The construction industry has many terms that make up our “industry speak”. They make sense to contractors and architects and help us communicate with each other, but can be confusing for people outside the industry. Build out is one of those terms. What is a build out?
A “build out” is the construction activities executed to a commercial building space to make it functional for a tenant. After a business rents a space to conduct its business, the space is almost never set up the way it needs to be. The wrong number of offices, no conference room, bathrooms are too small, or it may just be a shell of a space with no interior walls. It won’t work as is. It needs a build out.
Build outs frequently involve an architect for design. Many architects focus on interiors for these types of commercial spaces. When a space had a previous tenant, some of the original build out may be re-used. In other cases, an entire gutting of the space is necessary.
The contractor and architect in this scenario must also work together for compliance purposes. That is, the build out construction must be in compliance with local building ordinances and codes. The building project must also be coordinated with the building engineer and landlord.
Every tenant has different needs, therefore the original construction space is customized for the occupant’s specific desires. Actual constructed improvements can be executed for ceilings, doors, walls and more for the build out.
There are obviously significant fees involved in finishing a build out. These can be charged to the tenant, the landlord or split among both. How these fees are parted depends on market trends, tenant negotiations and the type of space within the construction.
Of course TI costs can be negotiated in leasing. These negotiations factor into the tenant improvement allowance (TIA); representing how much is contributed by the landlord for the tenant’s build out. Often a commercial real estate agent can provide tips on TIAs; specifically on the dollar values and legal terms.