by F. Joshua Millman, AIA, CFM, LEED AP
Highly unusual these days, it is to have a prospective client arrive in your office in a three-piece suit, even when it is not 83o outside. Jared was a referral from a past client, who had described him as a “fellow facility manager”. That was not my first impression as I met him in our lobby. Most facility managers I know (and architects) have adopted “business casual” as the uniform of the 21st Century. His LinkedIn profile reported that Jared had come up through the ranks in the finance area, most recently in corporate financial planning. That background heavily informed the building planning process we undertook in the next two weeks.
Two weeks? When Jared set that interval at the start of that first meeting, I was careful to not scoff aloud. I plan buildings for a living, after all, so moving that fast is not as much a challenge for me as it usually is for the client who sets that high expectation. But I had also worked for Honeywell as a corporate architect for several years, so such family-time-robbing turnarounds were sadly routine.
Jared had come to our meeting well prepared. On his iPad was a PowerPoint show he had recently presented to his senior management. The first slide focused on financial considerations: the project budget, cost per square foot assumptions, and the project ROI (return on investment). The next few slides indicated how much office space, production and warehouse space were needed in ten months, in five years and in ten years. He even had a target utilization rate in the office area; that is, the ratio of usable area to gross area. All the numbers were well within industry standards. Two weeks for planning began to seem achievable.
The slide that was titled “Contingency Planning,” however, was the most intriguing. The requirements were:
- Ability to subdivide office area into multiple tenants; need central lobby/central restroom core.
- Capacity to add a fifth tier of rack storage.
- Flexibility to accommodate storage of hazardous materials to support possible future manufacturing processes.
The first item was clearly incorporating an ownership exit strategy into the building design: there could be multiple tenants, even tenants who had no need for warehouse/production space, or tenants with no need for office space. The other two requirements addressed building capacity and flexibility.
After he presented that slide, I asked him to hold on for a minute. The expression on his face suggested that he was anticipating my praise for his forethought, perhaps the reaction he had received from his senior management. I surely disappointed him then when I admitted that I did not think we could meet those requirements within his budget. More importantly, I did not think we should meet all of them. Here’s what I went on to explain:
Demisable Office Spaces: Years of working for office developers have taught me that an efficient single-tenant layout is typically not an efficient multi-tenant layout. As Jared had intuited, the placement of the lobby and restroom core is often the key. A floor plan that could work for both would require more square footage, so we would not meet the utilization goals, which meant we probably would not meet the project budget. My experience also suggested other considerations:
- If the amount of office space needs to shrink, it’s usually less expensive to shut down some office areas than the construction required to demise those areas for a subtenant. The mothballed area becomes a reserve for future growth. Otherwise, imagine having to later buyout the subtenant and then paying to remove the demising wall and rewiring the area for voice and data?
- Office spaces connected to warehouse/production spaces have little appeal to those who want office space only. That level of disinterest usually translates to lower rents, further diminishing any payback from demising.
- Bathrooms are less expensive to move than the cost of the additional square footage needed for an inefficient building. Better to design with flexibility to easily relocate restrooms.
Fifth Tier Rack Storage: While the cost is relatively low to set a roof five feet higher to accommodate a fifth tier of racking, the following unanticipated costs could lower the return on the investment:
- Depending on what is being stored and in what containers and what kind of pallets, the fifth tier may generate a code requirement for in-rack sprinklers.
- The ability for skylights and/or clerestory lights to diminish the need for artificial lighting is itself diminished by the height of the roof and the canyons created by 5 tier high racked storage.
- If the products stored need a tight range of temperature (or the people who work in the area are to have comfortable environmental conditions), then the increased height will aggravate temperature and humidity stratification, and large, slow-rotating fans will be less effective.
Hazardous Material Storage: The cost of accommodating hazardous materials within a building demands that other alternatives be fully considered, whether the need is now or may occur in the future:
- Certain levels of hazardous storage require the ability to contain any spills, as well as the water from the sprinkler system that might be activated at the same time as the spill. This is typically addressed by depressing the floor or adding a dike around the containment area. Any liquid volume that cannot be contained in this area would be siphoned or pumped to an exterior tank. Access into this containment area would most probably be via ramps for both forklifts and people. Dikes could be added later. There is even a door that can be installed in a floor recess that pops up as a containment gate when sensing any liquid in the recess.
- Hazardous storage areas also may require multiple egress doors to the exterior; these doors’ sills need to be at the top of the containment walls, with landings on both sides, a ramp on the interior side, and often stairs on the exterior. Casting additional doors in tilt up concrete panels is a further expense.
- It may be less expensive to have those hazardous items stored offsite by others, and delivered on site in quantities that can be stored in a special cabinet to meet the needs of a few days.
By now Jared had taken off his jacket and loosened his tie. Once I had answered his questions about each of my concerns in detail, these were the scenarios I recommended be calculated for each contingency item:
Scenario One: Determine the costs of building now without any future provision (Cost A) and constructing the retrofit later (Cost B). Jared called this the “base case.”
Scenario Two: For the retrofits, identify which items would be significantly less expensive to put in now than later. For example, add underfloor sewer lines to a future restroom area as part of the original building construction. Calculate the cost of the building with the items best to do with the original construction (Cost C) plus the cost of finishing the contingency items in the future (Cost D). This would be the “contingency case.”
At this point, the decision rested on both the ability to predict probability of the future need for each contingency and the availability of construction capital. When applying this approach to the contingency items that Jared had proposed, we determined the following:
- Ability to subdivide office area into multiple tenants: As predicted, it would cost less money to later demolish the restrooms and create a central restroom core than to design the office area to work for both single or multiple tenants (A+B>C+D). Selling the building “as is” also seemed to be a more plausible exit strategy than trying to find a combination of multiple tenants to rent the building.
- Capacity to add a fifth tier of rack storage: These calculations confirmed a negligible net cost to provide clearance for a fifth tier (A+B<C+D). Having that additional height would probably make the building easier to sell, if necessary, given that there was also now room to create a mezzanine above three rack tiers of storage.
- Flexibility to accommodate storage of hazardous materials to support possible future manufacturing processes: Given the low probability of this need, the contingency plan was created to build this later using containment dike walls and a popup gate rather than lower the slab, even though it would be less expensive to depress the slab now (A+B>C+D). Drains and a lateral were installed in the slab for future connection to a containment tank. These plans and provisions also supported the exit strategy.
This was then all worked into a great series of slides, complete with net present value analysis, for our joint presentation to Jared’s senior management two weeks later. I even wore a necktie.
Interested in discussing the future of your facility? Contact Josh Millman, vice president of Nutec Design Associates, at 717.434.1570 or email him at email@example.com.