How to Budget for a Property Renovation

Date: September 30, 2024

How to Budget for a Property Renovation: A Simple Guide

Renovating a property—whether it’s a commercial building, apartment complex, or a single office—requires careful planning and budgeting. It can be a complicated process. However, understanding the steps and managing costs will help keep your project on track.

This blog will guide you through the budgeting process, covering everything from commercial remodeling to small bathroom makeovers. Whether you’re working with commercial remodeling contractors, apartment renovation companies, or multi-family general contractors, having a solid budget will set the tone for a successful renovation.

Step 1: Identify the Scope of the Renovation

The first step in budgeting for a property renovation is to determine exactly what needs to be done. Are you focusing on a specific area, like an office renovation, or tackling a larger commercial building renovation? Defining the scope helps you plan for the specific costs tied to different parts of the project.

Small bathroom makeovers can be more affordable but still require attention to detail, especially in commercial properties. Consider materials, fixtures, and labor costs when planning.
Office renovations might involve remodeling contractors to change layouts, upgrade electrical systems, or add new office furniture and decor.
Commercial remodeling projects often involve structural changes, which can increase costs because of building codes and permits.

Step 2: Estimate Costs Based on Property Type

The next step is understanding the costs associated with your specific property type. For example, commercial real estate cost per square foot can vary significantly. Factors like location, the type of building, and the extent of the renovation are all variables. Similarly, costs for multi-family construction and multi-family general contractors might differ from those for an office renovation.

Here’s a breakdown of different types of renovations and their estimated costs:

Commercial Building Renovation

Interior Remodel (non-structural): Updating walls, floors, and fixtures without altering the building’s structure typically costs about $50 – $150 per square foot.
Full Build-Out: The average commercial real estate cost per square foot for renovations can vary. Typically, you can expect $100 to $300, depending on the complexity of the work.
Restroom Renovations: Upgrading or adding bathrooms typically costs $200-$500 per square foot.
Facade/Exterior Renovations: Enhancing curb appeal with new signage, windows, or structural repairs can range anywhere from $40,000 – $250,000 depending on the scope.
NOTE: Most commercial remodeling contractors have experience with structural improvements, HVAC system upgrades, and safety compliance measures.

Office Remodeling

It’s important to hire the right office renovation contractors who specialize in modernizing workspaces.
Interior Remodel: Open-concept layouts, cubicle installations, or breakout areas typically cost $50 – $200 per square foot.
High-End Remodel: Executive offices, boardrooms, high-quality materials, and custom features can range from $150 – $300 per square foot.
Lobby and Reception Areas: First impressions matter, so a modern, professional entry that can elevate the space is typically $75 – $250 per square foot.
Restroom Renovations: Enhancing accessibility and aesthetics for employees and visitors is $200 – $500 per square foot.
Mechanical and System Upgrades: HVAC, lighting, and smart office technologies for energy efficiency can be $20,000 – $150,000 depending on the building size and systems.

Multi-family Remodeling

Renovations for apartment buildings or condos often involve common areas, exterior upgrades, and interior remodels. Partner with multi-family general contractors who understand the unique needs of large-scale residential renovations.
Unit Updates (per unit): This includes kitchen and bathroom remodeling, painting, and flooring.
- Basic Remodel: $25,000 – $50,000 per unit.
- Luxury Remodel: $50,000 – $100,000 per unit.
Common Area Updates: Hallways, lobby upgrades, fitness centers, and community spaces tend to range from $75 – $200 per square foot.
Facade Renovation: Modernizing exterior siding, windows, and landscaping has a wide range but is typically between $100,000 – $400,000 depending on the materials and scale.

Step 3: Include Soft Costs and Hidden Fees

When budgeting for a renovation, it’s easy to focus only on the construction costs. However, you must also account for soft costs such as permits, design fees, and project management. These costs can significantly impact the total budget. With IOC Construction, these costs are included. We never charge extra for things like project management or extra design fees.

Design and Architectural Fees: If your project requires major layout changes or a new design, you may need to hire architects or interior designers. The fees for these professionals typically range from 5% to 15% of the overall project cost.
Permit Costs: Depending on the scope of your renovation, you may need to obtain building permits. Costs can change based on where you are and what type of renovation you choose. Generally, they range from a few hundred to a few thousand dollars.
Unexpected Costs: Every commercial construction project has potential surprises, such as outdated electrical wiring or structural issues. It’s wise to include a contingency fund that is 10% to 20% of your total budget. This can cover any unexpected expenses.

Step 4: Work with the Right Contractors

Hiring the right professionals for your project makes a difference in staying on budget and finishing on time. Here are some key considerations when choosing contractors:

Commercial Remodeling Contractors: For large-scale renovations, you’ll need experienced commercial renovation contractors who understand local building codes and have a history of delivering high-quality work on time. Look for contractors with expertise in similar commercial property remodeling projects.
Condo and Apartment Renovation Contractors: Hiring contractors who are familiar with handling large residential buildings is crucial. They should be able to manage multiple units and coordinate with residents to minimize disruption.
Office Remodeling Contractors: Office spaces require contractors who can transform existing layouts into modern, functional workspaces. Look for office remodeling contractors with a portfolio of successful office renovations.

Step 5: Plan the Renovation Process

Once you’ve set a budget and chosen contractors, it’s time to outline the renovation process. This is where project management comes into play. Work closely with your contractors to develop a timeline and sequence for the work.

Establish a Timeline: Create a realistic timeline that includes each phase of the renovation process. Factor in time for obtaining permits, ordering materials, and any potential delays. Be sure to communicate this timeline to all involved parties, including tenants or employees if applicable.
Prioritize Projects: Not all renovation work needs to happen at once. Prioritize areas that will provide the greatest return on investment (ROI). In a commercial remodeling, this could mean high-traffic areas or improving workspace efficiency in an office remodeling.
Monitor Costs: Keep a close eye on your budget throughout the project. Regular check-ins with your contractors and reviewing actual costs vs. estimated costs can help avoid budget overruns. At IOC Construction, we use JobTread to send automatic updates, so you can skip this step.

Conclusion

Budgeting for a property renovation shouldn’t be overwhelming. By carefully identifying the scope of your project, estimating costs, accounting for soft expenses, and working with the right contractors, you can ensure that your commercial construction project stays within budget. Whether you’re tackling a commercial building renovation, apartment renovation, or office renovation, planning is the key to success.

At IOC Construction, we specialize in a wide range of renovation projects. Our team of experienced commercial renovation contractors is here to guide you through every step of the process. Contact us today to discuss how we can help you stay on budget and complete your next renovation project with ease.