Hard costs are physical improvements that will remain after the tenants have gone. Fortunately, it’s pretty simple to tell these costs apart once you’ve learned the lingo. When you’re pricing commercial build-out costs, you’re likely to see references to hard costs and soft costs. And even when building out new construction, tenants can design and finish the space based on their budget. Choosing a more finished space-even if it isn’t perfect-can significantly reduce costs. WeWork 1003 E 4th Pl in Los Angeles, CA.Įven though commercial construction cost breakdowns are hard to estimate, tenants have a lot of control over them. And if your office needs specialized spaces, like a kitchen or fitness center, you can expect to pay even more. At the high end, you’ll get high-quality details and finishes suitable for an executive space.
On the low end of that price range, you’ll get basic office space without any frills. If it’s a first-generation space-a shell that hasn’t been built out before-add $10 per square foot to those estimates. Practically, you can expect to pay anything from $50 to $150 for build-out costs per square foot. The location of the building has a big impact, too: Construction costs in New York City are higher than construction costs in Dallas, for example. But that’s just an average: Depending on the tenant’s needs and the condition of the building, costs could go up or down. The cost of a commercial build-out varies, but the average commercial building cost per square foot is $65 with standard finishes. Estimated construction costs for corporate interior build-outs Being clear about build-out requirements means everyone gets what they want without any surprise expenses. Otherwise, tenants could end up with a space that doesn’t quite suit them-and then have to spend more money to make things right. No matter who manages the build-out and who pays for it, it’s important to negotiate all of the specifications within the lease before signing. Though that allowance is unlikely to pay for the whole build-out, it helps offset some of the costs of fitting out a new commercial space to your specifications.Ī TI allowance is also typically referred to by cost per square foot, so your final build-out cost per square foot would be your build-out cost minus your TI allowance. In a tenant improvement (TI) build-out, the tenant handles the details of the build-out themselves, but is given an allowance to pay for the construction. In a turnkey build-out, a landlord handles everything, providing a move-in ready space.
This can be handled in a variety of ways. Usually, the landlord and tenant will split commercial construction costs, negotiated as part of the lease agreement. When a tenant decides exactly what they need, it will be priced out and the final build-out cost will be quoted as an average price per square foot.