Warm shell or cold shell?
Two words in a lease that decide more of your budget than every finish you will ever choose.
The short answer
Two tenancies, same street, same rate per square metre, same incentive. One of them will cost you about $70,000 more to fit out than the other on a 150 square metre floor plate, and nothing in the marketing brochure will tell you which.
Key points
- A warm shell arrives with air conditioning, ceilings, lighting, sprinklers and usually a bathroom.
- A cold shell is a concrete box with power and a water point.
- Budget roughly $350 to $550 per square metre extra for a cold shell.
- Ask for a written schedule of base building services. The terms themselves mean nothing.
Two tenancies, same street, same rate per square metre, same incentive. One of them will cost you about $70,000 more to fit out than the other on a 150 square metre floor plate, and nothing in the marketing brochure will tell you which.
Warm shell
You’re fitting out on top of something that already works. Conditioned air is at the tenancy, there is a ceiling grid, general lighting, sprinklers, a compliant path of travel to the door, and more often than not a bathroom you can use.
Your builder starts with partitions.
Cold shell
Concrete floor, concrete ceiling, a power supply and a water point. Sometimes not even that.
Air conditioning, ductwork, ceilings, lighting, fire services, floor coverings and quite often the accessible bathroom are all yours to install. On a clinic, where the ventilation has to satisfy AS 1668.2 rather than just keep an office comfortable, that’s not a small line item.
The bit that catches people
Nobody uses these terms consistently.
An agent will describe a tenancy as a warm shell because it has a ceiling, without mentioning that the air conditioning was sized for a call centre and cannot be zoned to a consulting room. Another will call something a cold shell that already has sprinklers and a bathroom. The words are shorthand, and shorthand is not a contract.
So don’t ask which one it is. Ask for a schedule.
What to ask for, in writing, at heads of agreement
- Air conditioning: is it there, what capacity, and can it be zoned and controlled by the tenancy?
- Ceiling: grid and tiles, or open to slab?
- Lighting: general lighting installed, or a supply only?
- Fire services: sprinklers, detection, exit and emergency lighting?
- Hydraulics: how many wet points, and where do they come in?
- Electrical: what is the incoming supply, and is there spare capacity on the board?
- Accessible path of travel and an accessible sanitary facility: provided, or yours?
- Floor coverings: existing, removed, or bare slab?
- Glazing and shopfront: complete, or to be installed?
Nine questions. Ten minutes. It’s the highest-value ten minutes anyone will spend on your project, and it happens before you have committed to anything.
Then read the incentive again
Landlord contributions get quoted as a headline figure, and the headline figure is the least interesting part. What matters is whether it’s paid against your fitout, taken as rent abatement, or spent by the landlord on base building works you do not control.
A generous incentive on a cold shell can easily be worth less than a modest one on a warm shell. Work out the net position before the number impresses you.
The rest of it is on the clinic lease checklist, and you can see what shell condition does to your own numbers in the fitout cost estimator.
Sources and further reading
The National Construction Code: building classification, fire separation, egress, sanitary provisions and access.
Source for AS/NZS 4815 and 4187 reprocessing, AS 1428.1 access and AS 1668.2 ventilation. The standards themselves are purchased, not free.
Questions
What is a warm shell fitout?
A tenancy handed over with base building services already in place: conditioned air, a ceiling grid, general lighting, sprinklers, an accessible path of travel and usually a bathroom. You fit out on top of a working base.
What is a cold shell fitout?
A concrete box with a power supply and a water point. Air conditioning, ceilings, lighting, fire services, floor coverings and sometimes the accessible bathroom are all installed by the tenant.
How much more does a cold shell cost?
Allow roughly $350 to $550 per square metre on top of the base fitout rate. On a 150 square metre clinic that is somewhere around $50,000 to $80,000 before a single finish is chosen.
How do I find out which one I am being offered?
Ask for a written schedule of base building services rather than relying on the term itself. Neither phrase is used consistently, and a schedule is the only version of the answer you can hold anyone to.
Send us the floor plan
A site assessment tells you what the tenancy can take and what it will cost to get there, ideally before you have signed for it.