Landlord-Built Office Spaces Garner Growing Interest

Once upon a time, a tenant wishing a specific style of office space would often opt for a tenant improvement allowance (TI) as part of a lease agreement. In this situation, a particular workspace would be built out based on tenant requirements.

However, the pandemic came along and upended the office sector in many ways, including the use of TIs. According to a recently released CompStak report, tenants’ workplace requirements shifted abruptly. These tenants were also more reluctant to plunge into a lengthy build-out process connected with tenant improvements. This has meant an increase in landlord-built spaces and lease transactions.

What Are Landlord-Built Spaces?

Unlike tenant improvements, in which a tenant comes in and dictates how a space should be finished out, a landlord-built space sees the building’s owner spending the money upfront and “finishing the space to different levels before signing a tenant or a tenant move-in,” Alison Baumann, CompStak’s Director of Real Estate Intelligence tells Connect CRE. “Examples of this include pre-built units, new-built installations and turnkey projects.”
   ...more

RSK: Interesting,,,but it sounds like it is mostly for speed of having the build out completed.