Paul Leongas | The Hidden Cost of Cheap Construction in Commercial Real Estate
Paul Leongas
The cheapest rooftop HVAC unit on the market will cool a commercial space. It will do this for about three years. Then it will start cycling too frequently, running up the electric bill. By year five, it will need a compressor. By year seven, it will need to be replaced entirely. The tenant pays the utility premium the entire time. The landlord paid less at installation. The math only works for one of them.
Paul Leongas has lived inside buildings where every system was specced to the lowest possible standard. He operated The Curragh Irish Pub across Schaumburg, Edison Park, and Skokie, each location for approximately 12 years. That is long enough to see every cheap construction decision come due.
The Three-Year Surprise
Cheap construction does not fail on day one. It fails at exactly the moment the warranty expires. An HVAC system rated for five years of office use will fail in three years of restaurant use because the thermal load was never calculated for a kitchen producing heat eight hours a day. An electrical panel installed with zero spare capacity will need a $10,000 upgrade the first time a tenant adds a piece of equipment. A flat roof patched instead of replaced will leak into the tenant's space during the first heavy rain after the patch gives out.
Paul Leongas kept a running list of these failures across his restaurant locations. It was not a short list.
The Tenants Always Pay, One Way or Another
A developer who installs the cheapest available systems saves money on the construction budget. That money does not disappear. It gets transferred to the tenant in the form of higher utility bills, more frequent repair calls, business interruptions, and eventually, a full system replacement that somebody has to pay for.
The lease determines who writes the check, but the tenant always absorbs the impact. A broken HVAC system during a July dinner service empties the dining room. No lease clause reimburses lost revenue. A plumbing backup during business hours closes the restroom and potentially the business. The landlord fixes the pipe. The tenant eats the lost day.
The Axis Approach to Mechanical Systems
Through Axis Development Group in Park Ridge, Illinois, Paul Leongas self-performs construction on his commercial projects. He specs every mechanical system for actual operational load, not minimum code compliance. The difference between code minimum and actual use is where cheap construction hides its costs.
Code says a commercial space needs a certain CFM of ventilation. Code does not say that a food service tenant running a grill, a fryer, and a full hood system will exceed that CFM requirement by 40 percent during peak service. Code says the electrical panel needs a certain amperage. Code does not account for the tenant who needs dedicated circuits for a walk-in cooler, a reach-in freezer, a POS system, and a security setup.
Paul builds for what tenants actually do in the space. Not for what the code theoretically requires.
Cheap Costs More. It Just Costs Later.
The Curragh earned the Guinness Gold Standard Award for the Perfect Pint in 2002. That kind of recognition requires consistency across years, not months. The buildings Paul Leongas operated in made consistency harder, not easier. Every mechanical failure was a threat to the standard.
Now he builds commercial spaces across the North Shore. Every system is specced with a 12-year tenant in mind, because that is how long Paul himself stayed in his commercial spaces. A developer who plans for a five-year hold period builds differently than one who plans for a decade. Paul Leongas builds for the decade, because he was the tenant who stayed that long and discovered every shortcut the developer took.
The construction budget is where a commercial building's future gets decided. Spend less now and spend more later. Spend right now and collect rent from a tenant who stays because the building works. Paul Leongas already paid the tuition on that lesson. His tenants do not have to.