What does Bare shell versus warm shell space mean?

Bare Shell Versus Warm Shell Space refers to two different levels of building finish delivered to a tenant before their own fit-out begins, with bare shell providing only the basic structural envelope and warm shell including additional core systems such as HVAC and electrical distribution.

How Bare Shell and Warm Shell Space Differ

• Bare shell space typically includes only the structural frame, exterior walls, roof, and floor slab, with no interior systems installed.
• Warm shell space adds core building systems such as HVAC distribution, electrical service, fire sprinklers, and finished restrooms.
• Tenants receiving bare shell space must install all mechanical, electrical, and interior finish systems themselves.
• Warm shell space reduces the scope of tenant improvement work required before occupancy.

What Does Bare Shell Versus Warm Shell Space Mean for Tenants

• Bare shell leases typically come with lower base rent but higher upfront tenant improvement costs.
• Warm shell space allows for faster tenant move-in since core systems are already in place.
• The choice between shell types affects negotiation of tenant improvement allowances.
• Landlords may offer either shell type depending on the target tenant profile and market positioning.

Best Practices for Negotiating Shell Condition

• Clearly define shell condition and included systems in the lease agreement to avoid disputes.
• Align shell condition expectations with the tenant's build-out timeline and budget.
• Confirm responsibility for code compliance and permitting for systems not included in the shell.
• Document the shell condition with detailed drawings or specifications at lease signing.

Understanding the difference between bare shell and warm shell space helps landlords and tenants align expectations around cost, timeline, and responsibility for building out a functional space.