Quote:
Originally Posted by ametz
...And on that note...
For anyone here who's in the real estate industry in whatever capacity, is there room for a developer or an architect to upsell a client on high quality design (yeah, i know it's subjective), the idea being that their property will ultimately be more desireable and therefore more profitable in the long run? Or is that just naive?
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They don't look at their returns on a long-term enough perspective for it. Unless you get a client looking to make a statement, which in developer-speak means the client is putting their own money on the line to "upgrade" to a higher level of design, you're getting cheap developer-schlock because it's the highest impact to their own immediate bottom line.
On a smaller scale, for instance, a developer will budget for say, a million dollar core & shell building. This might be four block walls with face brick, a roof, and whatever glass is required by code. If the tenant wants to have an interesting storefront, an allowance is created in the lease and the tenant has to kick in its own money. Maybe they split the difference in cost as part of the negotiations.
If the tenant wants to make a statement at a location, and alter the building, the developer says, "Here's my million dollar box, how different do you want it?"
The tenant comes in with their own design concept, and that gets budgeted accordingly, let's say to $1.6 million. Then everyone freaks out and says it's way too much and it gets VE'd and the cost differences get negotiated, and somewhere there's a middling design that's way better than the original nothing box, but not as good as what could have been, and it's like $1.3 million. The developer and the tenant figure out some way to divvy up that $300K so that either the tenant kicks it all in up front, or so that the developer will recoup the "extra" $300K he spent up front within a short period in the lease rates.
Generally, the developer always wants his profit as high as possible, and as fast as possible. Few of them could seem to care less about how things actually look at the end of the day.