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Base Building vs Tenant Work: What Am I Actually On the Hook For?

📖 1,915 words🗓️ Published Jun 23, 2026

Direct Answer

You are on the hook for everything inside your four walls that is specific to your business — interior partitions, finishes, your lighting, your data and electrical distribution, your kitchen or lab equipment, your branding. The landlord is on the hook for the base building: structure, roof, exterior walls, the main HVAC unit, the primary electrical service to your suite, code-compliant restrooms, and an accessible path to your door. The money-move: get the line between base building (also called shell or landlord's work) and tenant work (TI or tenant's work) written explicitly into the work letter before you sign, because every undefined item defaults to the tenant — and that is exactly how a buildout budget gets blown by $50,000 to $200,000.

The single most expensive ambiguity is HVAC. Landlords love to say "HVAC is provided." That usually means the base building rooftop unit (RTU) and trunk ducting are there — but the distribution (the ductwork, diffusers, thermostats, and VAV boxes that actually push conditioned air into your specific layout) is tenant work, and it runs $8 to $20+ per square foot. On a 4,000 SF space that is $32,000 to $80,000 you may not have budgeted because you read "HVAC provided" as "HVAC done." Pin down whether the landlord delivers distributed and balanced HVAC or just the unit on the roof.

The general rule of thumb across CRE: anything that benefits the building long-term and outlasts your tenancy is the landlord's; anything that exists only because of your specific use is yours. Structure, envelope, life-safety base systems, and core utilities to the suite are base building. Your offices, conference rooms, finishes, supplemental cooling, specialty power, and equipment are TI. The fights happen on the boundary items — and that is where the work letter earns its keep.

The Base Building / Tenant Work Line, Item by Item

Use this as your negotiation checklist. Confirm each item lands where it should.

Landlord / base building (push to keep these theirs):

Structure — foundation, columns, floor slab, roof structure.
Envelope — exterior walls, windows, roof membrane and weatherproofing.
Core HVAC — the rooftop unit or central plant and the main trunk duct to your suite.
Primary electrical — service to a panel in or near your suite, typically a defined amperage.
Base plumbing — main water, sewer, and a code-compliant common or in-suite restroom.
Life safety base — the building fire sprinkler main and risers, fire alarm panel, exit stairs.
Accessible path of travel to your suite entry door.

Tenant / TI work (expect to pay for these):

Interior partitions, doors, and finishes — flooring, paint, ceilings, millwork.
HVAC distribution — branch ducts, VAV boxes, diffusers, thermostats, balancing.
Electrical distribution — sub-panels, outlets, your lighting, low-voltage and data cabling.
Sprinkler drops and head relocation to match your ceiling layout ($3 to $7 per SF).
Specialty systems — supplemental cooling for a server room, grease interceptor, special power.
Signage, security, and branding.

The Boundary Items That Decide Your Budget

These are the items that live on the seam between shell and TI. Get each one defined in writing.

HVAC tonnage and distribution. Confirm the landlord delivers a specified tonnage per square foot (roughly 1 ton per 300–400 SF for office) AND whether distribution is included. "Capped duct at the suite" means you build everything downstream.
Electrical capacity. Get a stated amperage and voltage delivered to your suite. Discovering you need a service upgrade — pulling new feeders from the building's main switchgear — is a $15,000 to $75,000+ surprise.
Fire sprinklers. The landlord provides the main and risers; relocating heads and drops to your ceiling grid is tenant work. On an open shell this is $3 to $7/SF.
Restrooms. Confirm whether code-compliant restrooms are delivered or whether you must build them — see the ADA cost question for how fast that escalates.
Floor and ceiling condition. Is the slab delivered level and sealed? Is there a ceiling grid or are you buying it? "Open to deck" means no ceiling at all.
The "shell" definition itself. "Cold shell" (bare, no HVAC distribution, no restrooms, no ceiling), "warm shell" (HVAC, restrooms, basic systems roughed in), and "turnkey" (landlord builds to your plan) describe wildly different starting points. Know which one you are buying.

Shift It to the Landlord So You Don't Get Screwed

The whole game is moving boundary items onto the base-building side and funding the rest with the landlord's money:

Make the landlord define the delivery condition in detail. A one-line "warm shell" is not enough. Demand a delivery condition exhibit listing exact HVAC tonnage and distribution, electrical amperage, sprinkler coverage, restroom status, and floor/ceiling condition. Every item you nail down is one that cannot silently become your cost.
Use the tenant improvement allowance for permanent systems. HVAC distribution, electrical sub-panels, and sprinkler work are permanent building improvements. Fund them from a $30 to $100+ per SF TIA, not your own capital.
Negotiate a base-building warranty. Insist the landlord warrants that the roof, structure, core HVAC, and base electrical are in good working order at delivery. If the rooftop unit dies three months in, that should be the landlord's repair, not yours.
Cap your TI exposure with a turnkey deal. In a tenant-favorable market, push for turnkey — the landlord builds to your approved plan at their cost, capped at an agreed budget. You stop carrying construction risk entirely.
Carve out base-system repairs from your operating costs. Make sure the lease puts structure, roof, and core HVAC repair/replacement on the landlord, not buried in your CAM (common area maintenance) charges.
Get an independent shell inspection. Before signing, have a contractor verify the actual condition matches the promised delivery. A landlord's "warm shell" sometimes hides a dead RTU or an undersized panel.

The leverage: base-building systems are the landlord's permanent asset and their obligation under standard CRE practice. Every time a landlord tries to slide a structural or core-system cost into your TI scope, name it for what it is — their building, their cost — and push it back.

Common Traps in the Shell-vs-TI Line

"HVAC provided" that means only the rooftop unit — leaving $32,000 to $80,000 of distribution on you.
"Electrical to the suite" with no stated amperage, hiding a service-upgrade surprise.
"Warm shell" with no delivery exhibit, so every ambiguous item defaults to tenant.
CAM charges that quietly fund landlord base-system repairs you should not be paying for.
No base-building warranty, so a failed RTU or roof leak becomes your emergency.

flowchart TD A[Item in the buildout] --> B{Does it benefit the building long-term?} B -->|Yes - outlasts your lease| C[Base building - landlord] B -->|No - exists only for your use| D[Tenant work - TI] C --> E[Structure, envelope, core HVAC unit, main electrical, base restroom] D --> F[Partitions, finishes, HVAC distribution, your lighting and power, equipment] F --> G{Boundary item like HVAC distribution or sprinkler drops?} G -->|Undefined in work letter| H[Defaults to tenant - budget risk] G -->|Defined in work letter| I[Cost lands where you negotiated]

flowchart LR A[Demand detailed delivery condition exhibit] --> B[Define HVAC, electrical, sprinkler, restrooms] B --> C[Fund permanent systems from TIA] C --> D[Get base-building warranty + repair carve-out] D --> E[Independent shell inspection before signing] E --> F[You pay only for your own interior fit-out]

Related on PULSE

[What is the right base/variable split for an AE in 2027?](/knowledge/q12709)
[What's the typical CRO base salary in NYC vs SF vs remote in 2026?](/knowledge/q12)
[How does Salesloft win the HubSpot CRM customer base?](/knowledge/q1857)
[How do I roll out a 15% price increase without churning the base?](/knowledge/q80)
[How does Salesloft win the HubSpot CRM customer base?](/knowledge/q1802)
[What's the right approach to hybrid comp (base + commission + SPIFFs) when we have multiple sales roles (AE, Solutions Consultant, Sales Dev)?](/knowledge/q268)

FAQ

What exactly counts as "base building" in a commercial lease? Base building typically includes the structural shell, core mechanical/electrical systems, common areas, and building-standard restrooms. It’s what the landlord provides to make the space usable, but it rarely includes any finishes or fixtures tailored to a specific tenant.

If I’m a tenant, am I responsible for replacing the HVAC unit on the roof? Usually not — rooftop HVAC units that serve the base building are the landlord’s responsibility. However, if you install a dedicated unit for your space or modify the existing system, you may be on the hook for maintenance and eventual replacement. Always check your lease’s “HVAC” and “repairs” clauses.

What about flooring and ceiling tiles — are those mine to pay for? In most cases, yes. Standard ceiling grids and basic floor coverings are often considered tenant improvements. If you want upgraded materials or a custom layout, that’s your cost. Some landlords offer a “base building allowance” that covers a basic level of finishes.

Does tenant work include electrical outlets and data cabling? Absolutely — all interior power distribution, outlets, switches, and low-voltage cabling (data, phone, AV) are typically tenant work. The landlord usually provides only a main electrical panel and a point of connection. Running wires to your desks or walls is on you.

Who pays for adding a kitchen or break room in my leased space? You do, unless your lease specifically includes a tenant improvement allowance for such amenities. Kitchen plumbing, cabinetry, counters, and appliances are all considered tenant improvements. Landlords rarely cover these unless you negotiate a higher allowance.

If I move out, can I take the improvements I paid for with me? Generally no — once installed, they become part of the real property. Your lease likely states that all tenant improvements remain when you vacate. Exceptions exist for easily removable items like modular furniture or specialized equipment, but built-in walls, flooring, and plumbing stay.

Sources

BOMA International — base-building vs tenant-work responsibility matrices.
CBRE — Office and Industrial Fit-Out Cost Guides, delivery-condition benchmarking.
JLL — Tenant Improvement Cost Guide, HVAC and electrical distribution line items.
Cushman & Wakefield — Tenant representation on shell definitions, TIA, and turnkey deals.
RSMeans (Gordian) — HVAC distribution, electrical, and sprinkler unit cost data.
NAIOP — capital improvement and landlord/tenant cost allocation standards.
ICC / International Building Code — life-safety, sprinkler, and core-system base requirements.
Tenant-rep broker delivery-condition and work-letter negotiation briefings.

Download:

![Base Building vs Tenant Work: What Am I Actually On the Hook For?](https://swsydneyplasterer.com.au/wp-content/uploads/2026/03/How-Open-and-Closed-Ceilings-Differ-visual-selection-1.webp)

<svg xmlns="https://www.w3.org/2000/svg" viewBox="0 0 1200 340" role="img" aria-label="Base Building vs Tenant Work: What Am I Actually On the Hook For — 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>

# Base Building vs Tenant Work: What Am I Actually On the Hook For?

## Direct Answer

You are on the hook for **everything inside your four walls that is specific to your business** — interior partitions, finishes, your lighting, your data and electrical distribution, your kitchen or lab equipment, your branding. The **landlord** is on the hook for the **base building**: structure, roof, exterior walls, the main HVAC unit, the primary electrical service to your suite, code-compliant restrooms, and an accessible path to your door. The money-move: get the line between **base building** (also called **shell** or **landlord's work**) and **tenant work** (**TI** or **tenant's work**) written explicitly into the **work letter** before you sign, because every undefined item defaults to the tenant — and that is exactly how a buildout budget gets blown by **$50,000 to $200,000**.

The single most expensive ambiguity is **HVAC**. Landlords love to say "HVAC is provided." That usually means the **base building rooftop unit (RTU) and trunk ducting** are there — but the **distribution** (the ductwork, diffusers, thermostats, and VAV boxes that actually push conditioned air into your specific layout) is **tenant work**, and it runs **$8 to $20+ per square foot**. On a 4,000 SF space that is **$32,000 to $80,000** you may not have budgeted because you read "HVAC provided" as "HVAC done." Pin down whether the landlord delivers **distributed and balanced** HVAC or just the unit on the roof.

The general rule of thumb across CRE: **anything that benefits the building long-term and outlasts your tenancy** is the landlord's; **anything that exists only because of your specific use** is yours. Structure, envelope, life-safety base systems, and core utilities to the suite are base building. Your offices, conference rooms, finishes, supplemental cooling, specialty power, and equipment are TI. The fights happen on the boundary items — and that is where the work letter earns its keep.

## The Base Building / Tenant Work Line, Item by Item

![Base Building vs Tenant Work: What Am I Actually On the Hook For? — The Base Building / Tenant Work Line, Item by Item](https://image.pollinations.ai/prompt/high%20quality%20editorial%20business%20professional%20office%20photograph%20illustrating%20The%20Base%20Building%20%2F%20Tenant%20Work%20Line%2C%20Item%20by%20Item%20Base%20Building%20vs%20Tenant%20Work%3A%2C%20realistic%20magazine%20style%2C%20warm%20light%2C%20no%20text%2C%20no%20watermark?width=1200&height=675&nologo=true&model=flux&seed=89197)


Use this as your negotiation checklist. Confirm each item lands where it should.

**Landlord / base building (push to keep these theirs):**
- **Structure** — foundation, columns, floor slab, roof structure.
- **Envelope** — exterior walls, windows, roof membrane and weatherproofing.
- **Core HVAC** — the rooftop unit or central plant and the **main trunk duct** to your suite.
- **Primary electrical** — service to a **panel** in or near your suite, typically a defined amperage.
- **Base plumbing** — main water, sewer, and a **code-compliant common or in-suite restroom**.
- **Life safety base** — the building **fire sprinkler main and risers**, fire alarm panel, exit stairs.
- **Accessible path of travel** to your suite entry door.

**Tenant / TI work (expect to pay for these):**
- **Interior partitions, doors, and finishes** — flooring, paint, ceilings, millwork.
- **HVAC distribution** — branch ducts, **VAV boxes**, diffusers, thermostats, balancing.
- **Electrical distribution** — sub-panels, outlets, your lighting, low-voltage and data cabling.
- **Sprinkler drops and head relocation** to match your ceiling layout (**$3 to $7 per SF**).
- **Specialty systems** — supplemental cooling for a server room, grease interceptor, special power.
- **Signage, security, and branding.**

```mermaid
flowchart TD
  A[Item in the buildout] --> B{Does it benefit the building long-term?}
  B -->|Yes - outlasts your lease| C[Base building - landlord]
  B -->|No - exists only for your use| D[Tenant work - TI]
  C --> E[Structure, envelope, core HVAC unit, main electrical, base restroom]
  D --> F[Partitions, finishes, HVAC distribution, your lighting and power, equipment]
  F --> G{Boundary item like HVAC distribution or sprinkler drops?}
  G -->|Undefined in work letter| H[Defaults to tenant - budget risk]
  G -->|Defined in work letter| I[Cost lands where you negotiated]
```

## The Boundary Items That Decide Your Budget

![Base Building vs Tenant Work: What Am I Actually On the Hook For? — The Boundary Items That Decide Your Budget](https://image.pollinations.ai/prompt/high%20quality%20editorial%20business%20professional%20office%20photograph%20illustrating%20The%20Boundary%20Items%20That%20Decide%20Your%20Budget%20Base%20Building%20vs%20Tenant%20Work%3A%20What%20Am%2C%20realistic%20magazine%20style%2C%20warm%20light%2C%20no%20text%2C%20no%20watermark?width=1200&height=675&nologo=true&model=flux&seed=38700)


These are the items that live on the seam between shell and TI. Get each one defined in writing.

- **HVAC tonnage and distribution.** Confirm the landlord delivers a specified **tonnage per square foot** (roughly **1 ton per 300–400 SF** for office) AND whether distribution is included. "Capped duct at the suite" means you build everything downstream.
- **Electrical capacity.** Get a stated **amperage and voltage** delivered to your suite. Discovering you need a service upgrade — pulling new feeders from the building's main switchgear — is a **$15,000 to $75,000+** surprise.
- **Fire sprinklers.** The landlord provides the **main and risers**; relocating **heads and drops** to your ceiling grid is tenant work. On an open shell this is **$3 to $7/SF**.
- **Restrooms.** Confirm whether code-compliant restrooms are delivered or whether you must build them — see the ADA cost question for how fast that escalates.
- **Floor and ceiling condition.** Is the slab delivered **level and sealed**? Is there a **ceiling grid** or are you buying it? "Open to deck" means no ceiling at all.
- **The "shell" definition itself.** "Cold shell" (bare, no HVAC distribution, no restrooms, no ceiling), "warm shell" (HVAC, restrooms, basic systems roughed in), and "turnkey" (landlord builds to your plan) describe wildly different starting points. Know which one you are buying.

## Shift It to the Landlord So You Don't Get Screwed

![Base Building vs Tenant Work: What Am I Actually On the Hook For? — Shift It to the Landlord So You Don't Get Screwed](https://image.pollinations.ai/prompt/high%20quality%20editorial%20business%20professional%20office%20photograph%20illustrating%20Shift%20It%20to%20the%20Landlord%20So%20You%20Don't%20Get%20Screwed%20Base%20Building%20vs%20Tenant%20Work%3A%20%2C%20realistic%20magazine%20style%2C%20warm%20light%2C%20no%20text%2C%20no%20watermark?width=1200&height=675&nologo=true&model=flux&seed=56151)


The whole game is moving boundary items onto the base-building side and funding the rest with the landlord's money:

- **Make the landlord define the delivery condition in detail.** A one-line "warm shell" is not enough. Demand a **delivery condition exhibit** listing exact HVAC tonnage and distribution, electrical amperage, sprinkler coverage, restroom status, and floor/ceiling condition. Every item you nail down is one that cannot silently become your cost.
- **Use the tenant improvement allowance for permanent systems.** HVAC distribution, electrical sub-panels, and sprinkler work are permanent building improvements. Fund them from a **$30 to $100+ per SF TIA**, not your own capital.
- **Negotiate a base-building warranty.** Insist the landlord warrants that the **roof, structure, core HVAC, and base electrical** are in good working order at delivery. If the rooftop unit dies three months in, that should be the landlord's repair, not yours.
- **Cap your TI exposure with a turnkey deal.** In a tenant-favorable market, push for **turnkey** — the landlord builds to your approved plan at their cost, capped at an agreed budget. You stop carrying construction risk entirely.
- **Carve out base-system repairs from your operating costs.** Make sure the lease puts **structure, roof, and core HVAC repair/replacement** on the landlord, not buried in your **CAM (common area maintenance)** charges.
- **Get an independent shell inspection.** Before signing, have a contractor verify the actual condition matches the promised delivery. A landlord's "warm shell" sometimes hides a dead RTU or an undersized panel.

The leverage: base-building systems are the landlord's permanent asset and their obligation under standard CRE practice. Every time a landlord tries to slide a structural or core-system cost into your TI scope, name it for what it is — their building, their cost — and push it back.

```mermaid
flowchart LR
  A[Demand detailed delivery condition exhibit] --> B[Define HVAC, electrical, sprinkler, restrooms]
  B --> C[Fund permanent systems from TIA]
  C --> D[Get base-building warranty + repair carve-out]
  D --> E[Independent shell inspection before signing]
  E --> F[You pay only for your own interior fit-out]
```

## Common Traps in the Shell-vs-TI Line

- **"HVAC provided"** that means only the rooftop unit — leaving **$32,000 to $80,000** of distribution on you.
- **"Electrical to the suite"** with no stated amperage, hiding a service-upgrade surprise.
- **"Warm shell"** with no delivery exhibit, so every ambiguous item defaults to tenant.
- **CAM charges** that quietly fund landlord base-system repairs you should not be paying for.
- **No base-building warranty**, so a failed RTU or roof leak becomes your emergency.

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

- [What is the right base/variable split for an AE in 2027?](/knowledge/q12709)
- [What's the typical CRO base salary in NYC vs SF vs remote in 2026?](/knowledge/q12)
- [How does Salesloft win the HubSpot CRM customer base?](/knowledge/q1857)
- [How do I roll out a 15% price increase without churning the base?](/knowledge/q80)
- [How does Salesloft win the HubSpot CRM customer base?](/knowledge/q1802)
- [What's the right approach to hybrid comp (base + commission + SPIFFs) when we have multiple sales roles (AE, Solutions Consultant, Sales Dev)?](/knowledge/q268)

## FAQ

**What exactly counts as "base building" in a commercial lease?**  
Base building typically includes the structural shell, core mechanical/electrical systems, common areas, and building-standard restrooms. It’s what the landlord provides to make the space usable, but it rarely includes any finishes or fixtures tailored to a specific tenant.

**If I’m a tenant, am I responsible for replacing the HVAC unit on the roof?**  
Usually not — rooftop HVAC units that serve the base building are the landlord’s responsibility. However, if you install a dedicated unit for your space or modify the existing system, you may be on the hook for maintenance and eventual replacement. Always check your lease’s “HVAC” and “repairs” clauses.

**What about flooring and ceiling tiles — are those mine to pay for?**  
In most cases, yes. Standard ceiling grids and basic floor coverings are often considered tenant improvements. If you want upgraded materials or a custom layout, that’s your cost. Some landlords offer a “base building allowance” that covers a basic level of finishes.

**Does tenant work include electrical outlets and data cabling?**  
Absolutely — all interior power distribution, outlets, switches, and low-voltage cabling (data, phone, AV) are typically tenant work. The landlord usually provides only a main electrical panel and a point of connection. Running wires to your desks or walls is on you.

**Who pays for adding a kitchen or break room in my leased space?**  
You do, unless your lease specifically includes a tenant improvement allowance for such amenities. Kitchen plumbing, cabinetry, counters, and appliances are all considered tenant improvements. Landlords rarely cover these unless you negotiate a higher allowance.

**If I move out, can I take the improvements I paid for with me?**  
Generally no — once installed, they become part of the real property. Your lease likely states that all tenant improvements remain when you vacate. Exceptions exist for easily removable items like modular furniture or specialized equipment, but built-in walls, flooring, and plumbing stay.

## Sources

- BOMA International — base-building vs tenant-work responsibility matrices.
- CBRE — Office and Industrial Fit-Out Cost Guides, delivery-condition benchmarking.
- JLL — Tenant Improvement Cost Guide, HVAC and electrical distribution line items.
- Cushman & Wakefield — Tenant representation on shell definitions, TIA, and turnkey deals.
- RSMeans (Gordian) — HVAC distribution, electrical, and sprinkler unit cost data.
- NAIOP — capital improvement and landlord/tenant cost allocation standards.
- ICC / International Building Code — life-safety, sprinkler, and core-system base requirements.
- Tenant-rep broker delivery-condition and work-letter negotiation briefings.

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Kory White