When you rent retail, office, or industrial space, the landlord can deliver the space to you in pretty much any way that’s agreed upon, as just about everything in a commercial lease is negotiable.
However, while the terminology may differ slightly depending on your market, there are a few terms used to describe the ways that commercial spaces typically get delivered.
In this context, “delivered” means the condition of the space when the landlord hands the keys over to the tenant and the lease commences.
The primary categories, at least in my experience, consist of the following:
- As Is
- Cold Dark Shell
- Warm Vanilla Shell
While it helps to know the lingo during your real estate search, your definition of a term like “warm vanilla shell” could very well differ from the landlord’s definition, so you should make sure the lease is as specific as possible and not rely on these colloquial terms.
As the name suggests, “as is” means the space is delivered just how it is without the landlord completing any additional work, which could mean anything.
The space could be fully ready for occupancy, it could require some minor construction to implement the tenant’s specific wants, or it could require a full buildout just to move in.
Often, though certainly not always, “as is” refers to second generation space, which means the space likely already has improvements built out since it was previously occupied by another tenant. In this case, you’ll probably want to make some changes but you’re not starting from scratch.
Cold Dark Shell
A “cold dark shell” typically means the space lacks heating, ventilation and air conditioning (HVAC), ceilings, interior wall finishes, and lighting.
A “cold shell” is similar, but usually refers to a space with lighting. The expectation is that the tenant will build out their space to their liking, often with the use of funds from a tenant improvement allowance.
Warm Vanilla Shell
A “warm vanilla shell” means the space’s interior has a basic finish, including a ceiling, lighting, plumbing, HVAC, sometimes painted walls, electrical outlets, restrooms, and concrete or finished flooring.
The term “warm vanilla shell” is often interchangeable with descriptors like plain vanilla shell, white box, and warm shell.
Terms like “vanilla box” could mean the same thing as warm vanilla shell, but may or may not exclude the HVAC system.
Turnkey means the space is delivered in such a condition that does not require the tenant to do anything prior to occupying.
This could mean the space was built out in a broadly appealing way, allowing most tenants to move right in and get to work (no tenant-specific buildout).
Alternatively, it could mean the landlord constructed the buildout specific to the particular tenant’s specs prior to delivering the space (tenant-specific buildout).