Selling commercial buildings

People who work in big cities and choose to live outside the city in a quieter neighborhood with a little more room are happy to leave behind the hustle and bustle of living in the city. They don’t want to leave behind the conveniences of the city.

That means there are calls for gas stations, bank branch offices, movie rental stores and self-storage facilities. Someone has to erect these buildings and those developers or building owners are usually looking for someone who can quickly erect an efficient, durable, maintenance-free and attractive building.

That could be right in your wheelhouse.

Hoosier State Construction in Mitchell, Ind., has maintained an equal balance between taking on residential and commercial projects. “Residential is our bread and butter. That’s where our focus is,” says Ty Sovern. “We don’t market ourselves as a commercial builder. If we see a commercial project that fits what we do, we pursue it, but we rarely get into bidding on commercial projects.”

Sovern says “99.9 percent” of Hoosier State’s projects are post-frame, whether they are commercial or residential. The commercial projects Hoosier State takes on are negotiated projects with new customers or projects for repeat customers. “We’re fairly comfortable with commercial projects, but we’ll never be all commercial,” he says.

Because Hoosier State is versatile enough to work on both commercial and residential projects, Sovern has plenty of work for his crews in their central Indiana market. The problem is keeping enough crews to get the job done.

“It seems like there are not enough young people coming into the business to replace the ones that are leaving,” he says. “Housing has slowed a bit here, so there are some qualified applicants coming in looking for work, but it’s an ongoing problem.”

Sovern believes crews prefer the garage or workshop jobs compared to the longer-term commercial projects. “With commercial jobs, there are a lot more changes going on and subs afoot,” he says. The residential jobs are less hectic.”

Look before you leap
Like anything else, it’s important to know what you’re getting into when you choose to get involved with erecting commercial buildings. When you’re erecting a public building in a suburban area, everyone wants to know what you’re up to.

“In our area, agricultural buildings typically do not require any engineered building plans and have minimal special approvals,” says Valerie Kramer, who co-owns Scottdale Builders in Scottdale, Pa., with her husband Tom. “In contrast, with commercial projects, there is a significant amount of upfront work to gain all of the approvals required as well as to work through details with an owner. There is typically a township planning commission that needs to see and approve a site plan and then a separate process of approving building plans that varies by township. Although all of our work is in Pennsylvania and the state uses the IBC 2006 building code uniformly, the process steps can differ and the site plan related requirements are not uniform. Between working with the customer on their requirements, preparing engineering drawings and gaining all of the required approvals, the pre-planning work can take 3 to 6 months.”

If that’s not enough to scare you away from commercial projects, consider the finishing work that goes into any commercial project compared to an agricultural facility. Scottdale’s business varies annually between 20 and 40 percent for commercial projects. Kramer says commercial buildings represent a larger percentage in dollar volume because they are typically larger projects.

“Commercial projects typically involve more parts and pieces than a building such as a riding arena,” Kramer says. “There is a building shell, as in all projects, but then typically there is also significant interior build-out, including walls and interior finish work, electrical and phone lines, heating and cooling systems and plumbing.

“The customers differ and, in general, are more sophisticated. They are used to having meetings in conference rooms with agendas as opposed to in the field with paper and pencil sketches. The customers for commercial buildings have different focuses and concerns than in the agricultural market. They are less concerned with the construction details — they have decided to work with us because they feel confident we know how to build a building and they don’t want to discuss all of the construction details. They are very concerned about the details that will impact them everyday — things such as the floor plan layout, the types of doors, window placement, flooring, etc.”

Decisions and more decisions
Kramer says there is a multitude of design decisions with commercial buildings. Customers often want advice on things such as color selections. “We can provide this for simple office settings, however, in some larger retail projects, customers have called in interior designers to help with those decisions,” she says.

Projects obviously vary in size and difficulty. The bigger and more difficult a project is, the tougher it can be to submit a profitable and successful bid. So be careful. You will build a relationship with a building owner on a commercial project — it’s all part of totally understanding his or her mission.

Like any other project, the goal is to make the customer happy and that can be a challenge for a commercial project — building owners may be a little pickier considering they will be presenting their business in the building. You’re building the face of their business and that is important to them.

Kramer says Scottdale doesn’t seek out commercial projects, but rather, remains somewhat selective. Depending on the trend in your area, you can do as much or little commercial building as you’d like. It’s always good to be versatile.

“It was not a specific targeted marketing effort,” she says. “We did more agricultural work when there was more of that type of work in our area. Now, there is more of a shift to developing commercial areas — more businesses are expanding in the area. The projects we consider commercial include buildings that combine some retail or office space and some warehouse or shop space.

“It is fun to work with a business owner who is expanding their business to make their vision a reality,” Kramer continues. “There are many different types of decisions to be made and it is rewarding to help the owner work through the process. Also, the projects are very visible and provide our company with exposure in the community.”

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