Colorado-Real-Estate-Journal_482725

Page 14 — Office & Industrial Quarterly — September 2025 www.crej.com OFFICE I t wasn’t technically autumn back on Aug. 20, the date of Colorado Real Estate Journal’s annual Fall Property Manage- ment Conference. Still, the event is always a mental cue to think about golden aspen trees and enjoying the cool down. It is also the season of annual budget plan- ning, which for many in the com- mercial real estate sector is a real stress point. To shed light on the subject, at the conference, I had the opportunity to be a panelist on the session “CapEx Calculations: Setting Budgets and Controlling Expenses." Moderated by Judy Purviance- Anderson, RPA, BOMA Fellow, and associate director of asset services at Cushman & Wakefield, the panel shared personal experiences with practical takeaways I and fellow panelists – Jim Ellis, principal, Gen- eral Contracting, DCP; Mark Dean, president, Summit Insulation; Sean Wardroup, president, Jordy Con- struction; and Katie Winter, NCIDQ, principal/interior designer, Kieding – shared our expertise in building operations. Discussing large-scale capital projects, such as replacing a building envelope and targeted investments, like a lobby or com- mon area renovations, the budgets all follow a similar formula. “As a designer, I believe a success- ful capital improvement project balances creativity with financial responsibility – staying in budget is just as important as bringing the vision to life,” said Winter. The panel discussion touched on several best practices for achieving budget success. Common pitfalls and best practices n Step 1: Identify your needs. The most basic step, but it comes with challenges in identifying the detailed scope and the sequential scheduling. For instance, a boiler replacement isn’t just a boiler replacement; it's a comprehensive process. You will need to shut down the system, with temporary mea- sures potentially being required, and account for the pad and infra- structure needed to support the new boiler, including the structural load of the new boiler, and so on. n Step 2: Rough order of magnitude. Also known as the practice swing. Assuming you have access to historical informa- tion from the managed portfolio, past projects or vendor partners, you can insert placeholder values based on past boiler replacement. n Step 3: Budget fine-tune. For those familiar with the “5 Whys” concept of asking iterative questions, this is where we begin to look deeper. What makes this project different from historical values? Do we have a confined space to remove the old boiler? Is our boiler old enough to warrant concern about ACM? Is there a slippery slope of required code for the improvements? For optimal accuracy, engage preferred vendor partners to utilize their expertise. n Step 4: Presenting the budget to stakeholders. This is where the fun really begins. The upfront work noted previously will pay dividends. There will always be anecdotal ref- erences from historical projects that want to drive budgets down, which can create friction in the future as well. Know your true scope and numbers based on the market con- ditions to deliver a persuasive case to various stakeholders. Specific ways to reduce risk? Consider the following items: n Contingency/cost escalation. It is beneficial to be confident and believe that we’ve done our research to minimize contingency values. But that confidence can have consequences. Take a minute to recheck your work. The complex- ity of the project, the age of the building, and the age of the building system all impact the proper con- tingency value. As for cost escala- tion, it's simple: Things don’t get cheaper year over year. The ques- tion is only how much it will go up. n Vendor partner buy-in. Teamwork makes the dream work, they say. Even with early work, formal part- nering has the tangential benefit of scope and budget buy-in from partners. Create an atmosphere of accountability where achievements are celebrated. They will want to live up to the values discussed. n Cash flow. We’re facing limited available capital, but we’re also fac- ing the challenge of drawing on that capital within a tight timeline. This requires knowledge of poten- tial loan terms, payment timelines for both draws and payments to potential vendors and any deposit requirements for large equipment being replaced. This can be a benefit or a detriment to getting a project started in the first place. n Exploratory demo. Do your home- work based on the reality in the field. Make field visits with the team, open walls, and test systems and materials. Yes, it can be time- consuming and costly before there is a direct benefit, but risk man- agement and increased precision for the scope and budget will be a windfall. n Rule of 3s. This term exists for a reason. You may have a single pre- ferred vendor, but feel free to “poll the audience” to gather more data. It will help support your budget for stakeholders and allow for future options. Get multiple opinions on the more complicated capital proj- ect scopes. Budget season is tough on every- one, but we’re all in it together. By following these best practices, informed decisions can be made about the assets with available cap- ital resources. When in doubt about a particular item, call upon your colleagues for a second opinion. Our networks are not just transactional; they are a trusted network of advis- ers. s joe.zanone@zanonepm.com CapEx calculations: Set budget, control expenses Joe Zanone Founder, Zanone Project Management Colorado Real Estate Journal’s annual Fall Property Management Conference reuse of office space or conver- sion to other uses. In particular, the city is encouraging housing infill in blighted commercial areas. It’s too early to call this a game-changer, but it’s a policy trend that landlords and investors should keep on their radar. To keep tenants from relocating to surrounding communities, the city is making efforts to speed up the permit process. Time will tell if this strategy helps retain tenants. n Conclusion: A market in transition. The Boulder office market is nei- ther fully bullish nor bearish – it’s in transition. Success today hinges on creativ- ity, flexibility and a willingness to invest in quality. While structural challenges remain, especially around demand and lease economics, there are clear signs that well-positioned properties – with the right ameni- ties, sustainability features and modern layouts – can still attract tenants. In short: If you build (and price) it right, they may still come. s jason@coloradogroup.com Kruse Continued from Page 10 view, they can reposition assets and fill vacancies, all while offering com- petitive lease rates relative to replace- ment cost. Southeast Denver’s infrastructure, highway access, and growing amenity base make it a uniquely attractive submarket for this play. Its mix of established business parks and new development opportunities means there’s room for both turnaround and growth stories. n What comes next. The recent wave of sales – and the deep discounts at which they’re closing – signals a broader trend: Price discovery is hap- pening. The standoff between buyers and sellers is resolving, not necessar- ily with compromise, but with capitu- lation from some sellers and confi- dence from selective buyers. This will likely usher in a period of increased transaction velocity, as pric- ing floors become clearer and capital on the sidelines reengages. At the same time, leasing activity should benefit from refreshed ownership and better-capitalized landlords willing to meet the demands of modern ten- ants. In short, the Great Reset is not a sign of distress – it’s a sign of market functionality. The office sector is no longer frozen in uncertainty. It’s find- ing its footing, with southeast Denver leading the charge. s matt.edgar@communityfirstcommercial.com Edgar Continued from Page 12 work, some for deep focus, some for recharge. Retail spaces see “productivity” dif- ferently – longer visits, higher satis- faction and more repeat customers. And, yes, design can make that hap- pen. n Health: Designing for the long game . We now have building stan- dards like WELL and Fitwel that spell out exactly how design impacts physical, mental and social well- being. In offices, that might mean sit- stand desks, open staircases, or layouts that encourage movement. Spaces that offer healthy food options, hydration stations, and out- door areas are also linked to better employee health. In retail and public spaces, think inviting walking routes, spaces to rest and design cues that make healthy choices feel natural. n Why property managers and own- ers should care. Beautiful spaces get attention. Healthy, inclusive and pro- ductive spaces get results. For office tenants, this means attracting and keeping top talent. For retail, it’s about making customers feel good enough to browse longer – and come back again. For public spaces, it’s fostering connection and making them the heart of a commu- nity. And here’s the kicker: These sci- ence-backed design choices also help future-proof your property. They keep it competitive in the leasing market, adaptable to changing tenant needs and relevant for years to come. At the end of the day, the best spaces aren’t just “Instagrammable.” They’re the ones people want to be in, because they feel right. That’s not a happy accident – it’s science, well applied. s jcarpenter@kieding.com Carpenter Continued from Page 13