Conceptual cost estimating for Corporate Real Estate Budgets
As NYU finance professor Aswath Damodaran often says, every corporate decision is ultimately a financial decision. Whether it’s a strategic pivot, signing a lease, or redesigning office spaces, every choice affects resources and the value of the company.
For corporate real estate (CRE) leaders, a common challenge remains: how do you estimate the cost of an office renovation or consolidation before the design is even finalized? With construction costs constantly changing, conceptual estimating has become a key tool to make quick, confident decisions.
The need to look beyond the floor plan
For companies with 50 to 500+ employees, managing corporate real estate is about planning for multiple scenarios. Growth, restructuring, or lease expirations often require various types of initiatives:
Long-term planning: Setting up spaces for the next 5–10 years
Lease-end updates: Restoring spaces at the end of a lease
Modernization: Upgrading interiors to improve employee experience
Tenant improvements: Preparing spaces for subleases
Restacking & optimization: Reorganizing floors to use space efficiently
With annual budgets (Capital Expenditures, CapEx) often in the tens or hundreds of millions, CRE teams need to translate strategy into accurate financial planning and disciplined execution. That’s the reality of banking and insurance companies, lawyers and accounting firms, and many organisations.
Danger of “Cost per square foot”
A common shortcut for many organization is to use $/SF. While simple and great for screening purposes, it can be misleading. Consider this example: a 20,000 SF space requires a fresh coat of paint a meeting room and two new offices. Using a standard $400/SF gives a budget of $8M. This is not realistic. Without a professional estimate, you risk:
Inflated budgets: Projects may get rejected
Hidden costs: HVAC, fire safety, and other technical requirements may be overlooked
Extra expenses: Furniture, design fees, and contingencies may be forgotten
Estimating using cost per square foot , is great for project screening purpose, but is not enough diligence required for budget approvals and funding requests. You need an estimate built from bottom-up.
Traditional budgeting takes too long
Getting an accurate budget the traditional way can take months:
Consultant selection (RFP, request for proposals): 2 to 4 weeks
Design development: 8 to 12 weeks
Construction tender (RFQ, request for quotations): 2 to 4 weeks
Waiting three months for budget approval is not what you expect. CRE leaders need a reliable estimate fast. They need support from preconstruction professionals who understands building engineering and construction management, without having to invest significant fees that would themselves require a separate funding approval.
What is conceptual estimating?
Conceptual estimating combines cost expertise with early design planning. Unlike a rough $/SF estimate, it looks at the technical and design factors of a project. It is rooted in constructability analysis. The process examines a preliminary sketch through an architectural and engineering lens. No formal reports are created. What matters are the technical assumptions that drive the estimate. A conceptual estimate is usually a class D and in some cases class C estimate more reliable that a simple rough order of magnitude budget.
Assume a need to convert few regular offices into a high-density training room. A conceptual estimator considers for instance:
HVAC & Ventilation: Added cooling and fresh air for high occupant density.
Electrical & AV: Power, lighting, and technology needs.
Life Safety Systems: Sprinklers, fire alarms, and exit requirements.
Soft Costs & Contingency: Design coordination, permits, risk allowance
Never compromise on speed, accuracy, and confidence
Engaging a professional estimator during the test-fit phase transforms a concept into a solid budget to build a rigorous financial dossier that would ease the funding approval. Some finance team need cost estimate items classified as Capital or Operation Expenditure. A conceptual estimate, developed by a cost engineer is what CRE leaders need during planning phases, for these reasons:
Fast: Get a detailed estimate in days, not months
Accurate: Costs reflect constructability and technical needs
Trusted: Provides CFOs and finance teams with a credible basis for approval
Here are some levels of detail you may want to consider:
Cost by category: Consultants, construction, furniture, relocation, fees, and contingencies.
Cost by usage: Capital expenditures (CapEx) and operational expenditures (OpEx).
Cost by division: Millwork, doors and glass partitions, drywall construction, wall finishes, flooring and ceiling finishes, specialties, sprinklers, plumbing, HVAC, electrical, and communications.
Conclusion
Budget uncertainty should never slow down your real estate strategy. Conceptual estimating bridges the gap between your vision and real costs. It helps you decide quickly, avoid surprises, and secure funding with confidence.
This is why you should contact XENOFAN
Early choices make or break corporate real estate outcomes. Making renovation decisions without full visibility is a risk your project can't afford. We help organizations make confident retail and office renovation decisions through expert planning, transparent communication, and strategic cost engineering—providing total clarity, before committing to any lease, budget, or contract.