What is a Build Out?

There are numerous industry terms that apply to the construction industry - all part of industry speak in building. They make sense and help contractors and architects communicate, but can be confusing for outsiders. In fact one relevant industry speak question to ask might be ‘what is a build out?’

A “build out” represents the construction activities executed to a commercial building space, to make it functional for a tenant. In this respect build outs can also be considered “tenant improvements” or TIs. 

what is a build out?

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. 

The contractor and architect in this scenario must also work together for compliance purposes. That is, the build out construction must be in compliance with local building restrictions and codes. The building project must also be coordinated with the building engineer, landlord and tenant. 

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. 

There are obviously significant fees involved in finishing a build out. These can be charged to the tenant, the landlord or split among both. How these fees are parted depends on market trends, tenant negotiations and the type of space within the construction. 

Of course TI costs can be negotiated in leasing. These negotiations factor into the tenant improvement allowance (TIA); representing how much is contributed by the landlord for the tenant’s build out. Often a commercial real estate agent can provide tips on TIAs; specifically on the dollar values and legal terms. 

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