• Jon Davis

Building a project at $200 sqft. is a MYTH!

The inspiration behind creating this blog came from an understanding of the entire Real Estate development process.

Phase 1: The acquisition stage, permits, design-engineering, and financing

Phase 2: The Construction phase


Every aspect of the process is significantly important, however, every developer at the beginning and end of every project is asking themselves, how much money is going into my pocket, and how fast will it get there. Foundational Builders Corporation is a General Contractor, specializing in multi-family construction, so let's talk about the items we can control.


A developer has a project in mind they want to acquire, or have acquired. I get a phone call that sounds something like this.

" Hey Drew, I have this project near Koreatown its 40 units, my budget is $200 sqft. Can you take a look at the conceptual plans and see if this can happen."


The entire point of this article, is to inform developers, architects, investors that this $200 sqft. construction cost is a false-equivalency fallacy.


Building A is 20,000 sqft., so the price should be $4,000,000

Building B is 21,522 sqft., so the price should be $ 4,304,400.


This mindset is 100% wrong and let me tell you why:


What if Building A is Type 3 Construction, while Building B is Type 5 Construction?

Building A is calling for thermally-broken Fleetwood Aluminum windows

Building B is calling for Anderson 100 Vinyl windows


Building A has 20/30 stucco finish

Building B is calling for a smooth finish with elastomeric paint over it.


Building A has an on-grade parking garage

Building B has 2 levels of underground parking


Building A has temp shoring, we are excavating and trenching out 2 feet of dirt

Building B we are using a complex tieback shoring system that requires us to shore 24 feet below grade.


Building A is in Los Angeles, so DWP is doing all the wet utilities and dry utilities.

Building B is in Monterey Park and has a comprehensive street improvement plan, calling for a new bus stop, street lights, and a new curb.


Let's not forget the fire hydrant the city of LADBS wants you to pay for.

None of this is factored into the $200/ sqft. capital expenditure on your fancy excel spreadsheet.


No two buildings are the same every building is different.

Some buildings are stronger than others

Some buildings are uglier than others

Some Developers care about a nice aesthetic building, and some Developers care about the rental income and the occupancy rate. We get it.


As a contractor, we don't control that all we can control is ensuring the project is estimated to plan as we help you build your budget. A good contractor will help you build your project, but a great contractor, such as Foundational Builders Corporation will treat your project as its own and deliver the project on schedule and on budget, while still helping you achieve the design the architect developed.


President

Andrew Robles




51 views0 comments