New Law Raises New Issues at Bargaining Table

DALLAS-A federal mandate to remove old cabling from commercial structures has turned into a negotiating point, with the potential to kill deals, says a Cushman & Wakefield of Texas Inc. senior director.

Dallas-Fort Worth building inspectors are enforcing the law, which took effect in January, before issuing occupancy permits to tenants. Randall D. Thompson, C&W’s senior director of program management, tells GlobeSt.com that the cost of compliance and who pays have become stickling points at the bargaining table. And, it pleads a strong case for tenants to choose newer space over second-generation buildings, where cabling from years of tenant turnover and system changes line conduits between ceilings and concrete decks.

The feds, in light of Sept. 11, updated the National Electrical Code for the first time since 1975 and ordered removal of unused low-combustion cabling from plenum spaces. But, the new law failed to say who was tasked with the responsibility…and cost.

Thompson says Dallas-area building owners have been expecting incoming tenants to remove old cable when office improvements are undertaken. But, tenants’ brokers are arguing that the cost rests with building owners because it’s left-over materials from previous occupants and, in some cases, from a defunct high-tech access company.

According to Thompson, the cost to pull the old cable adds 15% to 30% to the tab for installation of telecommunications lines. The cost can go even higher if the old cable is stacked in trays. He says one Dallas tenant abandoned a deal when the building owner refused to assume the cost and a Richardson sublease for old Nortel space fell apart when calculations showed pulling the cable would add 50% to the cost. He says the deal went to a newer building as a result. Typically, it costs $500 to install each outlet, without the extra charge for stripping old cable.

Cushman & Wakefield’s counter measure has been to add a clause to RFPs and make sure brokers are aware of the problem. “Our stance is it’s a negotiated point,” Thompson says, “like any other cost. Our general position is it is an allowance that the landlord pays for.” He admits building owners aren’t overly warm to the idea, but are compromising to get deals done by agreeing to take out old cable if the tenant removes its lines when it vacates the space.

A proponent of the law’s intent, Thompson explains that the old cable often is riddled with environmentally hazardous materials and also holds potential to become an insurance issue since old cabling was found to be one of the reasons for the length of time that the World Trade Towers burned and the rekindles.