Landlord's Shell Improvement Rejection

[DTBarch]

Question for my valuable posse of building officials, plan examiners and forum co-members.

If my building owner / landlord client wishes to make incremental improvements to a grey shell space (162,000sf) in his new warehouse building, but has no idea whether the tenant he will lease to is going to be an S-1, and S-2, or an F occupancy user, does the AHJ have a code-based justification for requiring that we classify the space as one of the options in our shell improvement project?

My client's goal is to build out a 3,000sf spec office space and install minimal evap coolers and warehouse lighting so that the space is more marketable, and the required quantity of improvements from lease negotiation to occupancy is more manageable, financially minimal, and expeditious. In the ultra competitive and hot industrial market such as the Phoenix metro area is experiencing, timing is everything when competing for a tenant prospect.

Due to the long and shallow nature of the 162,000 sf warehouse space with the original developer's office setup being at one end of that space, installing additional restrooms to satisfy the warehouse restroom travel distance requirement is rolling the dice. The future tenant may very well end up being a manufacturing F Occupancy space that requires a secondary production office and larger set of restrooms in an entirely different and specific area of the warehouse, at which point the speculative restrooms that my client has sawcut 500 feet away is a complete waste of his money.

In our case, the AHJ initially rejected our submittal stating that if we did not classify the warehouse space, we would necessarily need to apply for another tenant improvement once the space was leased, and they "suggested" that we may want to pick a classification to assign to this project. Our response to this rejection was that we entirely expect to go through another tenant improvement project for the future tenant. After receiving no clarification response to our request to explain, we resubmitted with additional explanation of why we were okay with the additional future permit, and why we didn't want to incur the risk involved in the extra expense for occupancy specific improvements. This time they rejected it stating, "After further discussion with the Building safety department, it has been agreed that you may not submit for landlord Spec improvements without classifying both the office and storage."

Many other local AHJ's like Phoenix, for example, issue Certificate of Completions to projects where there is no tenant, requiring an inspection and re-application for CofO upon tenant occupancy. I know that all AHJ's handle CofO's differently, but again, is there a code based justification for outright rejection of a 1st generation shell improvement project that is purely speculative in nature?

I understand that the real estate industry has a tendency to abuse and avoid the permitting process, but why should a building owner should be forced into compliance under a specific randomly selected warehouse occupancy classification when he's just making basic initial speculative improvements to his property, primarily for the office space.

Opinions or code references? Am I entirely off base with my reaction to this?

 

[cda]

sounds like a local thing,

Only suggestion is go up the ladder, till you find intelligent life,

Or some how research similar shells built in the last year or so, and see if they were treated the same.

Anything in local ordinances about it.

 

[steveray]

2 different trains of thought....If you don't call it anything and it never gets a CO....When the tenant comes in, you may be on a new code and may have to "update" to it...Think "rip open the walls and reinsulate"....On the other hand, if you get a CO as something, it is a partial change of use and not much for upgrades might be required, especially if you go F1....

 

[ADAguy]

makes "cents"

 

[tmurray]

If you are just adding an office and washrooms to an empty building, why would I look at the rest of it? Those are existing conditions. I just care about what you are changing. Come back and talk once you get a tenant and we can work through a fit-up. Until then, nothing is changing in this space. There is no construction. There is no change of use. There is nothing for me to drive a permit requirement.

The only thing I would caution a developer/designer on is to ensure they are designing for the most restrictive to ensure the marketability of the building, but there are sometimes this is cost prohibitive and they just have to live with it.

 

[DTBarch]

If you are just adding an office and washrooms to an empty building, why would I look at the rest of it? Those are existing conditions. I just care about what you are changing. Come back and talk once you get a tenant and we can work through a fit-up. Until then, nothing is changing in this space. There is no construction. There is no change of use. There is nothing for me to drive a permit requirement.

The only thing I would caution a developer/designer on is to ensure they are designing for the most restrictive to ensure the marketability of the building, but there are sometimes this is cost prohibitive and they just have to live with it.

That's the logic that I see with it. By forcing a owner/landlord to use S-1 as a minimum, they are forcing a future change of use process if someone comes in differently??

This is a unlimited area building with non-separated uses, so the significant downsides only come into play if we get into an F or more complicated S occupancy with hazardous materials, which are going to be an acceptable future complexity anyway with a tenancy like that.

Our biggest beef is having to build out additional toilets in a remote location of the warehouse that may not make any sense to a future tenant who will either want more fixtures, or want them in a different location. We just don't know that, so why should we be forced into spending $30-40k on a toilet room WAG when it may have to be scraped once they lease the space??

 

[mtlogcabin]

The Building Official has a couple of different tools at his disposal to use for what you propose. Simply call your proposed office/sales area exactly that with it being identified as tenant space/suite 1 and the remainder of the space as unfinished or unoccupied.

[A] 111.1 Change of occupancy.
A building or structure shall not be used or occupied, and a change of occupancy of a building or structure or portion thereof shall not be made, until the building official has issued a certificate of occupancy therefor as provided herein. Issuance of a certificate of occupancy shall not be construed as an approval of a violation of the provisions of this code or of other ordinances of the jurisdiction.
[A] 111.2 Certificate issued.
After the building official inspects the building or structure and does not find violations of the provisions of this code or other laws that are enforced by the department of building safety, the building official shall issue a certificate of occupancy that contains the following:

1. The building permit number.

2. The address of the structure.

3. The name and address of the owner or the owner’s authorized agent.

4. A description of that portion of the structure for which the certificate is issued.

5. A statement that the described portion of the structure has been inspected for compliance with the requirements of this code for the occupancy and division of occupancy and the use for which the proposed occupancy is classified.

6. The name of the building official.

7. The edition of the code under which the permit was issued.

8. The use and occupancy, in accordance with the provisions of Chapter 3.

9. The type of construction as defined in Chapter 6.

10. The design occupant load.

11. If an automatic sprinkler system is provided, whether the sprinkler system is required.

12. Any special stipulations and conditions of the building permit.

[A] 111.3 Temporary occupancy.
The building official is authorized to issue a temporary certificate of occupancy before the completion of the entire work covered by the permit, provided that such portion or portions shall be occupied safely. The building official shall set a time period during which the temporary certificate of occupancy is valid.

 

[Sifu]

Occupancy classification drives most everything. You can't even start a real review without a designated occupancy. You can't issue a CO without a designated occupancy. That being said, I think you can permit the changes. I do it all the time, for the exact reasons the OP states. Similar type of buildings where the owner wants to put up a demising wall to be able to rent to smaller tenants. I will permit the wall-only the wall, as long as it doesn't mess with the exisitng code compliance of the building. I require lots of disclaimers, such as the acknowledgment that occupancy is not granted, that the separations have not been scrutinized for fire resistance, MOE, fixture counts aren't within the scope, and a TI permit must be applied for to permit occupancy, etc. They all understand that what they do today may be voided by what they want to do tomorrow. Call them what you want, I see it all the time in "white-box", "grey-box" or "Landlord Improvement" permits, from high-rise office suites, to retail type incubator buildings to storage buildings. You are permitting an element, not a space. Without any identifiable violations of the existing code compliance of the building, without granting occupancy there is no danger to the occupants...because there aren't any. IMHO!

BTW, as an added benefit, I have seen where this helps everybody in the future. As an example, say you permit a demising wall last year. Drawings were stamped showing how it was built. A new occupancy comes in that requires a rated partition. Now you have plans showing it was designed and inspected as a rated partition last year in anticipation of a future need. Voila, one less question that needs to be answered.