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Architectural Fees for Tenant Improvement ProjectsArchitectural Fees for Tenant Improvement Projects

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Joined: 08 Feb 2012
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Location: San Francisco & Santa Barbara, CA

Posted: 02/08/12 06:24pm  Reply with quote
Architectural Fees for Tenant Improvement Projects

Architectural fees are generally proportional to construction costs. A higher construction cost represents more complex details and finishes. More complex details and finishes require more time-consuming design services. Thus, a higher-end space requires higher design fees.

These days, many of us tenant improvement architects are designing spaces that are more budget-conscious than image-conscious. Yet even the most cost-conscious clients must spend a minimum of about $50 per square foot for an interior office remodel, especially for a smaller space less with less economy of scale. Let's use a 5,000 square foot space as an example. At $50 per square foot, $250,000 is a very bare-bones budget. If a space is in "shell" condition, $250,000 is not enough to build out even the most simple of spaces due to the needed HVAC and electrical infrastructure. However, if an office is "second-generation" space, meaning it's an existing office that simply requires some re-work, $250,000 would be enough to make a few functional and aesthetic upgrades.

On a simple $50 per square foot project, basic architectural design fees might range anywhere from $2.00 per square foot to $4.00 per square foot, or $10,000 to $20,000 for the 5,000 square foot example. These basic services would most likely include: programming (about 5% of the fee), schematic design (about 10% of the fee), design development (about 20% of the fee), permit, bid, and construction drawings (about 45% of the fee), and construction administration (about 20% of the fee). Not included are mechanical and electrical engineering costs which might be an additional $1.50 to $2.00 per square foot, or $7,500 to $10,000. On small projects, the mechanical and electrical work are often design/build and not engineered. Structural engineering is typically not required for most office tenant improvements, however if it is needed, the cost would vary depending on the reason, but would most likely be in the $2,000 to $5,000 range for a small project. Furniture and decorating services might be an additional $1.00 to $1.50 per square foot. The above basic fee range also assumes that a CAD file of the existing floor plan and existing handicapped accessibility drawings for the building are provided by the landlord to the architect. Given everything just said, the total fees for a small tenant improvement project might be as high as $8 per square foot if some of these extra services are provided.

A good benchmark for fees on a small remodel project is about 10% of the construction cost without engineering, or about 15% of the construction cost with engineering. But since the construction cost is not determined until the architectural drawings are complete and bid, this benchmark is not very useful unless a solid construction budget is established before the start of the project. If so, the architect should design to that budget if it is realistic. A client should not give an architect an unreasonably low construction budget in order to keep the architectural fees as low as possible. The architect will let the client know if the budget is not feasible. Moreover, if a low budget is established, and the contracted architectural fees are thus proportionally low, the architect can only provide services relative to the construction budget and their fees. If the client drives a higher-end design, the architect will need to request additional fees, because a higher-end design requires the architect to spend more time on the project. An architect will tie their fees to the construction budget in their contract for this reason.

Sometimes, a client does not want to commit to the entire project until they have an idea of what the construction cost will be, and will retain the architect for programming through design development, or just enough to obtain a construction estimate from a contractor. If an architect is working without a construction budget in mind, and designing per the client's direction without boundaries, the architect will most likely be compensated on an hourly basis, instead of a lump sum basis, at least through the design development phase, when the scope of the project is defined.

The above fee ranges apply to interior office tenant improvements, and assume that no work to the building core or shell is required. Banking, retail, restaurant, and other project types typically have higher fees.

Elisa Garcia, RA
Garcia Architects
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Joined: 02 Nov 2007
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Posted: 03/13/13 10:02am  Reply with quote
Elis Garcia

What happened to Elisa? I have enjoyed her BLOG....can you have her continue to post her interesting subjects.
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Posted: 11/11/14 11:32pm  Reply with quote

the architect will most likely be compensated on an hourly basis, instead of a lump sum basis, at least through the design development phase???????
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