Whether a business is outgrowing its current location or just starting up a new business, a commercial space that fits the business’ needs is a must. To achieve such goals, there are two options for business owners: to gut renovate an existing building or to build a brand new space for the company. Both of these options have their advantages as well as difficulties. The choice between gut renovation of an existing building or simply starting from the ground up depends on many different variables.
More importantly, it is the budget of a business owner that plays the biggest role in making the decision. The costs of gut renovation and new construction must be taken into consideration before planning anything.
That’s why it is important to know which factors would affect the costs and to weigh the benefits of each option involved to help business owners make the right choice. To help commercial business owners in taking the risk and making such a huge decision, here is an article that compares the cost of gut renovation and the cost of new construction.
Business Operation
In reality, the renovation of an old commercial property isn’t suitable for everyone, even if it does offer some compelling benefits. Gut renovation, although it means stripping everything down and replacing everything with new materials, may still allow a company to maintain the traditional charm of an older building. Moreover, while some part of the building is being stripped down and replaced, the business may still continue to operate as normal. Such a process is also quicker than building a new property from the ground up. Because of these reasons, gut renovation makes it possible to save on expenses and still keep on providing customers with the services that they need. With a gut renovation, there’s no need to rent a new space while the construction process is still ongoing.
Budget
For commercial building owners, it is only natural to assume that new construction is more expensive than renovating an old structure. But what most people don’t know is that the cost comparison actually depends on many factors.
New construction is certainly costly but it doesn’t have the cost that’s often faced by older buildings when it comes to compliance issues, which can be expensive to address. The retrofitting of the structure and building code upgrades can be very costly, especially when the building to be renovated is historic. Gut renovating an older building to maintain its historic beauty is often not as cost effective as starting a new construction. However, upgrading a relatively modern building with few changes can be less expensive than constructing a new building.
Return on Investment
When computing for the budget on either gut renovation or new construction, the ROI is something that should also be taken into consideration. There is return on investment when a commercial property owner makes changes to his or her property. Calculating the ROI is a complicated process since some changes have a bigger impact on the business and sales than other changes to the property.
For instance, it is more possible for a restaurant that upgrades its dining area to fit more customers while also making their dining experience more enjoyable to attract more business, hence, gaining return on its investment. That’s why the ROI must be taken into consideration when budgeting for a project because this would affect the cost for either project.
Timeline
The costs of both projects—gut renovation and new construction—are also calculated based on their timelines. Both timelines must be considered at the onset when deciding which is right for the commercial business.
For gut renovation, its typical completion can be in a matter of weeks or months. Since the renovations can still take place in the same place where the business operations are conducted, the timeline for completion is often more urgent than that of new construction. However, to minimize the impact of the renovation project, limiting construction time to evenings, weekends or off-season dates can also be done. On the other hand, a new building construction can take a long time—a year or even more, and this affects the cost of the project.
Sustainability
Nowadays, sustainability is already an important factor that commercial property owners take into consideration when they are changing or upgrading their property. Unfortunately, making a building sustainable is often expensive. Perhaps surprisingly, renovation of an existing property is more sustainable than new construction in most cases. This is because building a new commercial property produces far more carbon emissions than when renovating an already existing property.
