In commercial real estate, the space being leased is often essentially a blank slate. The walls and doors are there, but there is not much more character or detail to the space. The idea is that the office space will ultimately be completed to a tenant’s own specifications. That part of the construction process is known as the build-out.
What is a Commercial Build-Out
In the construction industry, there is a lot of slang or jargon used. It can be confusing to understand at first unless you have been in the industry before and you understand the lingo and terminology. The jargon used is often useful for the contractors and architects when discussing a construction project, but can also confuse others who are uninformed. One of the common terms used in the building industry is the term “build-out”.
A build-out in simple terms describes the construction tasks or the workload that will be accomplished in order for a commercial project to be completed. The tasks in a build-out could be improvements that were recommended by a tenant or any recommended changes from a contractor in order to stay compliant with local building restrictions and codes.
A “build out” represents the construction activities executed to a commercial building space, to make it functional for a tenant. Build outs frequently involve an architect for design. Many such architects often focus on interiors for these types of commercial spaces, while the construction is by a contractor group. When a previous space had previous tenant finishing, these original tenant improvements must be gutted or removed for the new build out. 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.
What You Should Know Before A Build-Out Begins
It is never as simple as moving right in after the purchase of commercial real estate space. There are a few steps that need to be taken beforehand. These steps need to be taken for approval before the real construction begins.
The Build-Out Negotiations
The very first step that is taken before the build-out begins is gaining approval from a landlord, property manager, or the owner of the building. There should be a clear understanding amongst everyone on what type of renovations and improvements are going to happen to the building. This negotiation will also determine build-out costs, who will be running the project, and who will be accountable for the payment. All of this information should be stated in the lease to avoid any miscommunication.
Commercial Zoning and Permits
After the agreed-upon lease, the next step is to get the relevant documentation in place before the project can begin. Documentation that is required includes permits and zoning approvals from relevant local authorities. The zoning approval ensures that the company is where it is meant to be without infringement of any local laws such as a business’s building located right next to a residential property.