As-Is vs Warm Shell vs Turnkey: Which Delivery Saves Me the Most?

Curated by Kory White · Fractional CRO, CRO Syndicate

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📅 Published Jun 21, 2026 · Updated Jun 21, 2026

Don’t get screwed.</text><text x="58" y="258" font-family="Arial,Helvetica,sans-serif" font-size="30" font-weight="600" fill="#6b5b4d">Leases, TI, NNN & buildouts — negotiated in your favor</text><g transform="translate(1010,86)" fill="none" stroke="#C0531F" stroke-width="9" stroke-linejoin="round"><rect x="20" y="40" width="150" height="130"/><line x1="20" y1="40" x2="95" y2="6"/><line x1="170" y1="40" x2="95" y2="6"/><rect x="50" y="80" width="36" height="36"/><rect x="104" y="80" width="36" height="36"/><rect x="74" y="128" width="42" height="42"/></g></svg>

As-Is vs Warm Shell vs Turnkey: Which Delivery Saves Me the Most?

Direct Answer

The money move: pick your delivery method by who controls the construction risk, not by which quote looks cheapest. The three options price wildly differently. As-is (you take the space exactly as it sits) carries the lowest base rent but the highest out-of-pocket — you fund 100% of the buildout, often $80–$200/sq ft. Warm shell (landlord delivers base systems, you do the fit-out) splits the cost — the landlord eats $35–$55/sq ft of base work, you spend $50–$120/sq ft on finishes.

Turnkey (landlord builds everything to your plan) means $0 buildout cash from you, but it's repaid in higher rent — typically a $3–$6/sq ft rent premium for the lease term.

The honest comparison on a 5,000 sq ft deal: as-is might cost you $500,000+ cash up front; turnkey costs $0 up front but adds roughly $15,000–$30,000/yr in rent (about $150,000 over a 7-year term). For a cash-strapped tenant, turnkey usually saves the most real money because it converts a crippling capital expense into a manageable operating expense — and the landlord eats every cost overrun.

What Each Delivery Method Actually Means

Don't trust the label — get the scope in writing:

As-is: the space transfers in current condition. Could be raw concrete (cold shell) or a previous tenant's worn fit-out. You own every dollar of construction and every surprise behind the walls.
Cold shell: bare bones — no HVAC distribution, no restrooms, no ceiling, no demising. The cheapest base rent, the most expensive buildout.
Warm shell (a.k.a. Vanilla shell): landlord delivers HVAC, restrooms, sprinklers, electrical service, demised walls, often a finished ceiling grid. You add flooring, paint, lighting, casework, branding.
Turnkey: landlord builds the entire space to your approved plan and hands you keys ready to operate. You bring furniture and inventory.

The trap is two landlords quoting "shell" that mean opposite things. Always get a delivery condition exhibit attached to the lease listing exactly what's included.

The Cost-Shift Math

Each method moves cost between your capital and your rent:

As-is / cold shell: lowest base rent (say $24/sq ft), highest buildout ($120/sq ft of your cash). Best for tenants with capital to deploy who want to own their finishes and control quality.
Warm shell: mid base rent ($28/sq ft), mid buildout ($70/sq ft). The most common balanced deal.
Turnkey: highest base rent ($31/sq ft), $0 buildout cash. The landlord amortizes construction into rent at 7–9% and keeps the asset. Best for tenants protecting working capital.

flowchart TD A[Choose Delivery] --> B[As-Is / Cold Shell] A --> C[Warm Shell] A --> D[Turnkey] B --> E[Low rent $24/sf + YOU fund 100% buildout] C --> F[Mid rent $28/sf + split buildout] D --> G[High rent $31/sf + ZERO buildout cash] E --> H{Do you have capital?} H -->|Yes| I[As-is can save total cost] H -->|No| J[Turnkey protects survival]

When Turnkey Actually Saves You The Most

Turnkey wins when cash is the constraint and the landlord wants the deal:

Landlord-controlled cost overruns. In turnkey, if the buildout runs 20% over, the landlord eats it — not you. On a $600,000 buildout that's $120,000 of risk transferred.
No construction-loan interest on your side.
No GC management headache — the landlord runs the project.
Faster to open if the landlord has an in-house construction team.

The cost: a rent premium. Run the breakeven — if the turnkey premium over the lease term is less than your buildout cost plus the interest you'd pay to borrow it, turnkey is the cheaper path. On most 5–10 year deals for finish-heavy spaces, it is.

When As-Is Saves You The Most

As-is wins when you have capital and the existing improvements have value:

Second-generation space (a former restaurant for a restaurant, former clinic for a clinic) where plumbing, hoods, grease traps, and electrical are already in. You inherit $50–$150/sq ft of prior tenant work for the price of a cleanup.
You want control over finish quality and vendor selection.
Short payback — owning the buildout means no rent premium for 10 years.
Negotiating leverage: as-is deals come with the lowest base rent, and you can stack a TI allowance on top to offset your own work.

flowchart LR S[Scope the space] --> T{Second-gen improvements?} T -->|Yes, usable| U[As-is captures free value] T -->|No, raw| V{Cash available?} V -->|Yes| W[Warm shell + your finishes] V -->|No| X[Turnkey shifts cost to rent]

The Traps In Each Delivery Type

As-is trap: hidden conditions. Demand a building-condition assessment — roof age, HVAC tonnage and remaining life, electrical capacity, ADA gaps, environmental issues. A $40,000 HVAC replacement you didn't know about wipes out the rent savings.
Warm shell trap: vague scope. Get the delivery exhibit specific — "HVAC" means how many tons, ducted where, controlled how.
Turnkey trap: cheap finishes and change-order games. Attach your finish schedule and plans as a lease exhibit, define an allowance per finish category, and require landlord-paid change orders for any deviation from approved plans.
Universal trap: rent commencing before the space is usable. Tie rent start to substantial completion, verified by your architect's sign-off.

FAQ

Which delivery method is cheapest overall? It depends on your capital and the space. As-is on second-generation space can be cheapest in total dollars. Turnkey is cheapest in up-front cash and lowest-risk because the landlord absorbs overruns. Run the breakeven over the full lease term.

What's the rent premium for turnkey? Typically $3–$6/sq ft over an as-is base rent, reflecting the landlord amortizing the buildout at 7–9%. Over a 7-year term that can total $100,000–$200,000 — compare it to your buildout cost plus financing.

Is warm shell or vanilla shell a standard definition? No — definitions vary by landlord and market. Always attach a delivery-condition exhibit specifying exact systems, capacities, and finishes included so "shell" can't be reinterpreted later.

How do I protect against hidden conditions in an as-is deal? Order a building-condition assessment before signing: roof, HVAC tonnage and age, electrical capacity, plumbing, ADA, and environmental. Negotiate landlord credits or repairs for anything the assessment flags.

Sources

CBRE — Fit-Out and Delivery Condition Cost Guides
JLL — Office and Industrial Fit-Out Cost Guide (Americas)
Cushman & Wakefield — Project & Development Services delivery benchmarks
NAIOP — Building Delivery and Tenant Improvement research
BOMA International — base-building delivery standards (shell vs turnkey scope)
IREM — capital and operating cost analysis for income property
Tenant-representation brokers — as-is, warm-shell, and turnkey negotiation norms

Keep reading

<svg xmlns="http://www.w3.org/2000/svg" viewBox="0 0 1200 340" role="img" aria-label="As-Is vs Warm Shell vs Turnkey: Which Delivery Saves Me the Most — PULSE Buildouts"><rect width="1200" height="340" fill="#EBE9DE"/><rect width="14" height="340" fill="#C0531F"/><text x="58" y="116" font-family="Arial,Helvetica,sans-serif" font-size="32" font-weight="800" letter-spacing="3" fill="#C0531F">PULSE BUILDOUTS · COMMERCIAL REAL ESTATE</text><text x="56" y="198" font-family="Arial,Helvetica,sans-serif" font-size="60" font-weight="800" fill="#2b2b2b">Save money. Don’t get screwed.</text><text x="58" y="258" font-family="Arial,Helvetica,sans-serif" font-size="30" font-weight="600" fill="#6b5b4d">Leases, TI, NNN &amp; buildouts — negotiated in your favor</text><g transform="translate(1010,86)" fill="none" stroke="#C0531F" stroke-width="9" stroke-linejoin="round"><rect x="20" y="40" width="150" height="130"/><line x1="20" y1="40" x2="95" y2="6"/><line x1="170" y1="40" x2="95" y2="6"/><rect x="50" y="80" width="36" height="36"/><rect x="104" y="80" width="36" height="36"/><rect x="74" y="128" width="42" height="42"/></g></svg>

# As-Is vs Warm Shell vs Turnkey: Which Delivery Saves Me the Most?

## Direct Answer

The money move: **pick your delivery method by who controls the construction risk, not by which quote looks cheapest.** The three options price wildly differently. **As-is** (you take the space exactly as it sits) carries the lowest base rent but the highest out-of-pocket — you fund **100% of the buildout**, often **$80–$200/sq ft.** **Warm shell** (landlord delivers base systems, you do the fit-out) splits the cost — the landlord eats **$35–$55/sq ft** of base work, you spend **$50–$120/sq ft** on finishes. **Turnkey** (landlord builds everything to your plan) means **$0 buildout cash from you**, but it's repaid in higher rent — typically a **$3–$6/sq ft rent premium** for the lease term.

The honest comparison on a **5,000 sq ft** deal: **as-is** might cost you **$500,000+ cash up front**; **turnkey** costs **$0 up front** but adds roughly **$15,000–$30,000/yr in rent** (about **$150,000 over a 7-year term**). **For a cash-strapped tenant, turnkey usually saves the most real money because it converts a crippling capital expense into a manageable operating expense — and the landlord eats every cost overrun.**

## What Each Delivery Method Actually Means

Don't trust the label — get the **scope in writing**:

- **As-is:** the space transfers in current condition. Could be raw concrete (cold shell) or a previous tenant's worn fit-out. **You own every dollar of construction and every surprise behind the walls.**
- **Cold shell:** bare bones — no HVAC distribution, no restrooms, no ceiling, no demising. The cheapest base rent, the most expensive buildout.
- **Warm shell (a.k.a. Vanilla shell):** landlord delivers **HVAC, restrooms, sprinklers, electrical service, demised walls, often a finished ceiling grid.** You add flooring, paint, lighting, casework, branding.
- **Turnkey:** landlord builds the **entire space to your approved plan** and hands you keys ready to operate. You bring furniture and inventory.

The trap is two landlords quoting "shell" that mean opposite things. **Always get a delivery condition exhibit attached to the lease** listing exactly what's included.

## The Cost-Shift Math

Each method moves cost between **your capital** and **your rent**:

1. **As-is / cold shell:** lowest base rent (say **$24/sq ft**), highest buildout (**$120/sq ft of your cash**). Best for tenants with **capital to deploy** who want to own their finishes and control quality.
2. **Warm shell:** mid base rent (**$28/sq ft**), mid buildout (**$70/sq ft**). The most common balanced deal.
3. **Turnkey:** highest base rent (**$31/sq ft**), **$0 buildout cash**. The landlord amortizes construction into rent at **7–9%** and keeps the asset. Best for tenants protecting working capital.

```mermaid
flowchart TD
    A[Choose Delivery] --> B[As-Is / Cold Shell]
    A --> C[Warm Shell]
    A --> D[Turnkey]
    B --> E[Low rent $24/sf + YOU fund 100% buildout]
    C --> F[Mid rent $28/sf + split buildout]
    D --> G[High rent $31/sf + ZERO buildout cash]
    E --> H{Do you have capital?}
    H -->|Yes| I[As-is can save total cost]
    H -->|No| J[Turnkey protects survival]
```

## When Turnkey Actually Saves You The Most

Turnkey wins when **cash is the constraint and the landlord wants the deal**:

- **Landlord-controlled cost overruns.** In turnkey, if the buildout runs **20% over**, the landlord eats it — not you. On a **$600,000** buildout that's **$120,000** of risk transferred.
- **No construction-loan interest** on your side.
- **No GC management headache** — the landlord runs the project.
- **Faster to open** if the landlord has an in-house construction team.

The cost: a rent premium. Run the breakeven — if the **turnkey premium over the lease term is less than your buildout cost plus the interest you'd pay to borrow it,** turnkey is the cheaper path. On most **5–10 year** deals for finish-heavy spaces, it is.

## When As-Is Saves You The Most

As-is wins when you have **capital and the existing improvements have value**:

- **Second-generation space** (a former restaurant for a restaurant, former clinic for a clinic) where **plumbing, hoods, grease traps, and electrical** are already in. You inherit **$50–$150/sq ft** of prior tenant work for the price of a cleanup.
- **You want control** over finish quality and vendor selection.
- **Short payback** — owning the buildout means **no rent premium for 10 years.**
- **Negotiating leverage:** as-is deals come with the **lowest base rent**, and you can stack a **TI allowance** on top to offset your own work.

```mermaid
flowchart LR
    S[Scope the space] --> T{Second-gen improvements?}
    T -->|Yes, usable| U[As-is captures free value]
    T -->|No, raw| V{Cash available?}
    V -->|Yes| W[Warm shell + your finishes]
    V -->|No| X[Turnkey shifts cost to rent]
```

## The Traps In Each Delivery Type

- **As-is trap:** hidden conditions. **Demand a building-condition assessment** — roof age, HVAC tonnage and remaining life, electrical capacity, ADA gaps, environmental issues. A **$40,000 HVAC replacement** you didn't know about wipes out the rent savings.
- **Warm shell trap:** vague scope. Get the **delivery exhibit specific** — "HVAC" means how many tons, ducted where, controlled how.
- **Turnkey trap:** cheap finishes and change-order games. **Attach your finish schedule and plans as a lease exhibit**, define an **allowance per finish category**, and require **landlord-paid change orders for any deviation from approved plans.**
- **Universal trap:** rent commencing before the space is usable. **Tie rent start to substantial completion**, verified by your architect's sign-off.

## FAQ

**Which delivery method is cheapest overall?**
It depends on your capital and the space. **As-is on second-generation space** can be cheapest in total dollars. **Turnkey** is cheapest in up-front cash and lowest-risk because the landlord absorbs overruns. Run the breakeven over the full lease term.

**What's the rent premium for turnkey?**
Typically **$3–$6/sq ft** over an as-is base rent, reflecting the landlord amortizing the buildout at **7–9%.** Over a 7-year term that can total **$100,000–$200,000** — compare it to your buildout cost plus financing.

**Is warm shell or vanilla shell a standard definition?**
No — definitions vary by landlord and market. Always attach a **delivery-condition exhibit** specifying exact systems, capacities, and finishes included so "shell" can't be reinterpreted later.

**How do I protect against hidden conditions in an as-is deal?**
Order a **building-condition assessment** before signing: roof, HVAC tonnage and age, electrical capacity, plumbing, ADA, and environmental. Negotiate landlord credits or repairs for anything the assessment flags.

## Sources

- CBRE — Fit-Out and Delivery Condition Cost Guides
- JLL — Office and Industrial Fit-Out Cost Guide (Americas)
- Cushman & Wakefield — Project & Development Services delivery benchmarks
- NAIOP — Building Delivery and Tenant Improvement research
- BOMA International — base-building delivery standards (shell vs turnkey scope)
- IREM — capital and operating cost analysis for income property
- Tenant-representation brokers — as-is, warm-shell, and turnkey negotiation norms

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As-Is vs Warm Shell vs Turnkey: Which Delivery Saves Me the Most?

As-Is vs Warm Shell vs Turnkey: Which Delivery Saves Me the Most?

Direct Answer

What Each Delivery Method Actually Means

The Cost-Shift Math

When Turnkey Actually Saves You The Most

When As-Is Saves You The Most

The Traps In Each Delivery Type

FAQ

Sources

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