by Joe Killinger
When you begin the process of looking for a new office or retail space some people get confused between a Vanilla Shell and a Grey Shell. Because each market is different, you need to specify what your expectations are and what type of property the landlord has available.
Vanilla Shell
A Vanilla Shell (also known as a warm shell) is a commercial real estate term that refers to a landlord delivering a space to a tenant with the basic finishing’s
The finishing’s typically include taped walls ready to paint, electrical panel and outlets, sealed concrete or finished floor, finished ceiling with lighting, HVAC including duct work and controls, finished bathroom (if no common bathroom), and sprinkler system if required by code.
However; depending on the landlord, it may not include all of these items, so it’s important to clarify what is included. Since Vanilla Shells offer tenants a close to finished space, they allow for a quicker move-in time and provide less initial hassles.
Grey Shell
A Grey Shell (also known as a cool shell) is space offered by a landlord that is completely unfinished.
You will generally find bare stud walls, unfinished floors, and no plumbing or electrical. The space will more than likely include a HVAC unit but no duct work or controls. If required by code, the sprinkler system may be installed but not dropped to finish ceiling height.
As a tenant you need to be aware that this will dramatically increase your costs for tenant improvements, especially if you plan on adding drains and/or bathrooms. Although Grey Shells do require more tenant maintenance they allow for greater flexibility for your individual needs.
Additional Considerations
One thing you do want to remember is that if you are doing a substantial amount of work you will want to have a longer lease and therefore the landlord should have more flexibility.
It’s important to work with an agent that can help negotiate assistance from the landlord for you to complete additional work, either in the form of rent credits or additional tenant improvement dollars from the landlord.
Finally, it’s always a good idea to have your team ready (including a contractor) to prepare a budget prior to looking for your new space. In the end it can save you a lot of time and effort.
