6 Tips For Transforming A Warehouse Into A Loft-Style Office

Once a collection of warehouses and storage facilities just outside of Chicago’s Downtown Loop neighborhood, the West Loop has undergone a real estate transformation comparable to New York City’s Meatpacking District. Over the past 20 years, the neighborhood’s low-rise warehouses have become the home of trendy restaurants and a mecca for nightlife in the Windy City. Recently, the West Loop has also become an attractive destination for large companies like Google and Sara Lee, as well as small startups and artists.

But the raw, brick exteriors and loft-like floor plans companies flock to come with their own set of challenges. For office tenants accustomed to the Class-A, turnkey experience of leasing space in Chicago’s central business district, the process of an interior build-out in the West Loop could come as a shock, Skender Project Executive Brian Bukowski said.

“They are going to have a lot more upfront mechanical, engineering and plumbing costs, buildings might not be set up to accommodate the businesses that the tenant wants to use the building for,” Bukowski said. “If you are used to a traditional leasing process where you move in and are provided a lot of landlord-provided accommodations, in the West Loop you will likely have more upfront costs for what you would otherwise be provided.”

When looking to move into a raw space like a warehouse, tenants must be prepared, from a budget and time perspective, for the amount of work the build-out requires. Identifying these challenges upfront can help prevent a new office from becoming a burden.

Here are six ways office tenants can build out the space they desire without going over time and budget.

1. Don’t Be Blinded By Design

Young professionals love loft-style offices. It’s a concept that has been covered several times over and has companies clamoring for offices with high ceilings, exposed bricks and ductwork, and plenty of lounge space. But in looking for the perfect office to attract and retain talent, some company decision-makers might overlook the necessary infrastructure that allows offices to run efficiently and best serve employees.

“Make sure you are paying attention to the actual cost of construction,” Bukowski said. “I think it’s easy for people to fall in love with the look of these buildings without realizing the amount of work that needs to be done to convert that raw environment into an efficient workspace.”

2. Involve Your Contractor Early

A way to prevent form from getting in the way of function is to have a contractor involved in the process before the lease is signed.

“When they are doing the building evaluation with a broker, have a contractor do that walk-through with you,” Bukowski said. “Most contractors are happy to get involved that early.”

The contractor will be able to give the prospective tenant insight into the cost of the build-out process that a broker cannot. A missing HVAC system, for instance, could add upward of another $10/SF to the overall building cost.

The contractor can also identify potential structural problems that could impact the tenant’s business activity. A timber-framed warehouse might not be able to support the weight of heavy laboratory equipment and would require additional structural support.

3. Read Through The Work Letter Carefully

Because office tenant build-outs in industrial spaces require a significant amount of construction work, landlords typically provide a tenant improvement allowance as part of the lease package. These sweeteners range from the landlord covering all costs of design and construction to just mechanical improvements.

It is critical that the details of which costs the landlord will cover and how much say the tenant has over the build-out process is documented within a work letter. The work letter should explain the scope of work being conducted, the project budget and landlord contribution. It should also identify whether tenants can choose their own architects and contractors.

Unexpected costs can be the difference between a deal going through and falling apart.

“The tenant should have a contractor involved in that process as well as the broker to make sure that the landlord is giving the tenant what they would otherwise get in a competing building,” Bukowski said. “People will turn down an opportunity in the Loop because of the lure of the West Loop, but you should get everything you get in the Loop and more if you are going to take the leap and come out here.”

4. Don't Ignore The Building Envelope

In a finished, Class-A office building in the Loop, office tenants don’t have to worry about the exterior of the property affecting interior build-outs. But in an older warehouse in the West Loop, features like exposed brick might offer limited building insulation from the elements, impacting everything from energy costs to employee comfort. If a business depends on having comfortable, airtight space, tenants might need more perimeter wall enclosures.  

“You move to a building in the Loop, you expect the building to have an energy rating and the perimeter of the building to handle anything your interior office build-out can throw at it,” Bukowski said. “In the West Loop, you might be moving into an old brick building that leaks air, which will either add money to your operational costs, if left unfixed, or upfront construction costs to resolve it.”

5. Consider Acoustics And Ceilings

Similar to brick walls, high ceilings might play into popular design trends and evoke a loft aesthetic, but that could cause problems with acoustics. A company of 50 people in a room without any walls or structures to absorb sound will result in a loud, and often unproductive, working environment. Tenants might have to compensate for noise with additional structures, raising the budget, Bukowski said.

Opting out of drop ceilings can also have an impact on fire safety. The tenant might have to relocate sprinkler heads to stay compliant with building fire codes.

6. Work With A Contractor You Can Trust To Meet Deadlines  

Whereas a tenant build-out timeline is shorter for a traditional office space in the CBD, the extensive work required for a warehouse build-out can stretch schedules longer than the tenant anticipates. It is important for the tenant to work with a contractor that has the skills and experience working under tight deadlines to prevent costly delays with a project that impacts business operations.

“The West Loop is a little more Wild West, with a significant variance in the quality of general contractors working in the neighborhood," Bukowski said. "Just because you’ve got a lease saying you will move in within six months, that doesn’t always mean it will happen. Working with a union contractor mitigates risk and bolsters the successful delivery of your project.”

This feature was produced in collaboration between Bisnow Branded Content and Skender. Bisnow news staff was not involved in the production of this content.