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

📖 2,520 words🗓️ Published Jun 23, 2026

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.

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.

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.

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]

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]

Related on PULSE

[How Do I Get the Landlord to Deliver the Space in Better Condition (Warm Shell vs Turnkey)?](/knowledge/q13651)
[Gross Lease vs Triple Net (NNN): Which One Actually Saves Me Money?](/knowledge/q13648)
[Should I Take a Turnkey Buildout or Manage It Myself?](/knowledge/q13685)
[How do you build a warm outbound motion in 2027?](/knowledge/q12950)
[How do I structure a saves play for a customer who's considering churn?](/knowledge/q192)
[Should I open or buy a You Move Me franchise in 2027?](/knowledge/q15378)

The Hidden Cost of Construction Risk: Why “Cheapest” Can Cost You 40% More

The biggest mistake tenants make is comparing only the upfront buildout allowance or the base rent. The real cost driver is who bears the construction risk — and that risk is rarely priced transparently.

As-is spaces are the riskiest because you inherit every unknown. A 10,000 sq ft as-is warehouse might quote $80/sq ft for buildout, but once you open walls, you often find outdated electrical panels ($15–$25/sq ft extra), asbestos abatement ($5–$15/sq ft), or HVAC systems that fail code ($8–$12/sq ft). Total surprise costs: $28–$52/sq ft on top of your original budget. That’s a 35–65% overrun.

Warm shell shifts some risk to the landlord — they guarantee the base systems (HVAC, electrical panel, plumbing stubs, core bathrooms). If the roof leaks or the main electrical line fails, it’s their problem. But you still own the fit-out risk: the contractor you hire might be 20% more expensive than the landlord’s preferred vendor, or the city permit process could add 6 weeks of carrying costs at $2,000–$5,000/month.

Turnkey transfers nearly all risk to the landlord. If the project runs over budget, they eat it. If the timeline slips, you don’t pay rent until occupancy. The trade-off: the landlord builds a 15–25% contingency into their price, so your base rent is higher by $1.50–$3.00/sq ft/year compared to an as-is deal with the same finish quality.

The math that matters: On a 5,000 sq ft space with a 5-year lease, a 20% construction overrun on an as-is buildout ($100/sq ft budget) costs you $100,000 extra out-of-pocket. A turnkey deal with a $2.50/sq ft higher rent costs you $62,500 extra over 5 years — but you never write a check for construction. The turnkey saves you $37,500 in cash flow, even though the rent looks higher.

The “Partial Turnkey” Strategy: How to Get the Best of Both Worlds

Most tenants don’t realize you can negotiate a hybrid delivery that splits the sweet spots of each option. This is called a partial turnkey or TI allowance with landlord-managed construction.

Here’s how it works: You negotiate a $50–$80/sq ft tenant improvement (TI) allowance from the landlord, but you also require them to manage the general contractor for the core systems (HVAC, electrical, plumbing, fire sprinkler). You retain control over finishes (flooring, paint, millwork, signage) and hire your own subcontractor for those items.

Why this saves money:

The landlord’s GC gets volume pricing on mechanical/electrical/plumbing — typically 10–20% cheaper than what you’d pay as a one-off tenant.
You avoid the landlord’s 15–25% markup on finishes (where they make their profit).
You keep control of aesthetic decisions that matter to your brand.
The landlord still bears the risk on the expensive, complex systems.

Typical cost breakdown for a 5,000 sq ft office (partial turnkey):

Component	Landlord covers	You pay
HVAC, electrical panel, plumbing stubs	$35–$55/sq ft	—
Fire sprinkler modifications	$5–$8/sq ft	—
Ceiling grid & lighting	—	$8–$12/sq ft
Flooring	—	$6–$15/sq ft
Paint, millwork, signage	—	$15–$30/sq ft
Furniture & IT cabling	—	$20–$40/sq ft
Total out-of-pocket	$40–$63/sq ft	$49–$97/sq ft

You end up paying $49–$97/sq ft instead of $80–$200/sq ft for as-is, and your base rent is only $0.50–$1.00/sq ft higher than a pure as-is deal — far less than the $1.50–$3.00/sq ft premium on full turnkey.

The 3-Year Payback Rule: When Each Delivery Actually Wins

The “savings” from each delivery method depend entirely on how long you plan to stay and how much you value cash flow vs. total cost over the lease term.

Use this decision framework:

Your situation	Best delivery	Why
You’re staying 3 years or less	Turnkey	You don’t have time to recoup buildout costs. Every dollar you spend on construction is a dollar you lose when you leave. Pay the higher rent — it’s cheaper than writing a $200,000 check you’ll never see again.
You’re staying 4–7 years	Partial turnkey	You have enough time to amortize $50–$80/sq ft of your own spend, but you still want the landlord to carry the risk on big-ticket systems. This is the sweet spot for most growing businesses.
You’re staying 8+ years	As-is (with aggressive TI allowance)	You have time to fully amortize a $100–$150/sq ft buildout. Negotiate the lowest possible base rent and a $40–$60/sq ft TI allowance — then fund the rest yourself. Your total occupancy cost over 8 years will be 15–25% lower than turnkey.

The hard truth: If you’re a startup or a company with uncertain growth, never do as-is. You’ll be stuck with a space you can’t sublease because your custom buildout doesn’t suit the next tenant. Turnkey or partial turnkey preserves your exit flexibility — and that flexibility is worth $10–$20/sq ft in avoided vacancy risk alone.

Final rule of thumb: Add up your total occupancy cost (rent + buildout amortized over lease term + operating expenses) for each option. The one with the lowest total cost per square foot per year wins — but only if you’re confident you’ll stay the full term. If there’s a 30%+ chance you’ll leave early, turnkey is always cheaper.

FAQ

What exactly is an “as-is” delivery? An as-is delivery means you accept the commercial space exactly as it currently exists — with no landlord improvements, no warranties, and often with existing wear or code issues. You’re responsible for all design, permits, construction, and any surprises like outdated HVAC or non-compliant electrical. It’s the lowest upfront rent but the highest risk and cost for you.

How does a warm shell differ from as-is? A warm shell gives you a finished exterior, roof, and base building systems (like HVAC, electrical panel, and plumbing stubs), but the interior is a blank canvas — no walls, floors, ceilings, or finishes. You still handle all interior build-out, but you avoid major structural or system surprises. Rent is higher than as-is, but your construction risk is lower because the landlord certifies the base systems work.

Is turnkey always the most expensive option? Turnkey typically has the highest base rent because the landlord covers all construction costs — from design through final finishes and permits. However, it can save you money if you lack construction expertise, need a fast move-in, or want predictable costs. The landlord takes on the risk of delays and overruns, which can be valuable if your timeline is tight.

Which delivery saves the most on total project cost? It depends on your situation. As-is can save the most if you have in-house construction skills and can negotiate a low rent, but it often costs more overall due to hidden repairs. Warm shell usually offers the best balance for tenants who want control over finishes without major system risks. Turnkey saves you time and headache, but you pay a premium for that convenience.

How do I know which delivery is right for my budget? Compare the total cost over your lease term: rent plus your estimated construction costs for each option. For as-is, add 20–30% contingency for unknowns. For warm shell, add 10–15% for interior work. For turnkey, the rent already includes construction, so it’s more predictable. If your budget is tight, warm shell often gives the most control without the as-is gamble.

Can I switch delivery types after signing a lease? Generally no — the delivery type is locked into the lease terms. However, you can sometimes negotiate a “hybrid” where the landlord agrees to certain improvements (like a new HVAC) within a warm shell or as-is deal. Always clarify exactly what’s included in writing before signing, because changing later is expensive or impossible.

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?](https://jdj-consulting.com/wp-content/uploads/2026/03/bacb772d-370b-469c-a691-d0cfeb36eceb-1.png)

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# 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

![As-Is vs Warm Shell vs Turnkey: Which Delivery Saves Me the Most? — What Each Delivery Method Actually Means](https://image.pollinations.ai/prompt/high%20quality%20editorial%20business%20professional%20office%20photograph%20illustrating%20What%20Each%20Delivery%20Method%20Actually%20Means%20As-Is%20vs%20Warm%20Shell%20vs%20Turnkey%3A%20Which%20D%2C%20realistic%20magazine%20style%2C%20warm%20light%2C%20no%20text%2C%20no%20watermark?width=1200&height=675&nologo=true&model=flux&seed=12351)


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

![As-Is vs Warm Shell vs Turnkey: Which Delivery Saves Me the Most? — The Cost-Shift Math](https://image.pollinations.ai/prompt/high%20quality%20editorial%20business%20professional%20office%20photograph%20illustrating%20The%20Cost-Shift%20Math%20As-Is%20vs%20Warm%20Shell%20vs%20Turnkey%3A%20Which%20Delivery%20Saves%20Me%20the%20%2C%20realistic%20magazine%20style%2C%20warm%20light%2C%20no%20text%2C%20no%20watermark?width=1200&height=675&nologo=true&model=flux&seed=84599)


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

![As-Is vs Warm Shell vs Turnkey: Which Delivery Saves Me the Most? — When Turnkey Actually Saves You The Most](https://image.pollinations.ai/prompt/high%20quality%20editorial%20business%20professional%20office%20photograph%20illustrating%20When%20Turnkey%20Actually%20Saves%20You%20The%20Most%20As-Is%20vs%20Warm%20Shell%20vs%20Turnkey%3A%20Which%20D%2C%20realistic%20magazine%20style%2C%20warm%20light%2C%20no%20text%2C%20no%20watermark?width=1200&height=675&nologo=true&model=flux&seed=13310)


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.

<!--pillar-weave-->
## Related on PULSE

- [How Do I Get the Landlord to Deliver the Space in Better Condition (Warm Shell vs Turnkey)?](/knowledge/q13651)
- [Gross Lease vs Triple Net (NNN): Which One Actually Saves Me Money?](/knowledge/q13648)
- [Should I Take a Turnkey Buildout or Manage It Myself?](/knowledge/q13685)
- [How do you build a warm outbound motion in 2027?](/knowledge/q12950)
- [How do I structure a saves play for a customer who's considering churn?](/knowledge/q192)
- [Should I open or buy a You Move Me franchise in 2027?](/knowledge/q15378)

## The Hidden Cost of Construction Risk: Why “Cheapest” Can Cost You 40% More

The biggest mistake tenants make is comparing only the upfront buildout allowance or the base rent. The real cost driver is **who bears the construction risk** — and that risk is rarely priced transparently.

**As-is spaces** are the riskiest because you inherit every unknown. A 10,000 sq ft as-is warehouse might quote $80/sq ft for buildout, but once you open walls, you often find outdated electrical panels ($15–$25/sq ft extra), asbestos abatement ($5–$15/sq ft), or HVAC systems that fail code ($8–$12/sq ft). Total surprise costs: **$28–$52/sq ft** on top of your original budget. That’s a 35–65% overrun.

**Warm shell** shifts some risk to the landlord — they guarantee the base systems (HVAC, electrical panel, plumbing stubs, core bathrooms). If the roof leaks or the main electrical line fails, it’s their problem. But you still own the fit-out risk: the contractor you hire might be 20% more expensive than the landlord’s preferred vendor, or the city permit process could add 6 weeks of carrying costs at $2,000–$5,000/month.

**Turnkey** transfers nearly all risk to the landlord. If the project runs over budget, they eat it. If the timeline slips, you don’t pay rent until occupancy. The trade-off: the landlord builds a 15–25% contingency into their price, so your base rent is higher by **$1.50–$3.00/sq ft/year** compared to an as-is deal with the same finish quality.

**The math that matters:** On a 5,000 sq ft space with a 5-year lease, a 20% construction overrun on an as-is buildout ($100/sq ft budget) costs you **$100,000 extra out-of-pocket**. A turnkey deal with a $2.50/sq ft higher rent costs you **$62,500 extra over 5 years** — but you never write a check for construction. The turnkey saves you $37,500 in cash flow, even though the rent looks higher.

## The “Partial Turnkey” Strategy: How to Get the Best of Both Worlds

Most tenants don’t realize you can negotiate a **hybrid delivery** that splits the sweet spots of each option. This is called a **partial turnkey** or **TI allowance with landlord-managed construction**.

Here’s how it works: You negotiate a **$50–$80/sq ft tenant improvement (TI) allowance** from the landlord, but you also require them to **manage the general contractor** for the core systems (HVAC, electrical, plumbing, fire sprinkler). You retain control over finishes (flooring, paint, millwork, signage) and hire your own subcontractor for those items.

**Why this saves money:**
- The landlord’s GC gets volume pricing on mechanical/electrical/plumbing — typically **10–20% cheaper** than what you’d pay as a one-off tenant.
- You avoid the landlord’s 15–25% markup on finishes (where they make their profit).
- You keep control of aesthetic decisions that matter to your brand.
- The landlord still bears the risk on the expensive, complex systems.

**Typical cost breakdown for a 5,000 sq ft office (partial turnkey):**

| Component | Landlord covers | You pay |
|-----------|----------------|---------|
| HVAC, electrical panel, plumbing stubs | $35–$55/sq ft | — |
| Fire sprinkler modifications | $5–$8/sq ft | — |
| Ceiling grid & lighting | — | $8–$12/sq ft |
| Flooring | — | $6–$15/sq ft |
| Paint, millwork, signage | — | $15–$30/sq ft |
| Furniture & IT cabling | — | $20–$40/sq ft |
| **Total out-of-pocket** | **$40–$63/sq ft** | **$49–$97/sq ft** |

You end up paying **$49–$97/sq ft** instead of $80–$200/sq ft for as-is, and your base rent is only **$0.50–$1.00/sq ft higher** than a pure as-is deal — far less than the $1.50–$3.00/sq ft premium on full turnkey.

## The 3-Year Payback Rule: When Each Delivery Actually Wins

The “savings” from each delivery method depend entirely on **how long you plan to stay** and **how much you value cash flow vs. total cost over the lease term**.

**Use this decision framework:**

| Your situation | Best delivery | Why |
|----------------|---------------|-----|
| You’re staying **3 years or less** | **Turnkey** | You don’t have time to recoup buildout costs. Every dollar you spend on construction is a dollar you lose when you leave. Pay the higher rent — it’s cheaper than writing a $200,000 check you’ll never see again. |
| You’re staying **4–7 years** | **Partial turnkey** | You have enough time to amortize $50–$80/sq ft of your own spend, but you still want the landlord to carry the risk on big-ticket systems. This is the sweet spot for most growing businesses. |
| You’re staying **8+ years** | **As-is (with aggressive TI allowance)** | You have time to fully amortize a $100–$150/sq ft buildout. Negotiate the lowest possible base rent and a $40–$60/sq ft TI allowance — then fund the rest yourself. Your total occupancy cost over 8 years will be 15–25% lower than turnkey. |

**The hard truth:** If you’re a startup or a company with uncertain growth, never do as-is. You’ll be stuck with a space you can’t sublease because your custom buildout doesn’t suit the next tenant. Turnkey or partial turnkey preserves your exit flexibility — and that flexibility is worth **$10–$20/sq ft** in avoided vacancy risk alone.

**Final rule of thumb:** Add up your total occupancy cost (rent + buildout amortized over lease term + operating expenses) for each option. The one with the lowest **total cost per square foot per year** wins — but only if you’re confident you’ll stay the full term. If there’s a 30%+ chance you’ll leave early, turnkey is always cheaper.

## FAQ

**What exactly is an “as-is” delivery?**  
An as-is delivery means you accept the commercial space exactly as it currently exists — with no landlord improvements, no warranties, and often with existing wear or code issues. You’re responsible for all design, permits, construction, and any surprises like outdated HVAC or non-compliant electrical. It’s the lowest upfront rent but the highest risk and cost for you.

**How does a warm shell differ from as-is?**  
A warm shell gives you a finished exterior, roof, and base building systems (like HVAC, electrical panel, and plumbing stubs), but the interior is a blank canvas — no walls, floors, ceilings, or finishes. You still handle all interior build-out, but you avoid major structural or system surprises. Rent is higher than as-is, but your construction risk is lower because the landlord certifies the base systems work.

**Is turnkey always the most expensive option?**  
Turnkey typically has the highest base rent because the landlord covers all construction costs — from design through final finishes and permits. However, it can save you money if you lack construction expertise, need a fast move-in, or want predictable costs. The landlord takes on the risk of delays and overruns, which can be valuable if your timeline is tight.

**Which delivery saves the most on total project cost?**  
It depends on your situation. As-is can save the most if you have in-house construction skills and can negotiate a low rent, but it often costs more overall due to hidden repairs. Warm shell usually offers the best balance for tenants who want control over finishes without major system risks. Turnkey saves you time and headache, but you pay a premium for that convenience.

**How do I know which delivery is right for my budget?**  
Compare the total cost over your lease term: rent plus your estimated construction costs for each option. For as-is, add 20–30% contingency for unknowns. For warm shell, add 10–15% for interior work. For turnkey, the rent already includes construction, so it’s more predictable. If your budget is tight, warm shell often gives the most control without the as-is gamble.

**Can I switch delivery types after signing a lease?**  
Generally no — the delivery type is locked into the lease terms. However, you can sometimes negotiate a “hybrid” where the landlord agrees to certain improvements (like a new HVAC) within a warm shell or as-is deal. Always clarify exactly what’s included in writing before signing, because changing later is expensive or impossible.

## 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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Kory White