What's the first step to building something?

Question

At some point, I know I want to have something built. Most likely a hotel, but could be SFH's, or maybe all of the above.

Is the first step to go to an architect? Will they help me design the building as well? What are normal prices for blueprints? Are they drawn so that contractors can look at them easily and give me their bid? Are they drawn so that the Building Department will accept them?

Has anyone ever tried using plans from sites like HomePlans.com? Are there any similar sites that have pre-made hotel blueprints?

Mike Garrett · Answer

Patrick, These guys know their stuff (I've followed Jared for some time). From my perspective, i think you should hire a architect/planning office to do a feasibility study. Through this study they study the market, the land, the zoning, the jurisdictional permit requirements (including land use, which in itself can be a very long process, up to 2-years in Seattle), as well as discuss what your goals and objectives are for the property (like maximize profit). They will then provide you with a detailed report that outlines the most prominent paths that navigate all the pieces. They should be able to give you relatively accurate construction and design costs based on this investigation.

Best of luck.

Jared W Smith · Answer

Nope. These sites have very generic and do not take into consideration things like, building codes, zoning requirements, light and air requirements, site orientation, utilities, soil capacity for foundation types, etc. They may be a starting point as to what you like, design wise but they are cookie-cutter at best. If your architect has to make too many alterations to the generic plans, then it's better off just have the architect come up with something custom in the first place. Generic plans for a home is one things, generic plan for a hotel (if they exist) would need to be highly specific and catered to a region if not to a certain area within a state. This would be hard to come by unless an architect that works in the niche has several models that they've completed which will work.

Your initial questions on how to get something built is highly dependent on what you want to build. Yes you will need an architect however it's likely, especially for larger commercial properties that you will need a team of design and specialty professionals. Along side the Architect would be a Civil engineer (very important in the beginning for site development, bring utilities onto the site and dealing with proper drainage), geotechnical engineer (for soil testing and borings which will help inform the structural engineer on what the land can physically support), structural engineer (for foundation design and code required bracing and support systems within your building), and a bunch more.

There's no way to put a price on "blueprints" when you don't know what you want or where it will be built yet. (Side note- we don't use blueprints much anymore. Industry standard is "Construction Documents" or CDs) Yes they are drawn up for both the Contractor to bid on as well as for the Building Department/Municipality's approval. Please also realize an architect brings more than 'the completion of CDs' to the table. A good Architect is your design team leader and helps you to create a Program (what you want/need in the building sized appropriately for you/the end user) while taking the site and aesthetic into consideration. They organizes your team of design and specialty professionals and oversee each phase of design and usually also during construction.

You need to assess what you want to build and where. Then I think you have some general design, construction and zoning research to do within the locale you wish to build. At which point then you will be ready to reach out to design professionals with a course of action in conjunction with securing the land.

Jared W Smith · Answer

Actually No. Depending on where you build (excluding rural areas where building rules are very laxed) the building department will not accept generic building plans and a plot plan/site plan. Generic plans are possibly a starting part, if the plans are very good/detailed. Most building departments aren't going to be able to hold your hand through the process especially for a commercial building. They will give you general info on their permit process and point you to the building codes and zoning ordinance. You will have to decipher what's required and produce it or more than likely engage and hire an architect/engineer.

Jim Adrian · Answer

You my friend really need to talk with a local architect and developer to get things in perspective.  I would hate to see you get upside down.  Its great you are asking questions but you still have a lot more to learn.

Not sure how you got to $10m figure, none the less follow along...  So $10m divided by 90k sf =  $111 per sq ft.  This is extremely low!   Commercial projects run in the $250 or more per sq ft price here in the Midwest for comparison.  I took a quick look at 2018 RS Means "Square Foot Costs" book (they have several different books)  for 95k sq ft hotel will run $180 per sf with an eifs façade.   The cost goes up from here and this is very plane jane.

Look at all the different hotels brands and how each has its own unique identity.  If you build a marriot style hotel and only holiday inn is interested, now lobby finishes will not match corporate standards.

For 135k in fees I have no idea what you are getting. This may not include the other discipline fees; civil, structural, mechanical, plumbing and electrical.   6% of $10m is $600k.    Understand what is being provided and not provided for the services you are requesting.  Proceed slowly and with great caution. I hope this helps you.

Best of luck!

Joel Owens · Answer

Do you have the money yourself to do a hotel project like that? If you don't then what people usually do is go work for a hotel company or development company in the real estate section and learn the process that way.

New development you can lose your shirt pretty quickly and the costs can mount up. There is a lot of time and front loaded costs where almost everyone else gets paid but the developer. The developer  waits (along with the passive partners) and takes on the huge risk until it pays off (maybe) in the end. The developer can front load a few fees going in to get paid right away but is small compared to the risk factor. I have friends that own millions of sq ft of property and they develop new maybe 20% of the time. To take that risk the upside has to be greater than buying existing stabilized or turn around properties to stabilize that cost less per sq ft than to build new. Building new costs are up for labor, legal, materials, etc.  The big developers who churn out project after project can build for much less rates per sq ft. Example mid size MTNL in some states might run 115 a foot before interior TI and other costs for one off type projects for small developers. The big developers turning 10 to 20 projects a year or more might get it done for 85 bucks a foot. A small developer can't generally compete with the big developers pricing structure so this is why smaller developers might bring in a JV larger developer on projects. They get their savings model and diversify risk and they likely understand the microeconomics of the market better and have local lifelong connections to get projects approved. If it's just a big developer coming into a town with no local ties that can be a uphill battle.

There is a TON,TON,TON of stuff to learn with developing properties. Your modeled returns have to be MUCH HIGHER to passive investors waiting for the return for back end equity and total IRR.  When doing new development you have to predict out market cycles, supply and demand, and make sure your projections are not overinflated. Right now top of cycle in many markets so many are focused on smaller projects with forward commitments by tenants and non-refundable hard money to the developer.

Jim Adrian · Answer

An architect won't touch a hotel for $40k and if he does that's the last guy I want on the project.  Either they are cutting corners and you will be in trouble during construction or a lot of things will be out of scope of work and will be asking for more money.

Hotels are typically built by chain companies ie Holiday Inn.  Those companies come with their own set of plans to be site adapted.  This is part of their brand identity.  You simply can't build a generic hotel and have a company take over.  This only works for a mom and pops place to my knowledge.  But I could be wrong.

My quick dirty math says 135k is a good price and to take it.  One thing people don't realize is how long it takes to create "The Specification Book" aka "Project Manual" for the contractor.  Typically I start with 30 different spec sections (architectural only)  on project.  I budget 1.5 hrs to edit them and this is lean.  This translates to how fast can you read 800 pages?  Can you research product information, make decisions and edits  all in 45 hours. That's just over 3 minutes a page on average if you are following along at home.  The architect is responsible for about 65% of the project specs.  This excluded Division 01 specs handled by the project mgr or the architect.

Jared W Smith · Answer

@Patrick Philip

1- Your architect is talking about construction cost which usually doesn't include Architecture/Engineering fees, land acquisitions, Building department fees or holding cost. ALSO.. it's not $1.50/SF.. it's $150.00/SF. This is an average based on the locale/state. SO that's $270,000 to build a 1800 SF house. Architect/Engineering cost is a different animal.

2- I think you're missing my point and putting the cart before the horse. You are far removed from really talking about pricing. You have much to understand about the industry and construction first.

Patrick Philip · Answer

So you're saying it's unlikely that a major chain would let me flag my hotel with their brand unless it was built to their specifications?

I'm not sure if I would have wanted to do that or not.

Patrick Philip · Answer

Yea I suppose $135k sounds like a lot, but when you consider it would probably take over $10 million to build a 90,000 sf hotel, it's just a drop in the bucket.

Jared W Smith · Answer

@Patrick Philip

I can't help but notice you've overlooked the more important points I mentioned.

Nevertheless, if that's the architect fee then that cost is for a single family residential. This same cost is not interchangeable. The complexity and required tasks associated with a 90,000 SF hotel vs a SFH is apples and oranges. It cannot be overly generalized too much or the cost looses its accuracy.

What's the first step to building something?

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