As companies begin to look at their 2020 budgets for new or relocated call centers there are some costs that you need to be aware of as construction, furniture, fixtures and equipment prices continue to rise. Over the last few years we have seen call centers costs increase 10% to 20%, and we are expecting that to continue especially with new tariffs in place. To help you establish a call center budget, our team of construction experts has developed a summary of costs for building out a new call center facility.
Building choice can significantly influence build-out call center costs
A vacated call center facility will generally require the least amount of up-front capital and time to set-up. However, some buildings may require some key upgrades due to the insufficient mechanical/electrical systems or other hidden-cost issues that can’t be identified when touring the site. It’s also important to understand why a call center facility closed. Was there a labor problem or is the market saturated?
Conversely, we are starting to see a trend of companies targeting certain markets to attract the right talent. They are willing to make the investment to build out a more customized call center facility that often requires a complete remodeling. Typically, most of these projects are either traditional office space not designed for a densely populated call center or a former retail building. These call center conversion projects require a lot more capital and time. However, the end-result can be a truly state-of-art call center facility that helps with employee recruiting and retention strategies.
Both scenarios can lead to a profit-generating call center, but it’s important for companies to determine which model works best for their culture and budget when starting their real estate search.
Trade tariffs and the impact of capital investment in call centers
Trade tariffs earlier in 2019 were increased from 10% to 25% on construction and furniture materials such as metals, flooring, fabrics, wall panels, etc. Most of the construction steel and metal used in construction have been absorbed in the construction market in anticipation of the increased tariffs or have been sourced from other places.
The increased costs for furniture, fixtures and equipment has recently impacted our customers. Some furniture manufacturers have been trying to hold back price increases on their products due to the tariffs as long as possible, but unfortunately, they can’t any longer. We have seen most furniture manufacturers increase in price from 10% to 12% in the last nine months.
Call center construction budget comparison
Site Selection Group developed a Call Center Budget Comparison Matrix to help you identify the cost of build-out based on the existing building condition for potential call center facilities. The cost comparison is based on a standard call center build-out of approximately 30,000 square feet. Cost could increase by 20% for above-standard materials and finishes.
|Vacated Call Center||2nd Generation Office Remodel||Retail Conversion|
|Construction Schedule||1 to 3 Months||4 to 6 Months||6 to 9 Months|
|Soft Construction Costs1||$5 per square foot||$6 per square foot||$7 per square foot|
|Hard Construction Costs2||$10-$35 per square foot||$60 per square foot||$70 per square foot|
|Data Cabling3||$0-$250 per workstation||$250 per workstation||$250 per workstation|
|Supplemental Power4||$0-$250,000||$100,000- $250,000||$100,000- $250,000|
|Furniture||$0-$1,700 per workstation||$1,500-$1,700 per workstation||$1,500-$1,700 per workstation|
1Soft costs include architectural, engineering, project management and other related project consultants
2Hard costs include the general contractor, construction materials, mechanical, electrical, sprinklers, carpentry, millwork and special finishes.
3Data cabling includes cabling to the workstations.
4Supplemental power includes a back-up generator, UPS system and costs related to the connectivity of the equipment.
Retaining and attracting call center workers is becoming more critical due to labor supply constraints across the U.S. One way to set yourself apart from others is to focus on the design and construction of your new facility. It is important to note that real estate costs only account for roughly 5% to 10% of a call center’s operating costs while more than 80% accounts for your labor costs. Consequently, you need to realize that the investment in your call center facility will often impact your ability to successfully staff and operate your call center.