Silicon Valley and the Central Valley make up a particularly robust swatch of Northern California wherein lies a broiling epicenter of creativity and innovation. The amazing outbreak of technology start-ups and small businesses rising from this cauldron of productivity has also spurred growth from the businesses that feed these newborn fledglings. From legal services, to in-house advising, to production and manufacturing, start-ups have become a main source of fresh revenue for various industries.

One of the fastest growing of these industries is the rental market. Not just any rental market either. New small businesses and tech start-ups have come to value the décolletage of their workspace following trends set forth by leviathans such as Google and Facebook. These conglomerates transformed entire buildings into innovation processing centers provide by incorporating work-life and home-life via open-office layouts, outdoor and communal work areas, inducing natural light, and indulging in amenities such as laundry services, luxury cafeteria’s, and gyms.

That’s why the Bay Area, from Silicon Valley to Santa Clara and San Jose, provides particularly unique opportunities for renters to improve rental properties.

Tenant Improvement 101

1) Tenant Improvement Allowance

Business rentals come with unique caveats that differ from other types. These differences rely heavily on special needs that business tenants face. Generally, a businesses success hinges upon their identifying personality and service. Therefore, businesses seek to retrofit a workspace in accordance with the marketing schema that represents their goals, mission, attitude, and personality.

This where a tenant improvement allowance proves beneficial in the rental arena. Per 42 Floors, a tenant improvement allowance refers to “the amount a landlord is willing to spend so that the tenant can retrofit or renovate the office space. It is usually expressed in a per-square-foot or total dollar sum. This amount is decided upon during lease negotiations.”

During a tenant improvement allowance negotiation, it’s important for the tenant to retain as much control over the improvement decisions as possible. While the landlord may be willing to spend a certain amount on changers, they can also request control over approval and decision-making.

2) Estimate the Costs

When it comes to improving a rental space, budget is your main determinate. Dream big, but remember dreams come with caps.

Begin by reviewing what is possible within your allotted square footage. If a tenant improvement allowance is negotiated, consider what you would like to achieve in conjunction with your contract limitations. Once physicality is analyzed, begin scaling up or down based upon the budget. In short, before venturing to find a contractor or beginning any DIY projects, ask what are the physical and financial restrictions?

Project cost estimation is an inevitably large part of this analysis. Estimations should include costs to design, permits, professional hires, and construction.

Per Hughes Marino Construction Management, minor remodeling ranges from $15 to $25 per square foot, while major remodeling oftentimes goes as high as $50 per square foot. Keep in mind these estimations don’t include additional decorative upgrades such as carpet installation and painting ($5 – $10/ sf), constructing restrooms or lobbies ($60 – $75/ sf), or designing systems furniture (up to $5K per cubicle station), to name just a few.

The unique style of work life in Silicon Valley and the Central Valley offer very distinctive expectations. The above estimations are for a basic business office. For innovative design and specialty inclusions (such as a cafeteria or a gym or open-work space), cost estimations will continue to rise.

3) Find a Professional

When circuitry is shorted due to bad DIY decisions in a personal home, you call an electrician. In a rental space, you make the dreaded call to the landlord. Unless you have an extensive background in construction, it’s incredibly important to hire professionals.

• Project Manager

While a project manager is not necessary, they are oftentimes invaluable. For rental improvements, a project manager plays the role of organizational taskmaster.

Per the Project Management Institute, project managers “have a broad and flexible toolkit of techniques, resolving complex, interdependent activities into tasks and sub-tasks that are documented, monitored and controlled. They adapt their approach to the context and constraints of each project, knowing that no ‘one size’ can fit all the variety of projects.”

A PM’s main goal: understand the wants, document the restrictions, organize a timeline, and work with all the stakeholders to meet client satisfaction.

• Construction Manager

A project manager is optional, but the construction manager is a must have. When working with multiple stakeholders – the renters, the landlords, and even other building tenants effected by the renovations – a construction manager will be the key individual to provide neutral perspective when difficult decisions come about.

The Occupational Outlook Handbook from the Bureau of Labor Statistics states that construction managers “plan, coordinate, budget, and supervise construction projects from start to finish.” While this is true, their job encompasses much more. Construction managers also interpret contracts, report on building progress, and oftentimes become chameleon’s to work with architects, engineers, and various other construction specialists.

 

For more information on tenant improvements, feel free to reference the below related articles:

Tenant Improvement Allowance – Negotiating the Best Deals

Tenant Improvements: A Practical Guide to Estimating Project Cost

Bureau of Labor Statistics: Construction Managers

 

SiliconX Construction provides high-quality, reliable, comprehensive real estate services. From Silicon Valley to the Central Valley, we offer a wide range of skills including sales, leasing, property management, development, and syndication. For more information or to speak with a representative directly, feel free to contact us.

CUPERTINO, Calif., Sept. 12, 2016 – Marcus & Millichap (NYSE: MMI), a leading commercial real estate investment services firm with offices throughout the United States and Canada, is pleased to announce the sale of Saich Way Station, a 15,525-square-foot multi-tenant retail center located less than one mile from Apple Inc.’s headquarters in Cupertino, California. The $16.5 million sales price equates to $1,063 per square foot.

Kirk Trammell, senior vice president investments in Marcus & Millichap’s Palo Alto office, along with Vincent Schwab, senior vice president investments in the firm’s San Francisco office, and David Cutler and Joshua Johnson, associates in Palo Alto, represented the seller, Borelli Investment Co. Tenny Tsai of Cushman & Wakefield in San Jose represented the buyer, a family exchanging out of a redevelopment site in San Francisco.

The sale marks the successful fulfillment of a joint venture between Borelli Investment Co. and a local property owner. The partnership transformed the property from a burned-out shell in 2008 into a multi-tenant retail center that is perfect fit for its upscale location.

“Saich Way Station’s evolution is the result of an enormous effort by the Borelli Investment Co. and we are very pleased to have been able to maximize the value received,” says Kirk Trammell, senior vice president investments in Marcus & Millichap’s Palo Alto office. “The center’s excellent construction quality, strong tenant line-up, and close proximity to the new Apple campus made it an ideal trade property. We created a competitive bidding environment that produced multiple offers, secured an all-cash buyer and closed in a little over a month.”

Built by SiliconX Construction to exceed Cupertino’s high standards for a pedestrian-oriented, environmentally conscious retail center, Saich Way Station features a low roofline, bold storefronts, stylish awnings, modern colors, and ample glass. The center’s paved-stone walkways, benches, outdoor seating areas, bicycle racks, and ample parking welcome shoppers. One of the California Green features SiliconX incorporated into the center is a sophisticated drainage system that contains runoff on-site.

Saich Way Station’s tenants are Vitamin Shoppe, T-Mobile, The Melt, H&R Block, Blast 825 Pizza, Site for Sore Eyes, uBreakiFix and The Coder School Cupertino.

The center is located between a Target and a Whole Foods Market at the northwest corner of Stevens Creek Boulevard and Saich Way at 20803 Stevens Creek Blvd.

 

About Marcus & Millichap (NYSE: MMI)

With over 1,600 investment sales and financing professionals located throughout the United States and Canada, Marcus & Millichap is a leading specialist in commercial real estate investment sales, financing, research and advisory services. Founded in 1971, the firm closed over 8,700 transactions in 2015 with a value of approximately $37.8 billion. The company has perfected a powerful system for marketing properties that combines investment specialization, local market expertise, the industry’s most comprehensive research, state-of-the-art technology, and relationships with the largest pool of qualified investors. To learn more, please visit: www.MarcusMillichap.com

 About Borelli Investment Company

Now in its 61st year in business, Borelli Investment Company is one of the oldest commercial real estate firms serving the Santa Clara Valley, Central Valley and Sacramento areas. The company provides a full range of commercial real estate services — from development and asset management to land sales and property management services.  More information about Borelli Investment Company’s services may be obtained by calling (408) 453-4700 or visiting www.borelli.com

  About SiliconX Construction

SiliconX Construction is a full-service general contractor that provides a wide array of value-focused construction services to clients throughout Northern California. Specialties include ground-up construction, major renovations, tenant improvements, and facilities maintenance. For more information, call (408) 418-0099 or visit www.siliconxconstruction.com

 

Construction has been completed and leasing is nearly finished at Saich Way Station, a sleek 15,650 sq. ft. retail center in a prime, high-traffic area just off Stevens Creek Boulevard between Target and Whole Foods Market in Cupertino.

The busy location in Cupertino’s desirable “Heart of the City” area and within walking distance of Apple’s many offices has quickly attracted top tenants such as Vitamin Shoppe, T-Mobile USA, The Melt, and Blast 825° Pizza — resulting in all but 840 sq. ft. of space being leased. With development wrapping up, the retail center has now been listed for sale through widely respected real estate brokerage firm, Marcus & Millichap.

“Saich Way Station is ideally located in a city with a well-deserved international reputation,” said Tom Purtell, chief operating officer of developer, Borelli Investment Company. “Cupertino is the home of Apple’s headquarters and has many attractive community amenities, such as outstanding public schools, neighborhood parks and acclaimed De Anza College. Together with the Class A retail center’s impressive client list, this will make for what we expect to be a strong sales environment for Saich.”

Rising from the Ashes

The Saich Way Station development is a story of transforming bad news into good for the community. In July of 2008, sparked by a fire in the Bombay Oven restaurant, a small retail center occupying the current 1.29-acre site burned to the ground.

After a time, the owners approached Borelli Investment Company about rebuilding. Years of seeing the project through the detailed planning and approval process paid off — with construction starting in 2014, and the first tenant, anchor Vitamin Shoppe, an international health and wellness retailer, opening for business in the spring of 2015. Other tenants soon followed, including:

• The Melt — A rapidly growing chain of fast-casual restaurants that offers gourmet burgers, grilled cheese sandwiches, salads, and more
• Blast 825° Pizza — A quick-fired pizza restaurant chain known for creating custom pizzas in just three minutes
• T-Mobile USA — A national provider of wireless voice, messaging and data services
• H&R Block — The world’s largest tax services provider with approximately 12,000 company-owned and franchise locations in all 50 states
• Site for Sore Eyes — The preeminent retail optical brand in the Bay Area, with 40 locations
• TheCoderSchool — An innovative after-school, drop-off program for kids interested in learning to write computer code

Quality, Environmentally Friendly Construction

Saich Way Station features a modern profile with a low roofline, ample glass, attention-getting awnings, and stylish lighting — making it a perfect fit for such an upscale area. Working in close cooperation with city planners and other officials, general contractor SiliconX Construction incorporated numerous environmentally friendly, California Green features, such as a sophisticated drainage system that contains all runoff on-site — except in the case of a 100-year rain event — plus orchard-sized shade trees.

The center is pedestrian- and bicycle-friendly — with broad walkways, outdoor seating areas and convenient bike racks. Well-chosen paving stones and decorative tree grates provide added refinements to the center. Each store offers plenty of parking at the door — so retailers can attract and serve their share of the 30,000 vehicles that pass by daily on busy Stevens Creek Boulevard.

SiliconX Construction has also handled the custom tenant improvements as each retailer prepares its space for occupancy. Heritage Bank provided the construction loan for the project.

Marcus & Millichap Accepting Sales Offers

With only one small unit remaining — a highly visible, easily accessible end-cap space on the building’s far end — Saich Way Station has been listed for sale. Well-known broker Marcus & Millichap is currently accepting offers, and expects significant interest not only from U.S. groups, but also from international buyers.

Tenants interested in the final space at Saich Way Station can reach Randol Mackley of SRS at (408) 216-2316, or via email at randol.mackley@srsre.com. Prospective buyers can contact Vince Schwab at Marcus & Millichap at 415-625-2171 or vince.shwab@marcusmillichap.com.

For additional information about Saich Way Station, please contact Larry Bengiveno, vice president of Borelli Investment Company, at (408) 453-4700, or email larry@borelli.com.

 

About Borelli Investment Company

Now in its 61st year in business, Borelli Investment Company is one of the oldest commercial real estate firms serving the Santa Clara Valley, Central Valley and Sacramento areas. The company provides a full range of commercial real estate services — from development and asset management to land sales and property management services — as well as general contracting through its SiliconX Construction affiliate. More information about Borelli Investment Company’s services may be obtained by calling (408) 453-4700 or visiting www.borellli.com.

About SiliconX Construction

SiliconX Construction is a full-service general contractor that provides a wide array of value-focused construction services to clients throughout Northern California. Specialties include ground-up construction, major renovations, tenant improvements, and facilities maintenance. For more information, call Tony Gonzales at (408) 418-0099, or e-mail tony@borelli.com.  Or visit siliconxconstruction.com.

About Marcus & Millichap

With over 1,500 investment professionals located throughout the United States and Canada, Marcus & Millichap is a leading specialist in commercial real estate investment sales, financing, research, and advisory services. Founded in 1971, the firm closed more than 8,700 transactions in 2015 with a value of approximately $37.8 billion. The company has perfected a powerful system for marketing properties that combines investment specialization, local market expertise, the industry’s most comprehensive research, state-of-the-art technology, and relationships with the largest pool of qualified investors. To learn more, please visit: www.MarcusMillichap.com.

 

Office remodeling is challenging and expensive, yet occasional. According to the stats, home and office remodeling has increased by 5.4% since 2010. Office remodeling not only changes the personality of your office but it also motivates the employees, adds functionality to the workspace, attracts new clients, and adds value to the property. However, the first step for initiating your office-remodeling project is to create a budget.

Consider the Costs of Flooring

Flooring defines the personality of your office. Wooden or tiled flooring is ideal for workspace. However, it is necessary that the flooring is comfortable to walk. Different types of floorings have different costs, ranging from $473 to $1310. Visit the market with your contractor to find out the suitable flooring for your office. If you are on budget then replace the flooring of most used areas only, including doorways, passages, and stairs.

Painting and Wall Art

Ideally, wall art creates a dramatic look and personality to your office. However, choosing a nice color for your office paint is a cheaper way. You can also use different types of wall paints and designs to save the cost of wallpaper along with adding motivation to the workplace. The price of professional paint costs around $250 to $650.

Improve the Lighting

The productivity and comfort of your employees and clients largely depends on the lighting. Too much brightness or dim light causes discomfort. Professional lights like energy efficient bulbs are better for offices than wall lamps. However, you can install wall lamps and small chandeliers in the meeting room to add royalty and confidence. The cost of lighting ranges from $95 to $350 for small offices. Consider energy-efficient lights to save the cost of bills in long run.

Make Windows More Functional

Replacement of windows is beneficial only if you make them more functional. Energy-efficient windows cut the electricity bills up to 35% per annum. Tinted energy-efficient windows reflect the dangerous UV lights but allow healthy sunlight to enter the workspace. These windows also improve the brightness in the rooms and reduce the requirement of artificial light. Installation of the simple windows costs around $350 to $750. Installation of energy-efficient windows is a little expensive than simple windows but it is also one time investment, and ranges from $650 to $1450.

Furnishings and Renovation Items

The cost of furnishings and renovation items completely depends on your choice. You can cut this cost up to 100%. However, furnishings, decoration, and renovation items are important to make the workplace a livable and more functional area. Average sized shelves cost from $250 and more. The desks cost from $450 and above.

Budgeting According to the Room Size

Remodeling of the entire office space is important for professional touch. However, you can reduce the costs by remodeling the important areas only. An office from 200-300 sq-ft space requires at least $850 or more for remodeling. A 400-500 sq-ft office requires at least $1,500, and a 500 sq-ft office requires at least $2000 for remodeling.

1. Measure the total area of the office and divide it into high-priority and less-priority areas.
2. Note down the required items of remodeling along with their costs.
3. Calculate the total estimated cost of remodeling.
4. Compare the cost with your estimated budget. If the total cost of remodeling is higher than your estimated budget then re-check the requirements of remodeling and cancel out the less-required items.
5. Calculate again to estimate the total cost of remodeling.

When preparing the budget, make sure to add at least 35% extra cost as a backup of your project. Remember that office remodeling is an occasional project and cutting out less-prioritized items may make you suffer a loss to some extent. Therefore, always prepare the budget carefully and re-check it as many times as possible to finalize a foolproof budget plan. For more information and consultation on office remodeling, contact us today!