Legal Space: Nuts & Bolts of Project Management for Relocation and Renovation

Presented at the 2005 ALA Conference & Exposition
By Suzanne Heidelberger, Director of Real Estate, Skadden, Arps, Slate, Meagher & Flom LLP
Summarized by Debra J. Holland, CLM
June 2005

Renovation to an existing office or complete relocation to a new site is a very exciting project, but the enormity and details involved can be daunting. Ms. Heidelberger’s presentation began by focusing initially on identifying what real estate means to a law firm. There are three drivers of real estate – owners (partners), clients, and personnel. Most law firms want their offices to represent stability, value, judgment, and an atmosphere that will ultimately define the culture of the firm. The office environment may impact recruitment, retention, diversity, flexibility, and privacy. All of these factors should be given consideration.

We begin this large task by developing a project management plan, thereby breaking each phase of the project into smaller more manageable projects with their own goals and deadlines. Legal administrators typically are skilled at developing this type of plan because the day-to-day scope of their profession is a series of project management plans.

The combination of project management and real estate will ultimately lead to occupancy goals for the firm. The project will need to satisfy the Owners (Partners), meet the needs of personnel & clients, and support the firm’s priorities and culture.

The decision makers must be involved prior to development of the project plan, and opinions may differ significantly. Expenditures come directly out of the partners’ pockets, making it a very personal decision. Owners (partners) must evaluate the business growth and occupancy needs. They must also give consideration to the image or quality of the building and whether their clients will feel comfortable coming into the space. Decisions will need to be made about whether the floor plate will be adequate, whether columns within the space limit flexibility, what type of window spacing will there be, will there be enough natural light, where are the elevator banks located in relation to the space, who are the other tenants, are there signage provisions, amenities, adequate freight elevators, and a number of other decisions that must be addressed early in the process while visiting potential sites.

There are four essential components initially:

1. Timeline

2. Budget

3. The Right Team

4. Strategy for Success

Early planning improves Design, Coordination, and Communication resulting in reduced capital expenses, reduced ongoing occupancy costs and better results overall.

Ms. Heidelberger breaks the plan down further into phases and steps listed below:

The Project Planning Phase

Step 1. Review critical dates in the lease.
Step 2. Review your current situation and assess market factors and opportunities.
Step 3. Review current occupancy and capacity.
Step 4: Develop Headcount projections.
Step 5: Review corporate policies and procedures.
Step 6: Educate yourself about the local real estate market.
Step 7: Preliminary budgeting.

Occupancy expenses are typically the second largest firm expense, so the overall objective is to decrease real estate expenses over the long-term and maximize operational efficiency in the new space. The key decision makers will need communication, facts, education about the issues, and project updates.

The Evaluation Phase

Step 1: Define overall goals, objectives, schedule.
Step 2: Begin preliminary budgeting for occupancy and construction.
Step 3: Identify alternatives in the market.
Step 4: Conduct market survey and site tours.
Step 5: Building evaluation –current space vs. alternatives.
Step 6: Consider all options.
Step 7: Develop and distribute RFP’s – receive proposals.

Options during this phase:

• Stay put – do nothing.

• Cosmetic refresh – least expense.

• Blend/extend on the same floor or onto new floors.

• Full renovation in place with phased construction – this will require swing space while you are refitting, is disruptive and costs more than a full move.

• Relocate – best chance of targeting goals.

Once the decision has been made, wrap up the project planning quickly and proceed to build your team.

The Negotiation Phase

Step 1: Analyze RFP responses, submit counter proposals.
Step 2: Letter of intent negotiations.
Step 3: Cash flow analysis; test fits, engineering review.
Step 4: Occupancy cost budget review.
Step 5: Preliminary renovate/relocate cost reviews.
Step 6: Renovation or relocation decisions.
Step 7: Letter of intent execution.
Step 8: Lease negotiations begin.

During the RFP process it is important to identify “hot buttons” so you can trade for those things that are important to you. The landlord may reimburse test fits up to 10 cents/rsf.

The Design Phase

Step 1: Design process, programming, schematic design.
Step 2: Technology consideration.
Step 3: Furniture planning, lighting, AV, etc.
Step 4: Establish timing of construction/phasing.
Step 5: Construction RFP and negotiation.
Step 6: Construction budget review – hard and soft costs.
Step 7: Lease execution.

This is an important part of the process because many factors must be considered during this phase. Quality of lighting, technology access, acoustics, flexibility, and workflow confidentiality are all considerations during this phase. The design must meet the needs of owners, clients, & support staff. At this point you must also consider how the design would be affected if you later took on additional space.

Technology must be the first consideration after the deal is in place. Do not skimp in this area, but rather install the best infrastructure with dual connectivity – even if you may not use it.

Architects and/or furniture dealers will prepare specs for placement of structures and do basic fit-outs. Millwork vs. furniture is considered during this phase.

The Construction Phase

** It is during the construction phase that the true cost of the project is realized. **

Step 1: Monitor construction.
Step 2: Weekly coordination meetings, change orders, walk-throughs and punch list.

The Relocation Phase

Step 1: Move planning – sequencing.
Step 2: Move management.
Step 3: Space is occupied.
Step 4: Restoration of existing space.

Move planning requires a sense of humor and a lot of patience. The project manager should investigate access to the building and all rules & regulations in advance. Keep the firm’s operation intact by securing alternate location for temporary work. This is an excellent time to do file purging. Develop a spec book for all furniture purchases so you can find matching pieces later. Plan your project carefully but expect the unexpected.

Obtain the best possible advice or service that you can afford. Hire members of the team with only your interest at heart. Obtain competitive pricing. Ask questions and be proactive. The right team will include the landlord, the building manager, and the building engineer. Other members of the team will be architects, construction team, electrical engineer, expeditor, furniture dealer/supplier, mechanical engineer, movers, project manager, real estate broker, and a structural engineer. Consultants may be used and could include Acoustic consultants, AV consultants, lighting consultants, art consultants, move consultants, security consultants, technology consultants, and signage consultants.

This project requires informed well-thought out decisions on a day-to-day basis in response to an ever-changing environment. Communication is critical. Deliver concise, clear reporting and work with the right team. Be persistent!

Both the strategic and operational plan should include the following:

1. Know what you have, know what you want.

2. Stay up-to-date with market activity.

3. Keep real estate strategy in mind- goals and parameters.

4. Be opportunistic – “seize the day”.

5. Keep track of the situation.

6. Communicate, communicate, communicate.

There will be challenges and successes, but teamwork is key. To be effective in what we do, we need to be at the table; we need to understand what is going on in the law industry and in the real estate industry, and we need to know what our firm is doing, we have to ask questions, listen, and communicate. We cannot stand still and just take orders. We will not be able to deliver or even meet the expectations if we just take orders. Being there and being involved is the key to success.

Contact me for a copy of the meeting handout on this topic. djh@seibel-eckenrode.com

Additional resources:

ALAME
Legal Management Resource Center (LMRC) - www.alanet.org/home.html 
-- link from this site to the LMRC portal.

BOMA – Building Owners and Management Association - www.officefinder.com

NOLO – www.nolo.com

Today’s Facility Manager – www.todayfacilitymanager.com

Steelcase – www.steelcase.com

Interior Sources: www.isdesignet.com

Law.com – www.law.com

Facility City – www.facilitycity.com

American Institute of Architects (AIA) – www.aia.org