From SoCal Real Estate’s December 2018 issue:
R.D. Olson Construction
There is a high volume of redevelopment happening in Southern California today. But as the cost of development increases due to rising material and labor costs, as well as the concern over tariffs, there is more pressure than ever for commercial builders to shorten project timelines and reduce costs.
The increased focus on budget and speed to market, coupled with the lack of available land for new construction, is revitalizing adaptive reuse for commercial projects. While it does solve for expediting projects and in many cases is more cost-effective than ground-up construction, adaptive reuse comes with its own engineering challenges. It requires taking an existing building that might have been constructed 50 or more years ago and upgrading or reconfiguring it to meet current codes. The process oftentimes leads to mechanical systems needing to be modified or completely replaced. Structurally, there are many more requirements today than there were 10 or 20 years ago, especially when it comes to seismic upgrades. Title 24 and other energy-efficiency requirements can also be challenging to incorporate in older buildings.
One asset class where adaptive reuse has been especially fruitful is in the hospitality industry. Despite its engineering challenges, on average adaptive reuse enables these properties to go to market 20 percent to 30 percent faster and costs 20 percent less than new construction. Shortening the construction schedule also helps mitigate the risks associated with future labor and material cost increases as well as market changes. In Southern California, where prices can change drastically month to month, this is especially valuable. In the case of hospitality, an additional benefit is the ability to put “heads in beds” faster. When hotels are able to start making money and pay back investors more quickly, it provides additional cost benefits for developers.
The increased pressure on project timelines and budget does expose the industry to errors such as uncoordinated documentation or the execution of plans that aren’t fully vetted. Commercial builders — and really the entire CRE industry — are also dealing with an influx of our top executives retiring. This changing of the guard, coupled with the increased focus on speed to market, puts more of a burden on commercial builders to get the next generation trained and up to speed as quickly as possible.
Fuscoe Engineering Inc.
As a leader of a 200-person engineering firm, I get a lot of feedback from clients, agencies and the public. Since 35 percent of our business is commercial development, I can share my experiences with top-tier clients including The Irvine Company, Hines Development, McCarthy Cook, Related Companies, and more.
Some of the top engineering concerns commercial builders deal with today include lack of reliable infrastructure to serve new buildings; the ability to meet and solve agency compliance issues; the need for engineers to help more with energy and water conservation; the need for engineers to design sitework, drainage, and utilities for the “life cycle” of the building, with a focus on maintenance requirements; as always, a strong desire for high-quality work and a high caliber of service; and “future-proofing” projects with spaces for respite or play, denser with adjoining recreation and open space and healthier tenant space with sit/stand desks, fresh air, and daylight.
More and more these days, I also hear commercial clientele ask for “new solutions to old problems.” In other words, get creative. So, although these concerns are self-explanatory, let’s dig a little deeper on some.
Infrastructure is universally an issue. It’s “used up” and “falling apart” just about everywhere in the U.S.—our interstate highways and drinking-water dams were built in the ’50s! So, savvy developers need to research available infrastructure before planning a new project. For example, look at access. Are the roads to the site smooth and safe? Is the traffic manageable? Consider site prep: Can the site be graded to balance earthwork, avoiding costly and environmentally damaging truck haul-offs? Think about storm water: Can the site direct storm runoff to a nearby channel or creek or will large detention basins be needed, consuming valuable acreage? What about utility capacity: Is there a sanitary sewer big enough nearby? Is there an adequate supply of domestic water? Is it pressurized enough for a fire protection system?
Using solar energy with storage batteries, coupled with “grey” water reuse systems goes a long way in making projects “sustainable” and healthy.
Director of preconstruction
Pacific Building Group
We live, play, and work in a society and industry with an ever-increasing focus on and awareness of environmental sensitivity. As a commercial general contractor in Southern California, we have seen over the past five years the resulting impact on project planning, engineering, construction logistics, construction schedules, and costs. These changes
will always be in motion, which means our industry must be agile. This is particularly true as it relates to biofiltration basins, water treatment, hydromodification, detention basins, CDS systems, and modular wetlands. As an industry, we must follow best-management practices to remove debris and pollution out of surface/storm runoff water, as these requirements have escalated.
Although our industry is much more mindful and knowledgeable about environmental best practices, we do still encounter situations where environmental considerations have not been fully accounted for and/or are not well defined. In particular, these considerations are often overlooked during the space-planning and cost-estimating stage of a given project.
Our team is successful in getting ahead of this through early collaboration with the entire design team, especially in landscape and civil-engineering disciplines. In doing so, we make a concerted effort to ask the right questions of the right people proactively. What exactly are the right questions?
1. What is the total square footage of impermeable (vs. permeable) surfaces being added and/or disturbed? As a general rule of thumb, an area under 5,000 square feet would not typically require a specific system to retain and or treat runoff water.
2. Can you request or assist in the development of a formal soils report for the area in question? This will inform you of the subterranean conditions you might encounter should you be required to install a system.
3. What is the potential impact on the number of parking spaces available, should a system be required? How does this correlate with the total square footage of the site and building, which directly impacts the owner/developer’s rentable square footage?
It is vital to our environment and the success of our industry’s projects to understand and embrace the importance of properly handling runoff water. It certainly comes at a cost (space, planning, design, logistics and construction) that our industry did not experience five years ago. However, if owner/developers, design and construction teams collaborate early in the planning process and ask the right people the right questions about these systems, the element of surprise can be mitigated.
BNBuilders is known for building technically challenging projects that have complex engineering solutions for specialized buildings, including laboratories, pharmaceutical facilities, medical facilities and hospitals, colleges and universities, and high-tech facilities. The key engineering concerns on these projects are how the systems will
perform, cost/benefit analysis of alternatives, availability and speed to market, and impacts on facility operations to support our clients’ businesses.
Many of BNBuilders’ clients want to understand the costs and investment for sustainable design and engineering solutions that achieve LEED certification and zero net energy and are built with an understanding of energy consumption, operational impacts, comfort, and total cost of ownership. Careful planning and coordination are needed to ensure the buildings perform as intended while minimizing the impact on the environment.
Another key element with these types of facilities is aligning design and engineering solutions with project budgets and fast-track schedules. To address these concerns and others, BNBuilders performs technical reviews and interdisciplinary coordination of the various design and engineering options to understand the cost and schedule impacts, as well as how these systems and equipment will function over time. We provide comprehensive preconstruction services to provide certainty and predictability, taking into consideration local market conditions, labor and material availability, and long lead items to ensure critical milestones are met and everything is delivered on time for construction.
A further concern is how these complex engineering systems and equipment integrate with each other to meet performance requirements for facility operations. Our clients are highly dependent on how buildings perform with critical 24/7 research, life-support systems, computer facilities, data centers, and administration spaces with amenities for staff. To address this concern, we utilize proven tools and techniques, including Building Information Modeling and Virtual Reality, to simulate the design and engineering systems with visualizations and how they can be executed in the field prior to starting construction. Clients need more information earlier in the process to address their concerns, and providing this in-depth level of information has been extremely valuable for our clients to make informed decisions with confidence.