I talked with one one of my dear friends and cherished clients this week, John Hembree, Pastor at Woodbury United Methodist Church. Woodbury UMC is one of my fondest memories in our 20 years of service. I remember when they first called me and were looking some direction on where and how to hang a new projector for their sanctuary, and they had had some ceiling tile that was falling down.

On my first visit, I could tell a renewal was about to happen. John was providing solid pastoral and spiritual direction, and there was a true desire to grow. The sanctuary was well over a hundred years old. The education building looked like it was stuck in 1970. The congregation had a long list of small items they wanted to complete like new paint, carpet, light fixtures and plumbing fixtures, but nothing too big. They just knew the flow of the building was not working. There were not enough restrooms and those they did have were out of the way.  The layout of the facility made it very difficult to make a visitor to feel welcome, and it was challenge for a visitor to even feel like there was room for them.

After the meeting, it was clear a master plan was needed and appropriate.  The church needed an overall plan on how to renovate and in what order. They needed a plan that was feasible for their economic ability (something they could afford). A short time later, I brought to them a master plan proposal, and they agreed they needed to invest and bring in someone from the outside to lead them in this design.

We partnered with Steve Newton at LifeWay for this master plan, and the results were awesome. We came up with a plan that includes a connector entry and a new elevator. Now complete and in full use today, this simple addition changes the whole look of the church from the street, and makes two detached buildings look and function as one. With the new design, there is now room for more activities to happen upstairs and the elevator enables a large segment of the congregation to begin using the upstairs. 

But, back to the process.  Once the master plan was accepted and approved, the tricky part was coming up with a plan to pay for it and then execute that plan. The master plan was in a feasible one for this congregation, and required an effective capital campaign.  The congregation hired an outside resource to plan and guide them in the capital campaign. They were willing to borrow a little bit of money but not so much that they could not do other ministries.

We completed the addition and renovations on time and on budget, and then…their attendance doubled!  What a blessing.  The kingdom of God is advancing rapidly at Woodbury United Methodist Church, and we are so grateful to have been a part of this next step and stage in the congregation’s growth.

It’s no secret the screeching halt the commercial construction industry experienced during the Great Recession is warming up its engine.  There is a lot of pent-up demand, and while many are still holding firm and continuing to wait, things are loosening up and starting to move again.

In particular, we’re seeing a lot of movement in the health care industry, which is a key indicator and leading sector in the middle Tennessee area.  As that market is changing—chock full of change as we all know—the need continues to grow for more, new and different facilities to better serve patients and medical professionals. 

A survey late last year of health care providers found that more than 75% of health care institution respondents expect construction activity to increase in the next two years

We’re finding the survey results are proving true as we talk with business owners, managers, and also church pastors and leaders, who are thinking about moving forward with an expansion, renovation, addition or new construction project. 

In fact, we’re working on two health care projects right now that are in “get it done” mode to meet market demand.  Fortunately, our long experience in this sector helps us get the job done in record time for our clients. 

Ideally,at the beginning.  We’ve been around long enough in our 20-year history to know if the site or location is easy to build on or not easy to build on, and the best way to approach a renovation or addition.

If you have an existing building on your lot, and you want to add to the campus, where and how should you situate the additional structures?  It may seem obvious to you, but there are many factors that need to be considered, and ideally, we would develop a feasibility plan not only for today’s project but for any potential future build outs or new structures you may need to think about for the future. 

Also, we can help you better understand, from the very beginning, what the unique challenges of a building project might be, in terms of design, budget, feasibility and functionality. 

Have you thought about the following?

• Siting your building
• Drainage and erosion
• Access
• Utilities
• Technology needs
• Space, storage and capacity needs
• Connectivity to existing structures
• Outdoor spaces

 
You just can’t substitute anything else for good planning, and I’ve seen it time and again—good planning can save you money, time and headaches both today and on down the road. 

All of these issues are key factors—that greatly affect cost, timeline, efficiency and quality—a building owner should know about from the beginning.

First, as you determine your office space needs, think not only about your short-term needs but also your long-term needs.  Looking for office space is exciting and emotional because your business is growing and that’s a great feeling!  But before you sign, slow down and make sure you’re thinking it through.   

Ask these questions:

1. Is the layout efficient for my business?
2. Will you be “meeting the public” at your business?  If so, is the quality of the space sufficient to help create a strong brand for your company?
3. How many employees will you start out with?  Is the space sufficient for them?  Is it pleasant?  A well-planned work environment can boost the morale of your employees and help them be more productive.
4. How many employees do you anticipate within one year, three years, five years?  Is there room for expansion?
5. You don’t want to pay for too much space today, but you don’t want to be cramped and have to move too soon into your lease. 
6. What type of technology is available?  Is the space “technology ready” and primed to meet your needs today and in the near future?
7. Is your competition nearby?  Will that be a plus or a minus?
8. Add office space to your business plan.  You need to be aware of all of the costs involved with obtaining and maintaining office space.
9. What types of amenities are associated with the space you’re considering?  Consider parking, conference room, entrances, security, AV, technology.

In some cases the landlord will roll the cost of a tenant’s build-out of a space into the cost of the lease.  And, many of our clients have found it’s more cost-effective to use our company rather than the landlord’s to both build out the space and renovate it.  Ask questions now so you’ll be fully informed both today and on down the road. 

How can you, as a business owner, decide if renting or building is the best way to go? 

The arguments for renting include these:  Can you make more money by keeping the capital in the business instead of in the building?  If the answer is yes, you’re probably better off renting.  Are you prepared to dedicate the resources—time, money and expertise—to being a landlord?  If the answer is yes, you’re probably better off renting.

The arguments for building include these:  Are you comfortable you’re not going to move the business?  Are you reasonably sure you’re going to stay in the same location for the next 20 to 25 years?  Is the site a good one?  Is your location good?  Is your location and building likely to gain in value over time?

Once you carefully evaluate and make a decision, move forward with decisiveness.  Bring your builder or renovator in early to help design the right space for you and your business that not only works for today, but for the long term. 

We’ve found business owners looking to renovate, add-on, build-out or build from the ground up save the most money at the very beginning—in the building’s design phase.   Why? 

Having the same firm manage the project from day one means this:  ensuring the original design matches the construction process and budget so there are no surprises, no cost overruns, the schedule is met, and you receive a quality, cost-effective result.  All of this translates to saving money both short-term and long-term. 

We’ve all heard the horror stories.  You’re in the middle of your construction project.  The building is behind schedule, it’s raining every other day, the contractor is asking for more money, the design isn’t working when it’s put into action onsite—which means even more money for design changes—and a host of other problems.  Most of these problems—except the weather!—can be remedied by having the contractor on board and leading the project from the first day. 

The experienced contractor knows the cost of labor, materials, subs and construction and can find many ways to save money during the design phase.  That way, the project is feasible from the very beginning. 

We’ve been in business 20 years.  We’re knowledgeable and experienced in the critical questions you need to think about today so you save money down the road. 

For example, where is the best place to put your new building on the property?  While it’s sometimes obvious, many times there are options, and those options can be more or less expensive, depending on a whole host of factors.

Many of our clients build their buildings in phases.  In that case, where is the best place to put Phase 1 of this building on this property? And where will Phase 2 and Phase 3 fit?  Making these decisions now, rather than later, can save thousands down the road. 

I was recently asked whether it’s less expensive to rent or build commercial space.  While the answer can be different situation to situation, I believe the overall costs, long-term, will come out about the same.   Considering the effect on a business’s balance sheet and income statement, the cost should be roughly the same whether you rent or if you build and own.

Short term, there may be a difference, with renting coming in less expensive.  Long term, building may yield better financial results, because you’re building the space you need, you’re building equity in an investment you can later sell, and any improvements you make along the way are yours to appreciate—both literally and yield-wise. 

The bigger question is: what is the business owner prepared to do?  Would the owner rather be a landlord? Does he or she want the risks and responsibilities of owning property? Or would he/she rather someone else have that risk?

I recently had a conversation with an upper-level executive for a large middle Tennessee health care organization. He was telling me about a new renovation project in the area, and asked if I would be interested in looking at it.

Naturally, I was very interested, and asked a few questions about the project and how he will be making the decision. His reply is what I have heard many times before:  he was going to get an architect to draw it up, then get a whole bunch of contractors to bid, and then go with the lowest bid.

What’s interesting is they have another project going on right now;  that project is being handled by a firm chosen by this same method, and the project is filled with conflict and confrontation.

I know this because that contractor and my company use a lot of the same subcontractors and vendors. These subs and vendors are being raked over the coals because the contractor is in a project where he is losing money every single day he is working the project.

Also, no surprise, I’ve learned this contractor is on very shaky financial ground. Their key people are frightened about the very survival of this company. They are sending me resumes and inquiring if they can go to work for us. Their morale is low because they aren’t sure if they will have a job tomorrow.

Is this health care organization getting a quality construction project?  Subcontractors are avoiding this project because they aren’t sure they will get paid. Employees are walking on eggshells. The contractor is torn between the project and the very survival of his company.  I can assure you that every single action on the job site is under stress. 

I can answer my own question, and the answer is an emphatic ‘No!’  The health care organization isn’t getting a quality construction result.  But some will ask why they should care if the price is low?

Today, short-term, that lack of quality is characterized by daily problems, delays, work order changes, and hours of time wasted working through these issues. 

Long-term, I guarantee that when there is fear and low morale on a project, the actual construction quality will be low.  Poor work product affects many issues long-term, including additional costs the owner will inherit through additional maintenance, plus the cost of lost revenue due to the delays, plus the cost of the interruptions to the operations while construction is happening, plus the headaches and time wasted equals spending way, way more than they would have if they selected a contractor who can earn a fair profit. 

And sadly, the contractor’s reputation will suffer, adding to his/her long-term financial struggles.

What I am saying is this:  the design –competitive bid – build process does not work in 2012.  It may have worked well in 1982, but it just doesn’t work today. 

Coming out of the recent recession, we are all focused on the lowest price because money has been in short supply. Adding to that, in our culture for decades, we have been controlled by the desire for instant gratification, instant results, ‘what have you done for me today’? 

Thankfully, we are seeing a strong movement back to key basics:  quality, fair everyday pricing, doing what you say you will do, honesty, doing a good job, hard work and making the best decision for the long-term, not just the short-term.  Price is still key, and should be, but it isn’t the only factor in a quality result. 

Often, my friends and colleagues in business ask me if it’s better to rent space or build space.  Businesses most likely to rent are those just starting out, five years old or younger. The owner has made the strategic decision to rent.  In contrast, most business owners who are looking at buying a building—or building a commercial building—are owners of businesses who have built a stable base of business for five to 10 years or more. 

Those just starting out are rightfully considering their pocketbook.  For the short term, it can require less cash to rent, freeing up capital for other business purposes.

When the business owner needs to decide between renting and owning, he or she needs to answer the following two questions:

• Would it be better to use my cash for inventory or non-building business needs?

• Can I get a better return on the investment in my business versus the return on a venture in property ownership?                                                                        

Quite often,  you can make more money in your business than you can in property, and that can be the driving factor. 

However, there are definite advantages to building as well. Let’s just assume if a business owner decides to build, he or she is going to borrow money and assume a mortgage. The monthly mortgage payment will be a consistent amount for the life of the loan, allowing for stable financial projections for the long-term future. The business can budget for that mortgage payment for the next 10, 15 or 30 years, and there are tax benefits with owning.  Also, any improvements will just enhance the property’s value and provide a return over the years. 

With renting, you know that rent is probably going to go up every three years or so. You aren’t going to make property improvements while renting, which may mean you will outgrow the space or it no longer becomes feasible for use as you grow.

Depending on the type of business you have, location can be critical.  Once you teach the marketplace where you are located through consistent marketing, you hate to give up that knowledge equity you’ve created by moving.

Here are links to more information on this subject  http://www.officefinder.com/leasevsbuy.html

http://sbinformation.about.com/cs/office/a/aa111702a.htm

http://smallbusiness.dnb.com/operations/facilities-real-estate-office-leasing/876-1.html

We love partnering with healthcare providers—the industry is truly one of the great shining spots in our work. 

We value all of our clients, but one of our favorites has turned out to be Dr. Jeff Leech, who serves his dental patients in Murfreesboro. 

I remember when Dr. Leech’s father-in-law, Dr. David Sain, an orthodontist in Murfreesboro, told me  Jeff was  graduating from dental school soon and planning to open his practice in Murfreesboro.  Jeff had been eyeing a location at the corner of Memorial and Haynes Drive for a couple of years and felt it would be perfect for his new practice. 

It was so refreshing when I first talked with Jeff Leech and heard him say:   “Dow, If you need help with your teeth, I’m ready, but when it comes to renovating my office space I really don’t know what to do and when to do it so please be patient with me.”

I told him that is perfectly all right and that I was glad to walk alongside him and assist him in any way to get his office renovated.”  All he had to do was make his equipment vendor selection, and we took it from there, quickly and accurately providing the pricing he needed. 

Jeff and his wife, Jessica, really had their act together. They have high standards, and they want their patients to feel like they’re at home. The result is the finishes in their office are current, relevant, warm and functional.  After we finalized the finish schedule and color selections, the office went from good to great. Dr. Leech’s office is one of the best-looking interior projects we’ve completed.  Check them out at leechfamilydentistry.com.

If you have a rough idea about how you want your renovation/addition or new building to look and perform, but you need a little help to get your vision to reality, that’s where we shine.  We have built many healthcare offices over the past 20 years, and we understand the unique equipment, patient, back office function and aesthetic issues thoroughly.