CRE glossary
Build-out (fit-out)
A build-out (also called fit-out) is the construction work performed to customize a leased space for the tenant: walls, doors, electrical, IT cabling, HVAC distribution, kitchen/break room, signage. Build-outs are paid through some combination of landlord TI allowance, tenant capital, and amortized rent additions. Typical office build-outs cost $50–$200/SF depending on finish level.
Build-outs come in three forms: (1) Spec suite, landlord pre-builds a generic finished space; tenant moves in with minimal work. Cheapest and fastest. (2) Vanilla shell, landlord delivers walls, ceiling, basic mechanicals; tenant builds out interior to spec. Most common. (3) Cold shell, landlord delivers raw concrete; tenant builds everything. Rare for office, common for retail.
Build-out timing has two phases. Pre-construction (4–8 weeks): design, permitting, GC selection, long-lead-item ordering. Construction (8–16 weeks for office, longer for restaurants and complex spaces). The lease typically contemplates a 'fixturing period', months between landlord delivery and rent commencement during which the tenant builds out without paying rent.
Most build-out cost surprises come from three places: long-lead items (custom millwork, glass, lighting fixtures, order at week 1), permits (NYC and SF can add 4–8 weeks), and tenant-driven scope changes mid-construction (the most expensive cost on any project). Brokers should run a contingency of 10–15% on the GC budget at LOI.
Example
- Standard office build-out
- $80–$120/SF
- High-end office (custom millwork, glass walls)
- $150–$250/SF
- Restaurant build-out
- $300–$600/SF
- Spec suite (landlord-built)
- $45–$70/SF effective to tenant
Broker perspective
When the landlord proposes a turnkey build-out, normalize it against an allowance-based quote. Turnkey often hides a $20–$30/SF GC contingency that the broker can capture as additional TI in an allowance structure. That's real broker commission delta on a $1M build-out.
Frequently asked
People also ask
Build-out vs fit-out, same thing?
Yes. Different regional vocabulary. Build-out is more common in the US East Coast; fit-out is more common in the UK and West Coast.
Does TI cover the full build-out?
Sometimes. A $100/SF allowance covers a $90/SF build-out cleanly. Anything over the allowance is paid by the tenant or amortized into rent.
Who manages the build-out?
Tenant typically hires a project manager and GC. Some landlord turnkey deals have the landlord managing, usually less efficient for the tenant.
What's a fixturing period?
The pre-occupancy construction window when the tenant builds out without paying rent. Typically 60–120 days. Negotiate to start at lease execution, not lease delivery.
Related terms
Tenant improvements (TI / TIA)
Money the landlord contributes toward customizing the space for the tenant, usually expressed as $/SF.
Letter of intent (LOI)
A non-binding outline of the major business terms, rent, term, TI, options, that becomes the basis for the binding lease.
Free rent (abated rent)
A period at the start of the term where the tenant pays no base rent, used to offset move-in costs and competitive pricing.
Lease commencement date
The day the lease term begins and rent obligations start, not the day the lease is signed.
See build-out (fit-out) extracted from a real lease.
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