understanding The Dynamics Of A Build-to-Suit Lease

“A build-to-suit (or design-build) lease is essentially a landlord/developer’s agreement to construct a purpose built building, usually for a single tenant.” (Savvas Kotsopoulos)

Why Tenants Need an Office Build-Out:

One might think that when you lease an office space that you take the office space as is and are not able to alter the space in any way. This is often not the case. Many commercial tenants lease office space on the condition that certain alterations are made to the premises prior to or while they are leasing the space. These tenants often need something known as a build-out, where the office space is expanded upon and altered to suit their needs. This may be so that it can suit their specific industry needs or because it simply needs to be larger or sectioned differently.

How Much does an Office Build-Out Cost:

An office build-out will vary in cost but there are general estimates which are common with today’s commercial office space construction. For example, if you are interested in leasing office space and need a partial build-out for something such as paint and carpet, the current rate for both of these updates would be approximately x-amount of dollars per/sf. And if you require a full build-out, the price per square foot will be in the general vicinity of x-amount of dollars per/sf. Everything varies, never lumped as one set price.

Who Pays For the Office Build-Out?

Many times the landlord (in combination with the tenant) will pay for the build-out costs. This is especially the case when the lease term is for three years or more. For those instances when the landlord will allow the build-out to occur but refuses to pay for the costs, the tenant may pay for the costs on their own or ask that the rent rate be reduced for a certain amount.

These build-out costs and requests for such alterations are often done during the negotiation stages of the office space lease process.

An office build-out provides commercial office space tenants with a beneficial way to get the office space they want with the amenities and space they desire. Many landlords in the commercial arena are open to build-out negotiations and know that it is a good way to draw tenants in and have them lease their premises as opposed to going elsewhere. (Tom Koelzer)

Grand Park Professional CenteR — build-out example:

Left side , completed vision —  right side , open space

Left side, completed vision — right side, open space

“Okay, so I’m ready to take this idea of mine and will it into existence — I kind of have a handle on what to ask the landlord and for the most part, I understand this whole thing called a build-out… but, I’m still a little hesitant…”

We understand your concerns here at No Place Like Home Remodeling, and we, well, I think Nolan Bushnell said it best, “the critical ingredient is getting off your butt and doing something. It’s as simple as that. A lot of people have ideas, but there are few who decide to do something about them now. Not tomorrow. Not next week. But today. The true entrepreneur is a doer, not a dreamer.”

From government employee to self-made accountant, David Kembel (Kembel Tax Services) took Bushnell’s advice and started living his dream and we were with him every-step of the way. From critical planning to implementation, we saw his dream through — now, with two locations, he’s busier than ever doing what he loves to do — don’t wait, start living your dream today!

see below (start/finish process):

Feel free to contact us — we look forward to working with you and we’d love to answer any inquiries you may have about build-outs or construction related questions in general. Remember, at No Place Like Home Remodeling, we’re here to help!