included in the bidding. In addition, tenants will negotiate all fees. If the landlord insists on a particular contractor, the tenant’s broker will assume that the tenant may pay from 20 to 50 percent more than if the tenant had selected a contractor through competitive bidding, and the tenant will ask for that additional money. There are valid reasons for wanting control over the choice of contractor. Instead of forcing a particular contractor on the tenant, the landlord can provide the tenant a list from which to choose. The leasing agent should also make sure that construction process is carefully structured to avoid delays or additional costs to the landlord. Consider these issues, for example:  The tenant approval dates and turnaround times should be specifically outlined in the lease. A tenant’s delayed approval can destroy the construction schedule.  The lease commencement date is typically defined as the construction delivery date. A landlord who is late may be responsible for the tenant’s holdover rent at the prior location.  The landlord who has contracted with a general contractor to perform all interior construction for a set, predetermined fee may find, with the passage of time, that the fee has become either above or below market rates, which presents multiple problems for all parties.  The general contractor typically will have to coordinate with the tenant’s telephone, computer, and security systems vendors. This coordination needs to be specified in the lease document and construction bid packages.