Contributed by David Liebman, Managing Broker, Merit Partners, LLC
For end users who need specialized facilities for warehousing and manufacturing, or have compressed completion time frames, qualified design/build contractors can save time, money and hassle.
Combining several different operations has many advantages for businesses across the board. For that reason, according to research from the Design Build Institute of America (DBIA), the use of design/build has held steady at around 40 percent for the last three years. Furthermore, the DBIA reports that more than half of projects above $10 million are being completed through design-build project delivery. Design/build brings together design, engineering, permitting, building and execution of the process all under one project management team.
But business owners should know what they need to ask before they select a design/build contractor. In my 27+ years as an advisor to owners of industrial and distribution facilities, I’ve found that asking the following questions will help you decide whether you need a design/build contractor and which one might be the best for your company.
What are the most important features that your company needs in its building?
Whenever I sit down with a company, I run a comprehensive checklist of items by the executive team to determine what defines the company’s “dream building.” This helps the team focus on top priorities, while allowing items that would be nice but are not essential to fall lower down the list. While the time-consuming process of going through such a detailed list can seem daunting, it gets the group on the same page and sets up the project for success. What are the things that are most important in the overall project delivery? Answering that question, and then addressing increasingly specific related issues, will help set the direction for the entire process. This builds the foundation for the project’s best outcome – literally and figuratively.
By using such a checklist, end-users can find out if they really need a new building or if there is an existing building or structure that might fit their needs. However, if the group selects a pre-existing building, they will be limited to features are already in the building. The important thing is to plan for the most strategic path forward, delivering the features needed, at the best price and timing. End users must balance operational costs with the building construction costs—if it costs more to operate an older building than it would to construct and operate a more efficient new building, it usually makes sense to invest the higher costs up-front.
Where do you need (or want) to be?
Where does it make the most sense for your company to base its operations? Is it important to the brand to be in the city? Are most of your employees in the suburbs? It’s all about an individual company’s specific labor force, customer base and overall needs. Companies should consider whether their current location is consistent with their brand and convenient for their customers and employees. Understanding the life cycle of the building is another crucial consideration: how long a lease will be required? Or will the company own the facility? What long term vision does ownership hold for the company – and will expansion be necessary? The answers to these questions will guide the owner – and broker or advisor – to find a design/build company that can achieve the desired results, in the desired location, at the desired price point.
Who will be working for you?
Are you selecting your building’s location because of where most of your employees live nearby? What do your employees want in their new building? A detailed analysis should offer a response for any potential workforce issue that could crop up. Does it make more sense for the company to be close to a location that best serves clients, employees, management, or a combination thereof?
Companies also need to determine whether or not skilled employees will be needed. Some suburban locations have high concentrations of highly educated and/or skilled workers, while others have less expensive, but also less skilled, talent.
How will you pay taxes and other operating costs in your new building?
What are the government, services and utilities like in the location where you will locate? It’s a significant, long-term commitment that has impact on corporate operations well beyond real estate. Companies will need to know what incentives, if any, are available in their desired location. Some counties and states may offer incentives to companies who hire local workers. Local governments compete fiercely against each other for businesses, while also figuring out how to incentivize your business to settle in their regions, so be certain to understand how they operate and what they can offer to your company. Trusting and working seamlessly with local government are essential for companies planning to remain long term in their new locations.
What does your company need within the building to maximize efficient operations?
What kind of operations will be taking place in your building? For instance, a manufacturing plant, a warehouse, a research and development center all can benefit from the design/build process, but in highly variable ways. Specific requirements need to be outlined early on in the process to determine the exact building specifications. How high-tech will your facility need to be? Will you need an open, post-free space? How important are sprinkler systems, ceiling heights and power distribution?
The right project, the right timing, the right choice
When it comes time to select the design builder that is right for your company, it is important to ask all of the basic questions. Without a specific knowledge of construction and real estate, most business owners don’t think through the questions they will need to ask before considering a design/build contractor. By working with a qualified real estate professional, knowledgeable and familiar with design/builds, who knows the questions to ask and the answers needed, you have be thoughtfully and successfully guided through this detailed and daunting process.
As managing broker at Merit Partners, LLC, David L. Liebman, SIOR, JD, LEED Green Associate, takes a creative and client-centric approach to his industrial real estate practice. An active voice in his industry, David communicates its subtleties to colleagues and its complexities for clients, structuring and brokering transactions for tenants and buyers, plus owners, landlords and investors.