Topic 3 - Levels of Refurbishment
Level 2 – Intermediate Refurbishment
Level 1 – Minor Refurbishment
Benefits of Level 4 - Complete Refurbishment
Issues in Asset Enhancement for Occupied Building
Recap : Purpose
- Appraisal to outline the extent of improvements to the building
- Relate them to explicit monetary rate --> $/sqm
- Demonstrate the level of risk VS benefits
Key concerns
The value achieved in the long run
The necessary levels of both internal and external improvement
How far to take the redevelopment?
How to avoid spending more than necessary to maximise return on investment
Level 3 – Major Refurbishment
Level 4 – Complete Refurbishment
To be benched against New Build option
- Lowest investment & risk
- Least opportunity to generate value
- Quick & unobtrusive approach
Works include:
Decorating
Changing carpet tiles
Replacing ceilings
Servicing building's plant
Repairing & upgrading minor elements of building
Installing modern blinds
Revising layout (for lighting/flexibility)
Interior repainting
Low energy IT replacement options
Example: Replacing CRT monitors with Flat Screen monitors
Recommissioning of building services
Points to Note:
Office floor spaces often most heavily utilised, but require less effort to improve
For Level 1 Refurb: LITTLE external change
(More like major routine maintenance scope)
Public areas (reception, lifts, toilets) are often most outdated, thus require HIGHEST spend to achieve MAX impact & return
Reception & Entrance rebranding to be included in Minor Refurb works = significant impact on staff / visitors / potential tenants
Works include:
- ALL OF LEVEL 1 WORKS
Replacement of building services
Reception upgrades
Revised workspace strategy
i.e.: Hot Desking)
+
Replace lighting & control system
Reception upgrade
Replacement of WC sanitary ware
New entrance features
Example :
Replacement of major plant and services, floor finishes, etc
Includes the works outlined in Level 1 and 2; plus
a full replacement of building services,
some building fabric changes, possible extensions to the floor plates
the remodelling of cores and communal areas.
Take note, enhancements should :
To take note :
Includes the works outlined in level 1 to 3; plus
carefully considered to commit only to the most appropriate improvements necessary
needs to meet current Building Regulations standards & be future-proofed for a further 15 – 20 years.
further development opportunities outside the building.
Points to Note:
Level 2 Refurb = public areas & office floor spaces given more significant OVERHAUL
(i.e.: replacement of materials, fixtures, fittings)
Most comprehensive & expensive of the options & carries higher development risk
Brings the building up to current standards & future proof for 20-25 years
Example :
Structure facades alterations
Possible relocation of cores and risers
Can be more financially viable than demolition & new build
Can extend the lifespan of a building by bringing all elements up-to-date
creates the best opportunity to capitalise upon the improvement in asset value
Ensure the building is competitive with high value new build office accommodation in the local market
Extreme end = Only structure may be retained
Raising the floors and internal walls
associated increases in rent
attracts a wider base of potential tenants.
Make the most of the existing asset
Shorter development period and quick delivery back to the market
Achieve extra development
Increase the net lettable floor area
Maintain and improve character to attract tenants
Reduce the effect on the environment
Lower costs
carefully targeted investment can generate significant returns
Faster construction programme
retain the advantages of the existing building and benefit from planning consents
Original features that gives a building character are popular with tenants
cost of refurbishment are in the range of 30%-80% of an equivalent new build
reusing the building fabric and improving building performance
reposition it within the local property market
maintain or increase their value by extending economic life of the building
Planning issues are simpler to resolve
e.g. OXLEY holdings revealed that its asset enhancement initiative for Chervon House will increase the net lettable area by at least 20%
reduce environmental impact of delivery good quality office space
Reusing elements of existing fabric
more expenditure could be use on value adding features
Power and IT outage issues
Dust and noise issues
Access restrictions
Health & safety issues, for occupants and contractors
Schedule restrictions
General disturbance and impact upon occupants
Disruption issues can be minimized by:
having a detailed programme of works
having good communication
weekly and/or daily updates to occupants
displaying practicalities and viability of construction works
investors now focused on improving the workplace environment to create a brand for perspective tenants
by replanning existing floor areas, redesigning plant areas
attract higher quality tenants
Appropriate for empty buildings or one at the end of its lease