We explore how the layout of different buildings can impact the functionality and efficiency of a company’s operations.
We explore the intricacies of fire suppression systems in industrial buildings.
Environment is the invisible hand that shapes human behavior. —James Clear, Atomic Habits
Programming a building is the concept of taking all your operations and growth ambitions and turning them into square footages, layouts, and must-have features. After doing this, you can begin to transpose these figures onto buildings that are available in the market.
Building programming is often confused with space planning. Building programming is the active planning a company goes through to identify what they need in their future building. Space planning, which we will discuss later in the book, happens after you have gone into the market, found a building, and need to figure out how to fit your company’s needs into that specific building.
If a company has less than 10,000 square feet of office, they usually do the first round of building programming themselves, along with their broker. Companies with more office space may benefit from having an architect help them, so their team can better identify the right building. Many executives think they need a certain amount of space, only to find that they could have gotten by with less if they had spent a few days planning with an architect.
Below is an evaluation questionnaire I typically go over with clients. While there are generic worksheets for estimating office square footages, I have found the quantity counts that come from these discussions to be most important. Specific size requirements will come later, during talks with architects and when engaging in the market.
- How many people do you need to accommodate?
- How do you define your company culture?
- Are there any cultural initiatives or imperatives you would like to enhance through the use of space? There is no better time to institute this effort than when people are moving into a new building. The experience of adjusting to office life within a new space is rife with new connections, new adjacencies, new light, new energy, new places, and new ways for people to work together. A great example of this concept is the LPA architects’ corporate headquarters in Irvine, California. It includes an innovative stairwell that goes from the middle of the first floor to their second floor. It is half stairs, half seats, and is used for all-hands meetings in an open and collaborative environment.
- How many break rooms, conference rooms, breakout rooms, training rooms, and bathrooms would be ideal?
- More importantly, what is the nature of each of these rooms? What is the purpose for each meeting room? This concept continues to evolve in building programming. Traditional office build-out changed in the 2000s with the advent of the creative office concept. This change morphed conference rooms into collaborative areas. Private offices gave way to the open office concept to create more opportunities for people to bounce ideas off each other, and to increase density to lower overhead. However, this changed during the COVID-19 crisis, which increased the value of separation, sanitation, and personal space.
- What are the company departments?
- How many people are in each department?
- Do these departments need open areas, private offices, or even their own section of the building?
- Does each department need different furniture?
- What areas need to be adjacent to each other? What areas need to be separated? For instance, logistics operations separate drivers’ rooms from customer-facing offices. Professional services businesses separate visitor conference rooms from back-office support.
- What furniture do you currently have that you would like to reuse in the new building?
- Is it worth trying to reuse old furniture, which can be costly to break down, transport, set up, and supplement? Many companies see the act of relocation as an opportunity to get refurbished, new, or custom furniture. Consider this early on, as furniture can often have the longest lead time.
- Are any specific security or access restrictions needed in particular areas?
- Do any office components need to be near the warehouse or accessed through the warehouse? Sometimes this is a drivers’ break room, assembly area, lab area, quality control, testing, or another area that might need climate control.
- What is the total amount of warehouse space needed?
- Break Down Your Warehouse Space Into Its Components:
- Shipping and receiving
- Raw material storage
- Low-height pallet stacking areas
- High-height pallet stacking areas
- Total racked areas
- What building lengths, shapes, and column spacing requirements are optimal for your operation? For example, logistics operations prefer shallow and wide buildings with large speed bays. Moving and storage companies need longer walls for racking and stacking vaults.
- What minimum ceiling height does your operation need?
- Many warehouse ceilings have different heights at different parts of the warehouse, with the highest part in the middle of the building. The change in height can be two to four feet, depending on the size of the building and the year built.
- What fire sprinkler rating does your operation require? ◦ Do you need specific sprinkler head ratings?
- Does your insurance have any requirements?
- What is the commodity class of your goods?
- What kind of machinery will you be moving to the new building?
- What are the requirements for breaking down, moving, and installing each piece of equipment?
- Will you add new machinery?
- Have you ordered that new machinery?
- What is its estimated delivery date?
- How many pallet positions do you require?
- Will you be using an existing racking system or purchasing a new one?
- Will you be able to move inventory around during the relocation process? (If you choose to reuse your existing racking, you will need a place to store your inventory while you are relocating the racking.)
- What is your power requirement?
- How many amps of power will be required?
- Is three-phase power needed?
- Is there any specific voltage required?
- If You Need To Bring In Additional Electrical Supply From the Utility, how long will that take?
- Will you be looking to incorporate warehouse automation and robotic systems in your warehouse now or in the future? Do you know what electrical service those systems require?
- Do you need any climate-controlled areas?
- What are your warehouse lighting requirements?
- Has the warehouse lighting already been replaced?
- Does the local utility have any incentives for making such upgrades?
- Can the landlord include said upgrades within their leasing concessions?
- How many bathroom stalls do you think you will need? Some workers need their own restrooms attached to the warehouse, particularly those who manufacture, work with raw materials, run laboratory tests, and drive trucks.
DOCK EQUIPMENT/TRUCK COURT/YARD
- Dock-high loading doors
- How many dock-high loading positions are needed?
- Are interior or platform dock positions acceptable?
- Do the docks need to be Outfitted With Bumpers With Levels?
- If your docks need levelers, should they be mechanical or hydraulic?
- If hydraulic, is any specific weight rating required?
- Grade-level loading doors
- How many grade-level loading doors are needed?
- Do you have will-call customers who will need to come to the back of the warehouse to pick up orders and require their own door? Do you need to be sensitive of will-call customers’ paths of travel overlapping with trucks?
- Will a ramp be sufficient?
- Truck court
- How many trucks will be coming to the warehouse daily?
- What size trucks will be coming to the warehouse daily?
- Do trucks need to have a separate drive aisle?
- Is There A Need For Trailer Parking? If so,how many stalls?
- Does the yard need to be fenced and secure,or can it be a common area, shared with other neighboring businesses?
- Is there a need for outdoor storage?
- Is there a need for an exterior trash compactor?
- Is there a need to install a truck scale in the yard?
- If so, is the scale a platform scale or below ground?
- Are there any outdoor chemical storage needs?
- Are there any exterior silos, raw materials, refrigerants, chillers, saltwater tanks, backup generators, or any other outside improvements that might require additional space considerations, such as footings or screening?
- What kind of building image is necessary for customers and team members? How big a consideration is this?
- Are there any considerations in regard to who your neighbors are?
- What kind of uses cannot be adjacent to yours?
- Are there any competitors you are concerned about being close to?
◦ Do You Need To Be Within A Business Park Environment?
GEOGRAPHY AND TRANSPORTATION
- Where is critical inbound cargo coming from?
- Where are your most vital customers located?
- Where do your most impactful team members live, and what commute times are acceptable?
- What are the ideal cities in your target market or trade area?
- What adjacent cities would you consider if you could not find an opportunity within your target market?
- What traffic patterns are problematic?
- Are there any infrastructure projects scheduled in your target market that might positively or negatively affect your operations?
- How does your use fit within your target municipality’s zoning code?
- Are there any inconsistencies in your use and the zoning code that can be overcome?
- Are you in need of a conditional use permit (CUP)?
- Are you in need of a CUP consultant to expedite this process?
- How many parking spaces do you need for passenger cars?
- How much parking does the city require for your use? (Cities usually require four spaces for every 1,000 square feet of office space, and one space for every 1,000 square feet of warehouse space.)
- How many shifts will you be running?
- Are there any covenants, conditions, and restrictions that restrict operations during certain parts of the day or night?
LICENSING AND REGULATORY AGENCY APPROVALS
Some industries have specific licensing and regulatory approvals to take into consideration and include within their project timeline. For instance, if you are in the food production business, you know that over the last few decades it has become impossible to supply products to national grocery stores without being certified by the Safe Quality Food Institute. This is the organization in charge of ensuring that food producers adhere to multiple different standards of food safety. I have heard all sorts of stories about how constant Safe Quality Food (SQF) audits cause consternation for executives. It is prudent to know how long it takes to certify your new building.
The life science industry, too, has its own licensing and government regulations when it comes to body fluids, blood samples, and cultures. Manufacturers need to have certain machines calibrated and certified by the Underwriters Laboratories before they can be operated. The same goes for hazardous materials.
All industries should know the process for certifying a new building. If the certification process does not line up with your lease expiration and the start date of your new building, your operation may be unable to operate, or you may be stuck paying rent on two buildings, one of which you pay for to just sit empty. Either outcome is untenable.
Few things are more commonly unknown in commercial real estate than the actual cost of relocating a facility. You can simplify the process and hire one of the many consultants who budget and relocate for a living. They can estimate your project within 10 percent of the cost, within forty-eight hours of your inquiry. I have seen budgets vary from eight simple categories all the way up to three hundred specific line items.
If you choose to tackle project scope and budget internally, the main lesson is that you need to break your budget up into three components: the cost to lay out and fit out a new building, the cost of the move from the old building to the new, and the cost to decommission and surrender the prior building back to the landlord. For these components, you will need internal inputs and external vendor inputs. Then test your own assumptions and make adjustments. After this part of the process, you can be relatively confident you at least have the right order of magnitude for your budget. For example, will it cost you $10,000,$100,000, or $1 million to move? You will also get a feel for whether or not you need to bring on a project manager to help you further refine your budget and help you execute.
Budgeting is a task that often makes sense to outsource. Michael Shapiro of Relocation Strategies, one of the county’s most experienced movers, says that companies often come up with unrealistic numbers when they try to handle moves on their own.
“We have encountered situations where an employee told man agement that a move was going to cost $200,000, when in reality, it might have been closer to $80,000. It is all about letting clients leverage our experience to determine a realistic number early in the process. As soon as a company identifies a place or even just has an understanding of what they want to do, we provide them with a budget they can work with.
“Usually what prevents us from getting more specific is just the scope itself. We find that defining scope and roughing out a budget gives clients enough information to know whether or not they should be looking for space. It is not only that we do the homework quickly; we have an organization with over twenty-five years of experience, with literally thousands of moves to draw on. We are not creating the wheel, as a client will be doing this themselves once every seven to ten years. With something as particularly nuanced and detailed as relocation, you are never going to do it right the first time. It is in the building of confidence in your budget that you become empowered to take the next steps.”
Once again, the three primary components of a budget are:
- The cost to lay out and fit out a new building
- The cost of the move from the old building to the new
- The cost to decommission and surrender the prior building back to the landlord
NEW FACILITY SETUP COSTS
When thinking through the cost of setting up the new building, you can start with the physical structure and the construction needed to make the building suitable for your company. Some of these improvements will be made at your own cost and expense.The challenge is that you are budgeting without knowing how much the future landlord will contribute for the office build out. All costs related to your build-out must be considered: soft costs (architectural, engineering, consulting, plan check, permits); hard costs (construction); and tenant vendors (IT, cabling, audiovisual, security, signature, furniture, equipment).
Here is what I can tell you: no landlord will pay for everything you want. The reality is, you will contribute at some point. Landlords will usually provide an allowance to build out basic office and warehouse space with a handful of upgrades. Tenants typically have a wish list that surpasses the landlord’s budget, but the landlord will increase the allowance if you can create the right leverage at the right time. Otherwise, landlords who can increase their contribution will require it to be paid back in a lump sum at the start of the lease. Or they will amortize it, meaning you pay it back over time with interest. Your broker will apply their expertise to negotiate the lease terms that best protect you here. This includes how the allowance can be utilized and reimbursed.
The building programming stage is a great time to have an initial conversation with your broker to get a feel for which tenant improvement packages are commonplace in the market. It is also a great time to discuss internally which payment method best fits your company’s cash position and capital investment comfort level.
There are some predictable expenses of setting up a new building that will be based on your operational needs. For example, you might need new machines no matter which building you choose. The same goes for racking, furniture, and servers. Bob Barry of John Barry & Associates (JBA) famously says, “Improve while you move.” The setup and configuration moments are the times to make capital investment decisions that will pay dividends throughout the future.
The cost of the actual move is one of the more predictable expenses to budget, as the cost will be relative to the size and distance of the move. The main line item in this part of the budget is the moving and storage company. They will ask up front how much work you will do, so they can identify where you need support.
When our company moved, we all packed our own totes and labeled them with stickers that corresponded to our current office and future workspace. We arrived at the new space the following Monday at our work area with our totes, where we unpacked them and set up our own desks. That said, many companies choose to have movers pack and move everything, requiring them to coordinate with internal IT to assist with setup at the new facility.
DECOMMISSION AND RESTORATION COSTS
The other major cost of relocating involves the decommission and surrender of the premises back to the landlord. This is relatively predictable, as the amount and nature of the work to be completed does not materially change based on where you are moving.
Your initial lease review will provide you with insight into the items that are your responsibility for removal. If you have constructed your own tenant improvements, the landlord will usually have the option for you to remove those improvements and restore the building to its former condition.
Now you have taken a first pass at programming for your new building and roughed out a budget. You can now decide what people you have internally to work on this project, and what people you want to bring on to help complement your team. This is one of the more fun parts of the process because you get to learn from top industry talent and discuss how your project can be most successful.