Buildout Budget and Questions...

[harleysr1]

Questions specifically for the veterans and owners that have built from the ground up:

My situation....I currently own a 2,500 SF store (4 year owner)...looking to lease a space in a nice, new strip center.
2,100 square feet....plenty of parking, great mix of tenants...it is a blank slate right now.
We have asked the owner to pay for the entire build out...this includes:

1. Running electric & gas to (3) 75 lbs. and (11) 30lbs stacks.
2. Running electric and water/sewer, on a straight line, to (3) 80lbs, (3) 60lbs., (5) 40lbs, and (10) 20lbs....washers are set back to back...easy line
3. Concrete slab for all washers to sit on.
4. Running dryer vents outside and putting holes in concrete for make up air.
5. Concrete staining the floor.
6. Running a new 2" water line from the main water source.

They said they will do it, but that the total cost would be amortized over 10 years into the lease agreement...here is the unbelievable part....their figure is $140,000 for the entire build out....in this economy, with so many people looking for work, I thought that was way high...my initial calculation in my head and talking to local contractors was in the $50-$70k ball park....

Any thoughts? Advice/guidance from any new store builders would be appreciated...I've already asked for the cost break down of that $140k figure, which I should get later today...thanks for your help!

[Super Clean]

They are doing the build-out at their cost or they are doing the build out and you will pay it off over the 10 years?

You will find that many retail spaces with the property managment dictate only their contractors can do the work, generally the case with larger retail centres and not as much so with the smaller ones. The contractors of course will not always be the cheapest and everything should be done to code which results in a higher rate then some contractors who say everything will be to code.

[Jefflange]

Does that include impact fees?

[harleysr1]

It includes impact fees (owner essentially paid for them when building the shopping center) it is huge center, and he has lots of pull with the city.

They have electrical work at $45k (find that really high) and plumbing at $30k...has anyone seen these costs that high?

[wizard]

Based on the 2,100 SF (that's only $67 per foot) which may be in the ballpark should the owner provide this service. With that said, in my neck of the woods the range is $50 to $60 PSF for build-out cost and that would include impact fees of approximately $28,000 based on a 2" water line.

If you want to perform a reality check of the numbers, go to RS MEANS and run the numbers. (rsmeans.com) They are the source on construction costing.

Look at it this way, it saves you the cost up-front. You pay for it over time on a straight cost basis (no interest). The question becomes, can the store afford to service that extra $7 PSF cost per year. Only you can make that call!

[bodman]

those numbers do not sound out of line . , Looks like it will add 1,166.66 to the rent payment for 10 years , will that keep you around 20% of gross sales projection at 2.5 washes per day per machine, ? then utilities 25% and loan debt 25%, and 30% for wages , and ins and misc. and profit.