Definition: Landlord-provided tenant improvements to a grey shell building that convert a cold, dark space to a warm, lit one.
Also referred to as vanilla shell improvements (VSI), under-ceiling improvements vary by situation but usually
include taped and ready-to-paint walls, suspended ceiling with lights, floor coverings, electricity and plumbing
ready for the installation of outlets and fixtures, and window coverings.
Discussion: Like many real estate terms and phrases, those associated with shell leases (e.g., vanilla shell, base shell, cold shell, warm shell, etc.) differ by location and situation, sometimes even within the same region or municipal area. As they say, the devil is in the details. The lease or sales contract should clearly and exactly specify the degree to which construction of any sort of "shell" building has been or will be completed prior to tenant occupancy.
Shell leasing and its various forms (warm, cold, base) are used primarily in commercial real estate, but are gaining popularity in upscale condominiums and townhouses and other high-end residential real estate transactions. The idea is to attract either tenants or buyers, or both, by offering customizable living units. Financial incentives in the form of tenant (or buyer) improvement allowances afford new residents the opportunity to select nearly all aspects of interior decor, including relatively large projects such as plumbing and fixtures, wiring, and interior walls.
Terms, Definitions, and Concepts: Real Estate, Construction and Building, Appraisal, Auction, Finance and Investment, Management
Added: Fri May 02 2008
Last Modified: Thu Jul 10 2008