What Costs to Expect When Budgeting Commercial Office Space Build-Out

commercial office buildout budget

Before signing a commercial office space lease it’s important that the tenant or the landlord get a preliminary construction bid to see how much the tenant improvement allowance will cover and how much out of pocket (if any) the tenant has to come. This way there are no surprises later and the tenant does not spend more than they were prepared to spend.

Major categories that go into a preliminary commercial finish out bid and their percent of total costs

  • Hard Costs – Will be 75% to 85% of your construction budget. They will always be the largest piece because they include the actual construction of the space and the costs depend on the size of the space and quality or level of finishes. They typically cover the mechanical, electrical, plumbing, paint, flooring, drywall, doors and windows, and framing.
  • Soft Costs – 8% to 12% of total costs. Are things such as architectural fees, legal fees, engineering fees, TAS ADA review, permit expediting, reimbursables. Typically easier to estimate than hard costs
  • Vendor Costs – Typically 5% to 10% of total budget. Items such as furniture, data and phone cabling, security, moving, and signage costs are vendor costs. It can sometimes be negotiated to have the tenant improvement allowance cover these items however typically the tenant pays for them.
  • Contingency Allowance – 5% to 10% of budget. The reserve of money that is added to a project budget to cover unforeseen expenses and changes. Also covers scope creep which are items that are added after the fact.
  • Project Management Fee – This ranges between 3% and 5% of total costs. Project managers help you mange the project, help with the schedule, budget, and quality of project.

Those are the primary categories and percentage of costs. To see the average sf price for tenant finish outs go here.



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