Our International Client was concerned about the Office Lease proposed by its potential new Landlord. It required the Tenant to remove all of its IT Network Cabling at the end of the lease term. How much would this cost? Do I really have to do it?
Increasingly, major Landlords in the US are requiring Tenants to demo and remove their Voice/Data Network Cabling when leases expire. In Western Europe, this has been the standard for years and now it’s floated across the Atlantic to America.
Because many big city Building Departments are changing City Building Codes to require it. Over time, IT cabling piles up above the ceiling tiles and becomes a fire hazard.
If you looked above the dropped ceilings in older office buildings, going back to the late 1980s, when LAN (local area network) and other IT Networks came into wide use, you’d be shocked to see a black and gray Spaghetti Factory of abandoned cabling.
Honestly, it’s amazing that a ceiling somewhere hasn’t collapsed under the decades of accumulated weight and crashed down on someone’s head. Cause of Death: ceiling collapse due to abandonment of IT Network Cabling.
To shed light on this potential Tenant expense at the end of your Lease Term, here are some important things that you, your CFO, CTO and IT Managers need to know…
#1 – Cabling Removal Costs in Boston: In Boston, our 100% Tenant Rep colleague, Debra Stevens, reports that a Tenant’s expense to demo and remove IT Network Cabling there could run $0.50 to $1.75 per rentable square foot (“RSF”) of the Tenant’s space. But it’s really about the vendor/subcontractor’s time to accomplish the task. She figures on $100 per hour for Union labor plus $0.65/SF or Non-union labor at $75 per hour and $0.50/SF. Some US markets simply quote $100 per hour, without the per RSF add-on cost.
#2 – Demo in Denver: By comparison, Landlords’ Agents in Denver estimate $0.50 to $1.00/RSF for IT cabling demo and removal. A Cabling Vendor and an Electrician recently quoted me $0.21/RSF ($1,160) and $0.36/RSF ($2,000) for a 5,600 RSF office space configured thusly:
- No Private Offices.
- Large Conference Room.
- Two (2) Huddle Rooms.
- 20 Open Work Stations.
- One (1) voice drop and one (1) data drop per workstation.
- Two (2) voice drops and two (2) data drops per Conference and Huddle room.
I note, however, that this is a pretty simple IT Network, so a more complex cabling configuration would cost more per RSF to demo and remove.
#3 – Not Always Easy to Obtain Phone Quotes: Without a Cabling Plan or an on-site inspection, it’s difficult for some vendors/subcontractors to reliably estimate the cost of cable demo and removal. They need to know things like how many Private Offices and Open Work Stations/Cubes there are and how many voice and data ports (“drops,” as IT and cabling pros call them) are at each desk, as well as in Conference Rooms and Huddle Rooms.
#4 – The Key Variables: Ultimately, the cost will depend on several variables: the complexity of the installation, the amount of cabling, the number of drops, how long or short the cable runs are, whether the cable is located above a dropped ceiling or installed in raceways with fully exposed ceiling elements and whether or not there are many Private Offices.
#5 – Private Offices Increase Cost: Private Offices can considerably increase your cabling demo/removal cost.
#6 – Don’t Like Quoting Prices per RSF: Cabling vendors don’t like quoting prices on a per RSF basis, as they think in terms of the number of hours required. They’re much more comfortable quoting a total job price, based on how long they estimate the work will take.
#7 – Job Time Drives the Price: How long the work takes will depend mostly on the key variables in #4 above.
#8 – About Cat5e Cabling: Less expensive at $0.20 to $0.30 per linear foot, Cat5e cabling can run data at speeds of up to 1,000 Megabytes per second (1000Mbps), which is the same as 1-Gigabit per second (1-Gbps), and it has a bandwidth/frequency, such as for running video conferencing or streaming, of up to 100 Megahertz (100 MHz).
#9 – Why Cat6 Is Better: On the other hand, more expensive at $0.40 to $0.60 per linear foot, Cat6 cabling can run data at speeds of up to 10-Gigabits per second (10-Gbps or 10,000 Mbps) and has a bandwidth/frequency of up to 250 Megahertz (250 MHz) to carry video conferencing/streaming, such as for employee training and educational webinars.
#10 – Cost Gap Cat6 vs. Cat5e: On average, an IT Network Cable installation using Cat6 cable costs about 20% more than one with Cat5e product.
#11 – Your Landlord: Mylinda Vick at ITRA Global’s Office in Nashville has gotten creative. She’s been able to persuade many Office Landlords to back off ondemanding that a Tenant demo/remove its IT Network Cabling upon vacating a Premises, provided the Tenant installs faster, more expensive Cat6 (or better) cabling. Landlords might agree to this since Cat6 Cabling could (perhaps) be reused by a Successor Tenant, making a particular suite more attractive than an alternative, since it would save a Successor Tenant the expense of having to install new cabling.
#12 – $10,000 Lease Language: Here’s Mylinda’s excellent lease language that serves to mitigate risk and minimize your costs for leasing office space. For some Tenants, this paragraph could save $10,000 or more…
Notwithstanding the foregoing, if the Tenant installs IT Network Cabling (“Cabling”) prior to occupancy, or upgrades it during the Lease Term or any Renewal Periods, and the existing Cabling (Cat6 or higher) can be utilized by a new tenant for the Premises, then the Tenant will not be required to remove its Cabling upon the expiration or earlier termination of the Lease Term or upon the Tenant’s vacation of the Premises.
#13 – Cat6 Cable Might Eliminate Demo: Going initially with the more expensive Cat6 (or higher) cabling might also help with getting back a full refund of your Security Deposit when you eventually vacate your space. See more about this in #16 below.
#14 – Trust But Verify: If you seek quotes from vendors/subcontractors to demo and remove your office’s IT Network Cabling, don’t necessarily believe everything you hear the first time. Trust but verify from different sources. For example, a veteran cabling vendor/installer stated some “facts” about the differences in Cat6 versus Cat5e cabling, which proved to be wrong when I did more research.
#15 – Get Multiple Bids: As with any contractor or subcontractor, obtain competitive price quotes. Don’t assume the vendor that initially installed your IT Network will be the most cost effective. He or she might be your most expensive option. Again, trust but verify.
#16 – Cabling Affects Security Deposit Refund: Keep in mind, too, that getting back a full refund of your Office Security Deposit may depend on getting your IT Network Cabling demolished and removed properly per the terms of your Office Lease. For more details and a checklist on exactly how to get back your full Security Deposit, please see our blog article titled Full Security Deposit refund like free cash-back credit card.
#17 – Watch Out, Subtenants: If you’re planning to sign a Sublease Agreement, be extra careful to read your Sublandlord’s Master Lease on the subject of demo/removal of IT Network Cabling. If it’s mandated in the Master Lease (or if your city or town has changed its Building Code to require it), then you as the Subtenant are likely to get stuck with a surprise bill for demo/removal of your Sublandlord’s IT Network Cabling when your Sublease Term expires. Read more about this well camouflaged trap in our blog article titled Avoid 13 risks when you want to be a Subtenant.
If you need an advocate to have your back on potentially costly details, such as the demo and removal of Voice/Data Network Cabling, then the very best way is to select a 100% Tenant Rep/Broker/Agent to join your transaction team.
Contact William Gary at MacLaurin Williams at cell +1 303-901-1108 or wgary@MacLW.com in Denver/Boulder. We can help you to do things the best way on your next new Office Lease, Lease Renewal or Expansion.