<svg xmlns="http://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

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.

FAQ

What is the difference between base building and tenant work? Base building (shell / landlord's work) is the permanent structure and core systems — foundation, roof, exterior walls, the main HVAC unit, primary electrical service, base restrooms, and the fire-sprinkler main. Tenant work (TI) is everything specific to your business inside the suite — partitions, finishes, HVAC distribution, your lighting and power, and your equipment.

Who pays for HVAC, the landlord or the tenant? Usually both. The landlord provides the core rooftop or central unit and main ducting; the tenant pays for the distribution — branch ducts, VAV boxes, diffusers, thermostats, and balancing — which runs $8 to $20+ per SF. Confirm in the work letter whether distribution is included, because "HVAC provided" rarely means it is.

What does "cold shell" vs "warm shell" vs "turnkey" mean for my budget? Cold shell is bare — no HVAC distribution, no restrooms, no ceiling — so you build the most. Warm shell has core systems roughed in. Turnkey means the landlord builds to your plan at their cost.

The same square footage can cost you $0 or $150/SF depending on which one you signed.

How do I keep undefined items from becoming my cost? Get a detailed delivery condition exhibit attached to the lease that specifies every boundary item — HVAC tonnage and distribution, electrical amperage, sprinkler coverage, restroom status, floor and ceiling condition. Anything left undefined defaults to the tenant, so define it before you sign.

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.