Vanilla Shell versus Grey Shell
When looking for a new location for your business, an important consideration should be the costs associated with the buildout of a potential space. A new shopping center located in a market with high growth and strong demographics will be attractive for a variety commercial and healthcare related tenants. These first-generation spaces can be delivered in either a grey shell (aka cold dark shell) or a vanilla shell.
What’s the Difference?
In a grey shell there are no walls, no ceilings, HVAC, plumbing or electrical service and sometimes not even a concrete slab. Developers will deliver spaces in this condition so that a prospective tenant can custom build every aspect of their space to suit their unique needs. Contrast this with a vanilla box which will typically have a slab, perimeter drywall, drop ceiling, fire sprinklers, electrical panel, lighting, HVAC system, and a restroom. A landlord that delivers a space in a vanilla shell may not offer much, if any, tenant improvement (TI) allowance for a tenant’s buildout. Landlords that deliver a grey shell will often offer some level of TI allowance.
How Much TI Allowance Should I Ask For?
To determine how much you should ask for it is helpful to understand the costs of bringing a grey shell space to vanilla shell condition. This would be especially helpful if you are choosing between multiple buildings delivered in different conditions. Of course this isn’t the only factor that will determine how much allowance a landlord will provide. Other factors include market conditions, demand for space in the center, credit worthiness of the tenant and length of the initial lease term, among other factors. Utilizing the services of a good tenant rep broker will go a long way in assuring you get the most competitive TI allowance available.
At Invision, we specialize in commercial tenant improvements. To discuss the costs associated with the buildout of your particular space please give us a call at 407-233-1849 for a no obligation consultation.