Ambiguous Construction Terms Finally Defined
In the world of construction, the term “white box” is often used by real estate brokers and landlords to define the level of finish a space has prior to a tenant’s office remodel or tenant finish. However, it is an imprecise term. The white box is often synonymous with vanilla shell, lit shell, plain vanilla shell, plain vanilla box, warm vanilla shell, warm vanilla box, warm white box, and warm white shell.
White box is a term used for a type of finish in commercial real estate with an unfinished interior and does NOT include: interior walls (other than code required restrooms), wall coverings, paint, flooring, plumbing fixtures (other than code required restrooms and drinking fountains), upgraded electrical fixtures, and upgraded code required restroom fixtures. A white box–build out is ready for tenant improvements (TI’s), which are to be completed once the lease agreement has been negotiated and executed.
It includes a space that is protected from the outside elements which typically includes a roof, exterior windows, and doors. Also included is a basic finished ceiling, concrete floor sufficient for most flooring, basic heating, ventilation and air conditioning (HVAC), basic lighting, hot water, adequate access by way of an elevator or stairs, and if required by code fire protection, restrooms, and drinking fountain.
This particular form of construction is for commercial owners who need to quickly incorporate a new tenant into their property. It is typically an interior space that is minimally finished. The idea is that the next tenant will be presented with a shell space that they can quickly convert into virtually anything.
Though the finished project may seem like the bare minimum, the process required to achieve this state is far from it. All components of the space must be up to code and ready for a new interior tenant build-out. Typically a building permit and other licenses are required, depending upon the jurisdiction of the space.
In many cases, the landlord will offer financial incentives in the form of a tenant improvement allowance (TIA), which pays for or at least partially defrays the cost of any improvements necessary for the tenant to occupy the building itself. Tenant improvement allowances do not usually include furniture, fixtures, and equipment (FFE) or trade fixtures necessary for the tenant to conduct business.
Usually, white box finishes, or those improvements necessary to upgrade the building from a cold shell, are not completed until the lease agreement between the tenant and landlord has been negotiated and executed. This ensures that the landlord does not pay for improvements that are unnecessary or that the tenant does not want.