Effective partnering needed with general contractor.

Construction activity, especially tenant installations, has significantly increased during the last 12 months. This is largely due to increased leasing activity in commercial properties, and property upgrade work initiated by building owners who have recently acquired previously neglected properties.

In today's market, increased cost-consciousness is leading many owners and tenants to "partner" with a general contractor who can provide real service (not just lip service) in the preliminary phases of a potential project - whether to develop a budget for renovations as part of an acquisition, or to provide a turn-key tenant installation. Tenants are looking for attractive, clean, affordable space, and in order to be competitive, landlords are turning to their general contractors to deliver tight, reliable budgeting and true value engineering.

However, this focused reliance on the construction manager means that clients are paying special attention to the reliability and credibility of the construction firm they hire.

For example, W & M Construction Corp. recently completed a 40,000 square-foot installation for Cooper & Dunham, a major Manhattan law firm, for which we teamed up with the tenant, architect and building management to develop pre-construction budgets based upon conceptual architectural sketches. By knowing the exact construction cost, the landlord was able to effectively analyze the lease transaction, determine the exact net present value of the deal, and quote the most aggressive rental rate possible for the tenant. By carefully reviewing the preliminary design documents, selecting cost-effective materials, and making recommendations to reduce construction costs, we were able to develop a budget that fell within the landlord's limit - yet still met the needs of a growing New York law firm requiring attractive, efficient and affordable space.

Most of our projects in 1994, which was our busiest year on record, were turn-key tenant installations driven by budget-conscious landlords and tenants who want good value rather than just a cheap deal. Landlords need to know their exact tenant installation costs before committing to rental rates, and are reluctant to simply give away $50 to $60 per square foot work allowances - especially if a second generation space can be refurbished to meet the tenant's needs.

For instance, when M.D. Sass, a Manhattan-based financial services firm, needed 25,000 square feet of office space, the landlord asked W & M Construction Corp. to provide a budget for renovation of an existing space, which included extensive re-use and matching of existing millwork and finishes. Working closely with the architect and tenant, we re-designed existing offices, added new offices, and re-used and complimented existing finishes. We were then able to successfully budget and build their installation for less than half the cost of its total replacement value of $60 per square foot. The money saved on capital improvements enabled the landlord to provide a more attractive rental rate to the tenant, and close a successful lease transaction.

Similarly, we are working with landlords renovating recently acquired buildings who need to stick within budgets that may have been put together by their acquisitions group prior to developing any architectural plans. For example, one of our clients is a national real estate management firm who wants to renovate the lobby and common areas of a major office building in Fairfield County recently acquired by a real estate investment trust. Part of our job has been to develop a detailed budget for the client that meets the needs of their leasing staff and the market. The ultimate success of the building's renovation will be determined by the number of tenants that lease space in the building, and the return on the capital investment made by the owner.

As a general contractor, our success is judged by the quality of service we provide, and ultimately, by the total success of the project for the client. More than ever, we play a pivotal role in the planning phase, when the client looks to us to provide the proper guidance to reduce costs - without hidden extras and without sacrificing the aesthetic impact of the renovation. Indeed, in some cases, our work in the early stages of a project can make or break the deal.

Once the deal is done, our clients must then rely on W & M Construction to deliver the final product. Our success in these situations requires skilled and accurate estimating, professional project management and quality control. This increased level of involvement and the importance of our new "partnering" role put a much clearer focus on the reliability and quality of service that general contractors must now provide.