![]() Landlords often demolish these highly unique features, so they won’t distract potential users touring the space and to advance the demolition process for the new tenant. Additionally, some elements of the suite or floor may be highly specialized, making it very unlikely that a typical tenant will need that particular feature. However, the layout and finishes of the space may be outdated and warn with scuffs, water marks and stains throughout, Pruit said. These spaces typically feature carpet or flooring, finished ceilings and overhead lights as well as interior walls demarcating offices, lounges, kitchens or conference rooms - all elements selected by the previous tenant. The space may reflect the floor plan and finishes installed by a previous tenant, or a build-out that began was never finished. Office spaces are typically found in this partially built-out state for one of two reasons. Landlords commonly pay for some portion of the costs through a tenant improvement (TI) allowance. While building out shell space is often both expensive and time-consuming, for a tenant seeking a truly distinct space, it offers the greatest flexibility in determining the design and layout of the space. ![]() Constructing interior space from a raw shell is the most expensive and complex type of build-out, involving designs, engineering, bids from contractors, permits, inspections and extensive construction. Shell space is typically found in the newest buildings in a market that have not yet been occupied or in buildings undergoing extensive renovations. Pruitt added that “oftentimes you’ll see landlords allocate a tenant improvement allowance below a finished ceiling,” enabling the tenant to allocate more money toward construction of elements inside the suite that have a greater impact on their day-to-day business activities than the ceiling grid. Larry Fitzgerald, executive managing director at Newmark in northern Virginia noted that the costs and disruption of installing and reinstalling ceiling tiles are often incurred by landlords in order to secure a tenant. Removing ceiling tiles from a white box finish to accommodate HVAC systems seems wasteful, but it is a common practice. In some cases, a white box might also include an HVAC system with ductwork and controls, but in others, the ductwork will be installed after the tenant determines where private offices will be located. Generally, the walls are covered in drywall and the ceiling is finished with tiles and lights. Pruit said that shell space is sometimes upgraded slightly to what real estate professionals call a “white box.” Sometimes referred to as a “vanilla shell,” “warm shell,” or “warm lit shell,” the space features minimum finishes. This raw unfinished space is sometimes referred to or marketed as a “grey shell” or a “cold shell.” “Typically, shell space would be in a new build that is literally slab-to-slab and there is truly nothing in there,” said Grant Pruit, president and managing director of Whitebox Realty, headquartered in Dallas, in an interview with LoopNet. A sprinkler system will likely be included, as it is generally required by code. It is characterized by concrete floors, exposed columns, unclad walls and open ceilings, and it contains taps for future installation of mechanical, electrical and plumbing systems. Shell space is interior space that is completely unfinished. Before focusing on key terms, one concept to be aware of is the notion of a “build-out,” which is commercial real estate shorthand for both the construction process an interior space goes through and the end result of designing and constructing interior space for a tenant. Others offer newly finished office space ready for tenants to occupy in just a few weeks. Some spaces feature unfinished concrete floors with exposed columns, requiring extensive construction over many months before they can be occupied. The existing physical condition of an office space can range from raw and unimproved to polished and move-in ready. For business owners seeking office space to lease, understanding to what degree a block or floor of space has been constructed is important for meeting budgets and timetables.
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