18 October 2023 | Markus Karl

Construction projects: Refurbishment in occupied condition

Managing construction projects is part of the SFP Group's wide-ranging expertise. What are the challenges for our Construction team? What regulatory hurdles get in the way? We would be happy to explain the various construction phases using two current examples in one of our direct listed real estate investments.

In the SF Sustainable Property Fund, two properties at Luzernerring 148 with 17 flats and at Rufacherstrasse 8 with ten flats in Basel were in the pipeline for renovation. Both properties were out of fashion and no longer met the current energy standard. On 28 May 2022, the new housing promotion law "YES to REAL housing protection!" came into force in Basel; from this date onwards, only a limited amount of the conducted construction measures can be billed to the new rent. Therefore, the aim was to submit the building applications before this deadline. The date of the building application was decisive for its assessment.

The general planning tenders were issued in the fourth quarter of 2021. Since the projects are very similar, the same architect was awarded the contract so that synergies in planning and execution can be used. At the same time, the expenses on the client's side can be optimised. The preliminary project started at the beginning of 2022: in this phase, we clarified the most important points, such as the investigations of the sewerage system and the pollutant occurrences, floor plan design, which thermal and technical components are to be replaced. This clarification made it possible to move ahead with the building application. The application to the city of Basel was submitted at the beginning of May 2022, and we informed the tenants in advance about the upcoming renovation and its effects. The flats were not vacated, but the renovation was to take place during ongoing operations, although the tenants were given easier conditions for terminating their tenancy.

Following the building application, the pending services from the building project, such as the final cost estimate and the colour and material concept, were reworked. Fortunately, we received no objections during the publication period. Thus, the building permits could already be issued at the beginning of July 2022. Through the summer months and autumn 2022, the tenders for the construction services were due. We were able to start awarding building contracts towards the end of the year. Thus, we received partly very attractive prices from the contractors when the order books for the coming year could be filled and the interaction of the two projects could be brought in.

We prepared detailed tenant information brochures for the tenants, explaining exactly in which areas and over what period the renovation will take place. As kitchens and bathrooms were replaced and not available for use, we were helping out with an electric cooker and a dry toilet. The refurbishment of an occupied flat is a big challenge for everyone involved, which is why some tenants gave notice of their own accord at an early stage. Eight flats at Luzernerring 148 and four flats at Rufacherstrasse 8 remained occupied.
 

After concluding the work contracts (the contracts were awarded mainly to local individual contractors) and the detailed planning, the construction work at Luzernerring 148 started on 29 May 2023 and at Rufacherstrasse 8 one month delayed on 26 June 2023. The exterior facades, except for the street facade at Rufacherstrasse 8, will be provided with plastered exterior thermal insulation, we will replace the windows and blinds, insulate the basement ceilings, and renew the roofs. With these measures, the renovated buildings will achieve at least the GEAK C standard. In the interior, we replace the risers, newly install the electrical systems, replace kitchens and bathrooms, refurbish the surfaces, and renovate the lifts. All safety-relevant elements, such as railings that are too low or missing escape route lighting, will be repaired. Luzernerring 148 will be connected to district heating as part of the project; the connection to district heating at Rufacherstrasse 8 already took place after the gas heating system outage in 2021.

While the construction work at Luzernerring 148 went largely according to plan, the workmen at Rufacherstrasse 8 repeatedly encountered new challenges, as the substance of the building was partly dilapidated, and interior walls collapsed during the removal of the old wall panel coverings.

The completion of construction of both properties is scheduled for 1st December 2023, after which the flats will also be available for new tenants. To show our gratitude also to the contractors, a craftsmen's lunch will be held on 23 October 2023.
 

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