Discussion points will include:
“Is cost inflation/supply constraints now baked into the office for both owners and tenants?”
• Retro-fitting space rather than new construction
• TIs are reduced as they become more expensive to provide
• Reinstatement/”put right” obligations increase in cost
• Some building trades become more expensive/hard to hire
• BMS systems – replacement parts hard to secure because of chip shortage
The “So Whats” being how should these potential costs and delays be managed by the broker/architect/lawyer?
Background points – the “view from 30,000 ft” points
• Port of Los Angeles – time waiting to unload – now 6 days (was 2 days) – Financial Times 7th April 2021
• Copper prices – near to all time high
• Iron Ore – near all time high
• Micro chips – shortage is halting car production in Europe
Will prices continue to rise? Or should we wait on moving forward with a large construction project because these prices will come back down to earth?
Will project timing speed up eventually? If so, when do you anticipate that to happen?
What solutions have you implemented to work around these increased construction expenses and delays? Different materials, Third party permit expediters, etc?
Supply Chain disruption causes and anticipated resolutions?
What design changes have you seen tenants actually implement because of COVID, do you think that trend will continue?