Who Handles Build-Out in NYC, Landlord or Tenant?

Who Build Outs the Space, You or the Landlord?

Often the existing layout of an office, loft, showroom or medical space needs to be modified in order to suit a potential tenant. “Building out” a space allows it to be customized to best meet a firm’s needs, and often involves building sheet rock walls, modifying electrical distribution, adding floor treatment, installing HVAC or lighting fixtures, and painting. When tenants evaluate a space, they should be sure to learn whether the landlord is agreeable to build-out in NYC.

Many commercial landlords will agree to build-out in NYC for a credit-worthy tenant. Assuming the tenant signs a lease term of at least five years (so the landlord has sufficient time to amortize the cost of construction), the landlord will often modify an existing space or, if necessary, renovate it. For leases shorter than five years, landlords will usually agree to paint the space and, in some cases, provide and install carpeting or other flooring finish.

Understanding Build-Out in NYC

Some landlords simply do not want to get involved in build-out projects, particularly when the construction is of a specialized nature. Build-out of a medical facility or a salon, for example, can be costly and an unwise investment for a landlord. In such situations, a landlord may provide the tenant with a work letter or rent credit to offset construction costs. Landlords who are renting retail or restaurant space generally offer it only in “as-is” condition. Owners of small buildings are sometimes unwilling to provide any tenants with more than a fresh coat of paint or new floor finish, so any further improvements are the responsibility of the tenant.

It is always advisable for a tenant seeking to acquire office, loft or showroom space in Manhattan to ask their broker what improvements a landlord is willing to make to their space.

For a more information on build-out in NYC, contact Metro Manhattan Office Space for a free consultation. Call Principal Broker Alan Rosinsky at 212-444-2241.