The challenge, he says, comes when it is time to decide whether to hire a general contractor on a “fixed-price” contract or do the work on a “cost-plus” basis. Wertheim's answer is “it depends.”

“Fixed-price proposals are more common for commercial and residential condo owners seeking to build-out their property and budget appropriately,” he says. “My simple rule: The more predictable the build-out work is, the more appropriate it is to go with a fixed-price contract.”

On the other hand, he also recommends working on a cost-plus basis—in which the general contractor executes the work and then adds a fee to the cost of the project—when the job involves the build-out of a large and/or complex space or design.

“When the job may be conducive to surprises and, consequently, change orders, we recommend using the cost-plus approach,” Wertheim says. “This alternative prevents having to amend an initial fixed-price agreement, which can lead to a final price tag much higher than the one initially quoted.”

MIAMI—Many of the new condos coming to market in this cycle have retail on the ground floor. There are pros and cons to this mixed-use development approach.

On the upside, ground-floor retail could be an amenity for condo owners and tenants. But the developers and retail new unit owners face challenges when transferring ownership.

GlobeSt.com sat down with general contractor SPACiO Design Build's Alex Wertheim how to mitigate these challenges in part three of this exclusive interview. You can still read parts one and two: Softening Your Exposure to Miami's Fluctuating Real Estate Market and Building a Decorator –Ready Condo to Win Budget-Minded Tenants.

“Most of the time, the retail space on the ground floor of a new condo tower is a retail condo unit,” Wertheim says. “When an investor or retailer buys the retail condo, the buyer is responsible for building out the space.”

The challenge, he says, comes when it is time to decide whether to hire a general contractor on a “fixed-price” contract or do the work on a “cost-plus” basis. Wertheim's answer is “it depends.”

“Fixed-price proposals are more common for commercial and residential condo owners seeking to build-out their property and budget appropriately,” he says. “My simple rule: The more predictable the build-out work is, the more appropriate it is to go with a fixed-price contract.”

On the other hand, he also recommends working on a cost-plus basis—in which the general contractor executes the work and then adds a fee to the cost of the project—when the job involves the build-out of a large and/or complex space or design.

“When the job may be conducive to surprises and, consequently, change orders, we recommend using the cost-plus approach,” Wertheim says. “This alternative prevents having to amend an initial fixed-price agreement, which can lead to a final price tag much higher than the one initially quoted.”