Some of the first terms that typically get thrown around when looking at vacant commercial spaces are “gray shell” and “vanilla shell”. These descriptors come in handy because empty buildings come in a variety of states, and it helps to know what to expect as far as how finished the inside is. So, whether you are a real estate agent, broker, property manager, or business owner, we want to help you by defining each type of “shell” and providing some insights about what they mean with regards to construction.
Gray Vs. Vanilla
In a space that lacks tenant improvements the floor and even sometimes the walls are gray, hence the name. This space may also be referred to as “cold” because it has no HVAC (it may have an air conditioning unit, but no ducts to deliver the air). You can expect there will be no ceiling, lighting, flooring, or drywall. Due to the fact that this space is basically empty and requires more work by a general contractor, it costs more (approximately $50-100/ sq. ft.) to finish than a vanilla shell, which is further along in the construction process.
The advantage of a gray shell is that you can customize the mechanical systems in the space to your exact needs because they are not yet in place. For landlords, a benefit of leaving a space in this state is that they will not waste any money on getting the space to a more completed state, only to find out that the tenant wants or needs something different.
This type of shell is often called “warm” because it usually has HVAC that is connected and working. In addition, the walls have been closed up with drywall because the plumbing and electrical systems have been installed. There is also a drop ceiling grid/ drywall ceiling with overhead lighting. At a minimum, the vanilla shell also has a working ADA compliant restroom, but it may have additional walls or rooms. Commonly, landlords have the space painted white for a clean, bright look and feel. Depending on the level of existing finishes and the additional buildout needs of the tenant, a vanilla space could cost as little as $20/sq. ft. to finish up to $50+ /sq. ft. for more extensive build-outs.
An advantage of a vanilla shell for both landlords and tenants is the ability to finish the space quickly and move in sooner. But, if the tenant requires different plumbing, electrical, etc. the landlord has wasted money and modifications will have to be made to the space.
The Bottom Line
In the end, the terms gray shell and vanilla shell can mean different things to different people, depending on their location or experience. So, contractors, tenants, agents, brokers, and landlords should ensure they are all on the same page about the level of finish in the commercial space and what is expected for construction. This includes specifics, such as the need for removal of glue on a concrete slab, which could cause delays or an inaccurate bid if not disclosed. A work letter can act as the legally binding documentation that defines/spells out the details of a project.
Ultimately, each space is unique, so it can be a challenge to pin down exactly what to expect when it comes to construction and the cost for a build out. That’s why we analyze each project individually to identify what is needed and to come up with an accurate cost breakdown. Each client or business is also distinct, and the needs of the organization will determine whether a gray or vanilla shell will work the best. Reach out to us today at firstname.lastname@example.org or via phone at 480-832-9808, so that we can work together to turn your gray or vanilla shell into a beautiful, functional work space.