What It Costs to Build Out Your Office Space « The Office Space Guys | Everything You Need to Know About Finding and Leasing Office Space in New York City
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What It Costs to Build Out Your Office Space
October 31st, 2014

When you begin to think about the numbers it’ll take to build the office space of your dreams in your newly leased space, you must first figure out what kind of space you’re aiming for, as well as know what kind of lease you have signed. Let us break it down for you:

1) Negotiating with your landlord. The build out of a commercial space is a key point that is negotiated between the tenant’s real estate broker and the landlord. Manhattan landlords approach improvements to tenant’s space in various manners. Here are some of the ways your landlord might approach your build out:

  • A new building installation (NBI) based on the tenant’s architectural plans. Landlords use building standard materials and finishes when they provide new building installations. If the tenant requires that above standard materials or finishes be used, the tenant is responsible for paying for the difference in cost between building standard and upgraded materials and/or finishes.
  • A work letter reimbursing the tenant for the cost of construction. The tenant is allowed to hire their own licensed and insured architect and contractor to build out their own space. The landlord then reimburses the tenant. A cap based on a dollar amount spent per square foot is put on the reimbursement.
  • Free rent in lieu of construction. Generally, the longer the term of the lease the greater the amount of free rent.
  • A combination of free rent and a work letter.
  • Offer modest improvements to the existing space. These modifications generally entail, paint, carpet and some cosmetic changes.
  • Rent the existing space in “as is” condition.

Obviously, the more you want to do to the space, the more money you’re looking at – but often, this won’t be coming directly out of your pocket.

2) Union Buildings vs. Non-Union Buildings. Most of the big, nice and well-respected buildings in New York are union buildings – when you build out in a union building, you work with union contractors and union electricians, etc. Less fancy buildings, such as a small office building in Soho, are generally non-union buildings. Here, you’re not required to utilize union workers for your build out.
What’s the difference?

  • Union building build outs cost twice as much as non-union building build outs.
  • For example, a union carpenter costs $50/hr to a non-union carpenter’s $25/hr

3) Plain Vanilla Spaces vs. Sexy Spaces. There’s a price difference between what the industry calls a “plain vanilla” (read: builder’s beige) space and a sexy, colorful space.

  • Plain vanilla spaces always cost less. For these spaces, you’re looking at $75-$100 per rentable square foot in a union building. In a non-union building, a plan vanilla space build out can go for as low as $40-$60 per rentable square foot.
  • Sexy, colorful and more visually intriguing (read: more work to be done) spaces will cost you double that. In a union building, you’re looking at anywhere from $150-$200 per rentable square foot; in a non-union building, a bit less.

4) Office Furniture. Once your space is built, it’s time to think furniture. We’ve created the handy dandy chart for you to utilize below to calculate how much your office furniture will cost. Calculations are based on a density of 200 sq/ft per person and a mix of 20% private office and 80% open office cubicles.

Furniture Quality Level / Price Per Square Foot / Total Cost

A level furnishings / $25.00 x ____SF
B level furnishings / $20.00 x ____SF
C level furnishings / $10.00 x ____SF

This is just to get your started.  For more in-depth information, fill out the form below!

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