What is an Office Fit Out?
An office ‘fit out’ is a construction or real estate term describing the act of building an interior space into a suitable environment as desired by the occupant. This is very typical in commercial construction. The landlord will develop the ‘shell’ or ‘white box’ to make the space ready for the fit out, which is often done by the occupant’s construction provider (although sometimes it can be the same construction services provider for both developments). The white box is standardized among contractors and landlords with completed elements such as: basic floors and ceilings, finished exterior, doors and windows, HVAC, plumbing and electrical, restrooms, stairs and elevator, and fire escape evacuation routes. But beyond the white box, often the occupant comes to a negotiated agreement with the landlord where the landlord provides some of the budget or construction services for the fit out. Because the fit outs are customized for tenant desires, and add finishing to the white box, they are often referred to as TIs, or tenant improvements, as well.
Office fit outs can include additional details such as:
- Internal finishes
- Window furnishings such as blinds
- Raised floors and suspended ceilings
- Additional mechanical, IT cables and electrical services
- Branding signage installations
- Office and meeting rooms finishing
- A/V equipment installed
- Finished kitchen areas
- Reception areas finished
- Specialized lighting installations
- Installation of furniture
But it takes more than assumption between parties to properly obtain fit out services. Therefore there should be legal contracts between the landlord, tenant and developers which can clearly explain:
- Definitions of terms such as white box or shell and core, and fit out
- What specific finishings will be provided by the landlord vs. tenant
- Options provided by the landlord such as provisions for tenant equipment, extra generators, uninterrupted power supplies, etc.
- Division of costs covered for the office fit out between landlord and office occupant
- How the division of costs occurs; for example, the landlord may allow rent-free period to the occupant as cost contributions going toward the office fit out
- What degree of finishing will be covered by the white box contractor (such as plumbing, electrical and doors)
- Division of time between when construction of white box is completed vs. when the fit out begins (since sometimes they overlap)
Office fit outs are necessary to finish white box shells to meet tenant expectations and make office spaces move-in ready. Sometimes the same developer completes both the white box and the fit out. But the right, detailed legal definitions and contracts are important to clarify divisions of construction services and costs between landlords and tenants.
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