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COST MODEL:

OFFICE REFURBISHMENTS
An edited version of this article first appeared in Building magazine
June 2012

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Cost Model: Office Refurbishments

Introduction

Developers looking to get the most out


of their office stock in difficult economic
conditions are considering refurbishment
rather than redevelopment. Nigel Addy
and Peter McCallum of Davis Langdon,
an AECOM company, discuss creating
and adding value through refurbishment.
Peter McCallum, Associate
Davis Langdon, An AECOM Company

Nigel Addy, Director


Davis Langdon, An AECOM Company

This page: Angel Building, London


Cover: The Johnson Building, London
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Cost Model: Office Refurbishments

Refurbishment,
why would we do that?

There is a compelling argument as –– Maximise the value of an existing


to why a developer would elect to asset. With refurbishment, the
The refurbishment
build a new building. A new build developer is in the position where the and reinvention of
provides a contemporary design unique style and character of an older
that accommodates the latest building can be retained. This can existing office stock
technology in terms of infrastructure be useful when trying to market the
space to businesses that are looking
offers a number
and sustainability and ultimately
commands a higher rent when
to differentiate rather than emulate. of benefits when
In addition to this, various helpful
compared to a refurbished building. attributes of the original building, compared to complete
So why is there so much excitement
surrounding the refurbishment of
such as car parking allocation and
permitted development density and
redevelopment.
existing offices? massing, can be retained.
The key to this, not surprisingly, is –– A more affordable approach;
that the UK and Europe are in the grip refurbishment can avoid the
of one of the worst ever economic reconstruction of major structural
downturns. This is illustrated by the elements and still retain the benefit
of the creation and provision of new
decline in UK construction output with
office space. Depending on the level
the economy facing a “double dip” of refurbishment desired, the cost is
recession, difficulties with developers approximately 10% to 75% less than
achieving funding and an inability on a new build.
the part of potential tenants to look
very far into the future. This provides –– Achieve operational savings whilst
a backdrop for developers to focus on re-energising the asset.
getting the most from their existing –– Creating an opportunity to support
office stock. new ways of working.

The refurbishment and reinvention of –– Potentially reduce the carbon


existing office stock offers a number of footprint of an existing building.
There is a strong argument relating
benefits when compared to complete
to sustainability that supports
redevelopment. Refurbishment refurbishment. The re-use of the
enables a developer to achieve the majority of an existing building’s
following: fabric and an improvement to the
buildings services and performance
–– The reuse of an existing asset.
may result in the reduction of the
–– A better balance of risk and return. overall environmental impact when
compared to a new build.
–– Quick delivery back to market
(or refurbish whilst in use). Not all of the existing office stock
Refurbishment offers a programme is suitable for refurbishment and
advantage relative to new there are certain factors that
build. Dependant on the level of constrain and determine both the
refurbishment, it is approximately level and suitability of a building for
15% to 70% quicker than new build. refurbishment.

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Cost Model: Office Refurbishments

The reinvention of the workspace

Refurbishment does allow and By taking existing office space


facilitate changes in organisational and refurbishing, it can provide
Refurbishment does
culture. Modern working practices a variety of individual, team and offer the user the
allow for the advancement in the use community support spaces that are
of technology within the workspace, not necessarily the norm and can be
opportunity to adapt
which have revolutionised the targeted at tenants that are trying to and reinvent existing
way business is done. This has move away from institutional-looking
consequentially led members of space. As a result, organisations
office space to match
the work force to be more agile and are able to become responsive to the changing ways in
empowered as to how, when and change by breaking the traditional
where they work. link between the individual and the which the work force
workstation. operates.
Refurbishment does offer the user
the opportunity to adapt and reinvent There is a growing ethical awareness
existing office space to match the in the industry, that office space
changing ways in which the work force is now expected to be able to
operates and incorporate changes in accommodate the changing social and
technology that facilitate this. economic requirements. The design
of successful buildings takes into
account what happens after they are
built and what makes it possible for
them to mature and develop.

The Johnson Building, London


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Cost Model: Office Refurbishments

Creating and adding value


through refurbishment

A carefully thought through issues and planning. The additional


refurbishment can transform a tired, space also helps to create a “blended The design of
uneconomical, inefficient building product” that is ideally suited successful buildings
into a desirable, vibrant, efficient and towards a multi-let where tenants
profitable asset that supports new that have a fixed requirement in takes into account
terms of maximising floor to ceiling
ways of working and incorporates
height and the height of the floor
what happens after
modern sustainable technology.
void can be accommodated on the they are built and what
new floors whilst those that are
The key to creating and adding more flexible in this regard can be makes it possible for
value through refurbishment is to
understand the factors that will attract
accommodated on the refurbished
floors. This premium space should
them to mature and
tenants. These include flexibility, good attract higher rental values. develop.
floor to ceiling heights (+2.5m), column
–– Reconfiguration of the core in a major
free spaces, the maximising of usable
refurbishment. The reconfiguration
space, welcoming entrances, natural
of the core or even the creation of a
light and the right environment with new core can provide additional area,
adequate cooling. greater efficiency, additional plant/
rise space and better circulation.
The cost-versus-value equation
is the primary driver for decision –– Remove floor screeds to provide
deeper floor voids. This may, however,
making during the design stage of a
create issues with fire separation,
refurbishment project. The creation
acoustics and air leakage.
of more valuable space as well
as additional space is a primary The creation of a generous floor to
consideration when determining the ceiling height is a key consideration
extent of any refurbishment. for a refurbishment. Relatively small
floor voids are acceptable if the floor
Some examples of the sort of to ceiling heights are maximised.
intervention to the existing building With the advance in technologies the
which can create more valuable space need for larger floor voids is not as
include: necessary, however, this does need
to be considered against the tenant
–– Removing columns, cores/staircases market that is being targeted.
and other structures to open up
usable space. The choice of the service strategy
–– Infilling or reducing existing atriums, also needs to be carefully thought
courtyards, etc., to create additional through. Many older buildings do
usable space. An excellent example not have the floor to floor heights to
of this is the Angel Building in accommodate a 4 pipe fan coil system
Islington, London, which resulted in a and a suspended ceiling, whilst
significant increase in usable area. simultaneously maintaining an optimal
–– Adding floors. This can be a relatively
floor to ceiling height.
economical solution for creating
additional area. The use of lightweight
materials can create light, open,
column-free space that will be of
increased value as it is new space
usually located in a prime location on
the top of the building. The amount
of additional area can be constrained
by the structural and service capacity
of the existing building, rights of light

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Cost Model: Office Refurbishments

The use of chilled beams, chilled The complete refurbishment of a A BREEAM Excellent
ceilings and cooling mats are some building provides an opportunity
of the ways to create the right to review the services strategy. The
rating can be achieved
environment whilst maintaining ability to move a major plant from, in a refurbished
floor to ceiling heights. The use of say, the roof to basement can release
displacement air systems in existing area which can be turned into valuable
building and this
buildings is popular and enables the usable space. The freeing up of area on increases the
users to open windows and provide a roof can enable the potential to build
natural ventilation during the summer additional floors. marketability of the
months. This choice will be largely existing asset.
dependent on the ability to have a Finally, refurbishment also allows
suitable floor void to deliver the air to the opportunity to provide additional
the space. facilities such as bike stores,
showers and larger bin stores to
The creation of a welcoming entrance achieve BREEAM points. This is an
should be a major consideration in any important consideration with a major
refurbishment regardless of scale. The refurbishment. A BREEAM Excellent
first impression of the building is the rating can be achieved in a refurbished
entrance, and a high quality entrance building and this increases the
will enhance the marketability of the marketability of the existing asset.
building. Examples of how entrance
areas can be altered to create a more
inviting environment include:

–– The widening of the entrance.


–– Creation of greater volume by
creating double height space.
–– Introduction of greater transparency
and light.
–– Improved circulation and signage.
–– Improved disabled access, health and
safety and fire regulations to meet
current standards.
The refurbishment of common
areas such as toilets and lift lobbies
is also essential to a successful
refurbishment. The extent of the
refurbishment can range from a
refresh of finishes, which can be
done relatively cheaply, to a full
reconfiguration of the toilet areas,
including replacing sanitaryware,
finishes and services.

Angel Building, London


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Cost Model: Office Refurbishments

Other factors to be considered


with refurbishment

The extent and the success of a –– The introduction of secondary glazing. The base building
refurbishment is dependent on the
base building. The base building
–– The level of service infrastructure provides the
and plant space in the base building
provides the fundamental constraints that is available for use. Included in fundamental
to the level and nature of the this is the availability of existing riser
refurbishment. Some of the elements space to accommodate 21st century
constraints to the
of the base building are fixed and if technology into a 19th or 20th level and nature of
not ideal will need to be resolved by a century building.
design solution. the refurbishment.
–– Existing vertical circulation and the
impact on this resulting from an
Examples of possible issues to be increase in occupational density.
considered are:
–– Condition, capacity and quality of
–– The orientation of the base building. the base building. There is a risk
This could drive the requirement that the base building could contain
for extensive solar shading should deleterious material and asbestos.
the building be an east-west facing This would need to be addressed as
orientation. part of the refurbishment process as
would the achieving of an adequate
–– The quality of the existing external floor loading capacity. Additionally,
elevation. There may be a need to the capacity of the existing structure
adopt energy efficient measures may limit the potential to add area
to improve the facade thermal through additional floors.
performance and reduce the heat loss
from and heat gain into the space.
–– The air leakage rate of facades. This
will also contribute to the thermal
performance of the facade that will
influence the selection of the heating
and cooling systems.
–– The replacement of the existing
glazing.

The Johnson Building, London


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Cost Model: Office Refurbishments

Sustainability

It is generally considered that the –– External shading and facade For buildings offering
retention of an existing building is treatment can assist in the
considered more sustainable as it is reduction of energy consumption, limited potential
using existing building stock on 100% however, methods available such
as introduction of new glazing, and
for sustained uplift
previously developed land.
external shading is restrictive in in value, a small
refurbishments. The introduction of
As part of the new building design
secondary glazing can be considered refurbishment might
process, measures to incorporate
sustainable features go hand in hand.
for a refurbishment. provide an opportunity
With refurbishments the process is a –– Refurbishment projects can lend
themselves to innovative services
to enhance rental
little more challenging.
solutions that ordinarily would income ahead of
not be acceptable in the modern
Sustainable features for consideration
new corporate building. Exposed a comprehensive
in refurbishment schemes include:
services and use of thermal mass for redevelopment.
promotion of cooling for example.
–– Low water volume WC and urinals
and the inclusion of low water use –– Natural ventilation and mixed mode
sanitary equipment such as flow environmental control. This will be
restricted taps and showers. influenced by the size, location and
shape of the floor plate.
–– Introduction of lighting controls and
the extensive metering to monitor
the performance of the building and
occupants.
–– Green roof – This attenuates
rainwater and aids in the sustainable
drainage design.

Angel Building, London


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Cost Model: Office Refurbishments

Cost ranges

For buildings offering limited


potential for sustained uplift in value,
a small refurbishment might provide
an opportunity to enhance rental
income ahead of a comprehensive
redevelopment. A more extensive
refurbishment will close off the
opportunity for redevelopment for an
extended period. On the basis of this,
a developer does need to consider the
available opportunities. The options
open to a developer can be defined
as follows:

REPAIR RE-MODEL RENEW


Minor Refurbishment Medium Refurbishment Major Refurbishment*
Scope: Investment is focussed on This usually involves a full Works include significant
common areas and involves upgrade of the existing structural alterations
essential repairs only. building services and and may also include the
Often carried out during finishes but stops short of replacement of facades and
occupation. major structural alterations. roof finishes. The complete
If occupied, then some renewal of internal fittings,
decanting and phasing of finishes and MEP systems.
works will be required. The building is typically
unoccupied.
Extension of economic life: Approximately 5 years Approximately 15 years Approximately 15 to 20
years.
Benchmark costs per sq ft £30 to £75 / sq ft of Gross £75 to £125 / sq ft of Gross £125 to +£175 / sq ft of
of Gross Internal Area: Internal Area Internal Area Gross Internal Area

The above indicative costs of the programme, to take into account


refurbishment are driven by the the potential for further changes in
design and condition of the building, scope based on better knowledge of
constraints on the design and the existing building. These figures
construction solutions adopted as exclude any occupier enhancements
well as by the scope of works required and furniture installation.
to meet the project objectives. All
projects are unique, and as a result, *includes category A fit-out.
cost ranges are much broader than for Costs current at 2Q2012
new build. Furthermore, substantial for central London location.
allowances for additional costs
associated with design development
and risk should ideally be retained in
project budgets until a late stage in

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Cost Model: Office Refurbishments

Cost models

The following are a series of cost Rates are current in second quarter
models covering the different ranges 2012 based on a central London
of refurbishment of a fictional central location. Furniture and fittings,
London office block. The varying levels professional fees and VAT are excluded
of structural intervention are covered
under options included with the cost
models.

The cost models are based on a


20,000m2 (gross internal area) building
comprising ground plus 10 floors. The
net internal area is 13,000m2. The
cost model assumes the presence of
an atrium. An option is included to
alter the atrium to gain office area.
Additionally, an option is included to
add office area through the addition
of a floor.

£ £/m2 % of
GIFA total cost

Repair: Minor Refurbishment (to Cat A)

Strip Out Works 650,000 32.50 5.56%


Strip out of existing office space 13,000m2 @ £50
Shell and Core Refurbishment 3,600,000 180.00 30.77%
Shell and core refurbishment 20,000m2 @ £180
Including:
- Cosmetic upgrade to reception
- Cosmetic upgrade to toilets
- Refurbishment of existing passenger lifts
- Refurbishment of existing fire fighting lifts
Category A Fit Out 5,000,000 250.00 42.74%
Allowance for Category A Fit Out to all office areas;
assumes using existing main plant (except AHUs);
existing raised floor and ceiling are retained 20,000m2 @ £250
External Works 50,000 2.50 0.43%
General refurbishment of external works 20,000m2 @ £2.50
Preliminaries and Contingencies 2,400,000 120.00 20.51%
Preliminaries (14%); Main Contractors Overhead and Profit (2%);
Design reserve (5%)and Contingencies (5%) @ £2,400,000

Total estimated construction cost -


Repair: Minor Refurbishment to Cat A 11,700,000 585.00 100.00%

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Cost Model: Office Refurbishments

Cost models

£ £/m2 % of
GIFA total cost

Re-model: Medium Refurbishment (to Cat A)

Strip Out Works 900,000 45.00 6.30%


Strip out of existing office space 20,000m2 @ £45
Shell and Core Refurbishment 6,445,000 322.25 45.09%
Shell and core refurbishment 20,000m2 @ £295
Notes:
- No major structural alterations - see Options below
- No work to existing sub-structure - see Options below
- Replace existing AC system with upgraded cooling to perimeter
- Repair and redecorate existing doors throughout
- Redecoration of cores
- Refurbish and redecorate floor, wall and ceiling finishes to Landlord areas
- Allowance for minor repairs to facade
- Partial re-use of existing services
Refurbishment of main entrance reception 130m2 @ £1,000
Minor refurbishment of toilets 21nr @ £5,000
Refurbishment of existing passenger lifts 5nr @ £50,000
Refurbishment of existing fire fighting lifts 2nr @ £30,000
Category A Fit Out 3,900,000 195.00 27.28%
Allowance for Category A Fit Out to all office areas; assumes
reuse of raised floor (level and replace damaged as necessary);
reuse some Cat A plant; replace ceiling; redecorate 13,000m2 @ £300
External Works 50,000 2.50 0.35%
General refurbishment of external works 20,000m2 @ £2.5
Preliminaries and Contingencies 3,000,000 150.00 20.99%
Preliminaries (14%); Main Contractors Overhead and Profit (2%);
Design reserve (5%)and Contingencies (5%) @ £3,000,000

Total estimated construction cost -


Re-model: Medium Refurbishment (to Cat A) 14,295,000 714.75 100.00%

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Cost Model: Office Refurbishments

Cost models

£ £/m2 % of
GIFA total cost

Renew: Major Refurbishment (to Cat A)

Strip Out Works 1,200,000 60.00 5.92%


Strip out of existing office space 20,000m2 @ £60
Shell and Core Refurbishment 9,682,500 484.13 47.80%
Shell and core refurbishment 20,000m2 @ £400
Notes:
- No major structural alterations - see Options below
- No work to existing sub-structure - see Options below
- Replace existing AC system with upgraded cooling to perimeter
- New raised floor
- Level drylined ceilings
- New doors throughout
- New linings to cores and decoration
- New floor and ceiling finishes to Landlord areas
- Allowance for repairs only to facade
- New services throughout
Complete refurbishment of main entrance reception 130m2 @ £2,750
Complete refurbishment of toilets 21nr @ £15,000
Replace existing passenger lifts 5nr @ £150,000
Replace existing fire fighting lifts 2nr @ £130,000
Category A Fit Out 4,875,000 243.75 24.07%
Allowance for Category A Fit Out to all office areas;
assumes all elements are new 13,000m2 @ £375
External Works 300,000 15.00 1.48%
General refurbishment of external works 20,000m2 @ £5
Allowance for new Part L / Renewables Enhancements 20,000m2 @ £10
Preliminaries and Contingencies 4,200,000 210.00 20.73%
Preliminaries (14%); Main Contractors Overhead and Profit (2%);
Design reserve (5%)and Contingencies (5%) @ £4,200,000

Total estimated construction cost -


Renew: Major Refurbishment (to Cat A) 20,257,500 1012.88 100.00%

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Cost Model: Office Refurbishments

Cost models
Options: Adding Value by increasing usable space

OPTION 1
Partial Infill of Atrium Void

Remove existing atrium wall 500m2 @ £100 50,000


New pad foundations Item @ £20,000 20,000
New frame Item @ £70,000 70,000
New lightweight floor 350m2 @ £150 52,500
Lid to new space 40m2 @ £200 8,000
New atrium glazed wall 400m2 @ £600 240,000
Category A fitout 380m2 @ £375 142,500
Preliminaries (14%); Main Contractors Overhead and Profit (2%);
Design reserve (5%)and Contingencies (5%) @ £150,000 150,000

Total estimated construction cost - Option 1: Partial Infill of Atrium Void 733,000
Total additional Net Internal Area: 375m2 (4,036ft2)

OPTION 2
Replacing Rooftop Plant with Lettable Office

Additional foundation work Item @ £100,000 100,000


Frame to new floor Item @ £123,000 123,000
Strengthen columns Item @ £50,000 50,000
New roof slab and finishes 645m2 @ £210 135,450
Staircase extension Item @ £40,000 40,000
New external wall 700m2 @ £1,000 700,000
Roof plant enclosure 320m2 @ £450 144,000
Internal walls and doors 645m2 @ £15 9,675
Floor, wall and ceiling finishes and fittings to common areas 645m2 @ £10 6,450
Toilet fit out 2nr @ £15,000 30,000
Extend lifts 2nr @ £75,000 150,000
Category A fitout 645m2 @ £375 241,875
Preliminaries (14%); Main Contractors Overhead and Profit (2%);
Design reserve (5%)and Contingencies (5%) @ £450,000 450,000

Total estimated construction cost - Option 2: Replacing Rooftop Plant with Lettable Office 733,000
Total additional Net Internal Area: 645m2 (6,943ft2)

Acknowledgements
The authors would like to thank Paul Allen of Davis Langdon, an AECOM company, Nicola Gillen of DEGW, an AECOM company,
and Ian Woodman of AECOM for their assistance in the preparation of this article.

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Program, Cost, Consultancy
www.davislangdon.com
www.aecom.com

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