Commercial Build Outs (What They Are and Who Pays For Them)

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Today, we’re talking about commercial build outs. What are they? And more importantly - who actually pays for the cost of building out the space? Not every commercial space will be a perfect fit for every business. It’s actually very common for commercial spaces to require some renovation work before they’re ready for occupancy by a new tenant. Some spaces may be fully renovated and ready to go, but others may require you to implement your own design and renovations to bring them up to your company’s standards. Second-generation spaces, which are suites that were previously occupied by another tenant, usually require updating at the very least or a total makeover in the worst of cases. So, that’s where you’ll need a commercial build out.
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Tyler Cauble is Founding Principal and President of The Cauble Group, an East Nashville-based commercial real estate brokerage serving the Greater Nashville Area. He's a native Nashvillian that has not only been a witness to the city's tremendous growth, but is also involved in it through his developments, renovation projects, and volunteer work.
As President of The Cauble Group, Tyler helps bring together buyers, sellers, landlords, and tenants in retail, office, industrial, and multi-family real estate. He’s committed to helping business owners understand the market so that they can grow their business and be part of Nashville’s future. Cauble is also the best-selling author of Open For Business: The Insider's Guide to Leasing Commercial Real Estate.
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[@TylerCauble]

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[@tamarasmith2466]

Do you have a clip addressing multiple leases in one of my buildings? Coffee Shop-Bakery-Nail Salon all in the same building. Walls are diving each space. They all share the enter and exit door, hallway and bathroom. Each business space is a different square footage.

[@TylerCauble]

What specifically are you needing to know? Happy to see if I can answer it for you

[@TylerCauble]

The most impressive build out I've ever seen was from an architectural firm that leased office space from us and wanted to show off their design abilities. What's the best build out you've ever seen?

[@caseythemiltonaire]

I absolutly love your videos! Great job and great content!

[@TylerCauble]

Glad you enjoy it! Thank you, Casey

[@reinvestorshow]

What do you think is the best way to sell build outs as a general contractor? To the owner, find tenants, architects or what?

[@TylerCauble]

I would say to get with commercial real estate brokers - they tend to be the ones asked about all of that and if they’re closing the deals you could be top of mind

[@chriskramp5174]

Is there a way to find out or aproximate the cost of a build out for a specific commercial space before signing a lease? Im trying to estimate my start up cost for my business. i am new entrepreneur with no developed credit. I been flipping burgers my whole life and I am finally looking into opening a small burger shop. How would I go about figuring out the cost for a build out for say, 1200sf with small kitchen and dining? Do i have to contact a specific contractor or can the landlord/broker give out an approximate estimate?

[@TylerCauble]

Best way? Get full architectural drawings, equipment plans, then have a contractor estimate it for you. Next best way - assuming around $150k to $500k for everything, depending on how you plan to approach your buildout. It’s tough to get real numbers together until you have full plans with specs because not all 1,200sf spaces are created equal. If the landlord is delivering you a cold dark shell and leaving you responsible for bringing water, power, and mechanical to the space it’ll be far more expensive than a 2nd generation restaurants space. I’ve seen groups get open for less than $100k out of pocket, but that’s rare in the restaurant industry

[@jerrylee5403]

Hi Tyler, love your videos, very informative. I'm an entrepreneur wanted to start a small business in my area, recently scouted out a space, what is the major things should I be looking for during tour of the space , perhaps to my benefit to ask for a TIA, or lower rent payment?

[@TylerCauble]

Yes - you should definitely be seeking any concessions that they're offering. I would lean on your tenant rep broker to negotiate that on your behalf since they'll be familiar with your market

[@blessed7fold]

If you're a start-up you will not get any TIA. With all due respect, Tyler failed to mention in his video that all of this is predicated on how credit worthy you are as a tenant/business.

[@TylerCauble]

That can certainly be true, but not all startups have no funding. Some have founders with capital / assets that will suffice for a guaranty, but you definitely need to do your due diligence as a landlord

[@blessed7fold]

@@TylerCauble Hey Tyler 👋 My thoughts as a Landlord would be if they have the funding to do their own improvements why should I put my money up for it 🤷‍♂️

[@jaygreen3256]

Hi Taylor, Can I still get the TI plus the build out from the landlord? I am trying to lease a space for a coffee shop and it used to be insurance company there. Tow small units, And I'm trying to take both units Of total amount 2000. Square feet. Please let me know what you think. Thank you in advance.

[@TylerCauble]

Hi Jay - if the landlord is 100% turnkeying the space, then there would be no reason for them to give any TI as those funds are directed towards the improvements in the space. If you're needing further startup capital to pay for equipment, expenses, etc. then I would recommend raising capital from private investors or looking into an SBA loan. Hope that helps!

[@nicholasburbridge8605]

Great video. In a Build to Suit scenario where the landlord carries the cost to renovate how far does that investment go? Does it include things like fixtures, appliances, furniture, etc? I'm working toward an entertainment venue that includes things like VR sport suites, VR gaming, axe throwing, billiards, and a lot more. I have budgeted for all those components but also intend to serve food and beverage which makes me wonder if I need to allocate cap ex dollars to things like fridge, stove, dishwashers, freezers, etc or if that is typically covered by the landlord in the build to suit agreement? Thank you

[@TylerCauble]

The wonderful thing about a build to suit is that everything is negotiable, so it can include as much or as little as you like. Usually the improvements will only cover the actual building, but I have seen fixtures, furnishings, and equipment included before

[@nicholasburbridge8605]

@@TylerCauble thanks so much for your reply. This was very helpful!

[@TylerCauble]

Happy to help!

[@ceyciemateo9411]

Do you take calls ? Advice calls? Willing to pay ?

[@TylerCauble]

Absolutely! You can book a coaching call with me here: calendly.com/tylercauble/30min

[@faithgabrielle024]

This is very helpful! I'm hoping to start a business using a space that would need to be completely built out. As a new entrepreneur how do you recommend negotiating that the landlord cover the build out? The negotiation part is a little intimidating. Is it better to have someone negotiate on my behalf?

[@TylerCauble]

I would definitely hire a commercial real estate broker and / or attorney to help you with those negotiations - they do it every day and will have knowledge of negotiations in your market

[@blessed7fold]

This will probably not be possible due to the fact that you're a start-up, you have no business credit and the market conditions right now are in favor of landlords.

[@leeforsyth2036]

Three years ago, what the Hell, already we can’t imagine that, can’t right now, being all ready 6:41 6:44 being Thursday morning bye now, yep on point, Friday to come with, the weekend. Praise the Lord every day for sure, Sunday to come ,,