Commercial
Warm Shell vs. Cold Shell Commercial Spaces
If you're in the market for a commercial space for your business, you might be familiar with the terms ‘cold shell’ and ‘warm shell.’ But what to do these terms mean? And what considerations should you take into account when choosing a warm shell vs. a cold shell commercial space? We break it down here.
October 19, 2023
Looking for a new commercial space for your business is an exciting time. There are so many opportunities available and considerations to make when choosing a location. One major consideration is a space’s existing physical condition, which can vary widely. As you explore your options, you may encounter some unusual terms describing a commercial space’s condition. Commonly, these terms are warm shell and cold shell. We’ll help you break down what they mean.
What is a warm shell and what is a cold shell?
When you’re seeking out a new commercial space, you’ll probably come across phrases like cold shell, grey shell, warm shell, vanilla shell, white shell, or any number of variations. But what do these mean and how might they impact your decision-making when choosing a space? Let's dive in.
Cold Shell
Cold Shell or Grey Shell are terms for spaces that are unfinished. This can mean exposed wall studs, unfinished floors, and an exposed ceiling. Building systems-wise, electrical, mechanical, or plumbing systems, and, at times, fire sprinklers are not ducted or piped for future use. What we see instead are utility connections, known as ‘stub outs,’ which are capped and ready to be connected to the fixtures and/or equipment of your choosing.
Cold shell spaces are typically found in commercial buildings that are newly constructed but can sometimes be found in older buildings where a landlord has demolished an existing interior to make a blank canvas for a new tenant. It can also be seen in historic buildings, such as warehouses, in adaptive reuse project types where a space or building that once had a different purpose is being modified to suit a new function.
Things to consider when choosing a cold shell space?
A cold shell commercial space is a great option if you wish to fully customize the interior build-out for your business. You have a great deal of opportunity to create a unique statement that strongly adheres to your brand identity.
However, since there are no existing utilities in the space, there are tradeoffs and complexities with new systems. There is also energy efficiency, building code compliance and Initial Build-Out requirements with local jurisdictions that will influence return on investment, construction costs, and timeline.
From the landlord’s perspective, build-out complexity, incoming business brand awareness, and future business prospects are some of the discussion points that contribute to considerations for tenant improvement allowances. At times, there can also be opportunities to negotiate a delayed rental payment start date which a trusted real estate broker can help navigate.
Warm Shell
A Warm Shell is also known as Vanilla Shell or White Shell. These spaces typically have finished walls and ceilings, with existing building systems such as HVAC, lighting, and fire sprinklers. If there isn’t a common, shared restroom, these spaces will often have a built-out restroom, as well.
You can usually find warm shell spaces in existing commercial and mixed-use buildings where previous tenants have either already completed the initial build-out process or the commercial spaces have an established building-code-defined use.
Things to consider when choosing a warm shell space?
A warm shell is more ‘turnkey’ in nature, so it’s a great option to consider if you want to move in quickly with fewer adjustments, while being willing to work with existing conditions that might not suit your exact needs.
This is an approach preferred by some of our retail or office clients since these spaces are plug-and-play while keeping local jurisdiction, construction timeline, and budget variables at a more manageable level. This is especially true when embarking on a business’s first physical location.
A warm shell comes in many forms since existing spaces that had a former tenant will often have partitions, equipment, and utilities suited for the previous use. That means these spaces can be inherently less customizable, especially if you don’t want to engage in a longer tenant improvement process.
So which space is better for your business? That depends. Factors such as code compliance, Shell & Core building completion, return on investment, construction budget, opening timeline, type of business, and unique design needs will impact your decision.
Having a designer on board while you explore commercial spaces can help. We can provide you with commercial test fits, be another pair of eyes with the landlord’s work letter, and navigate potential challenges and solutions for any spaces you’re exploring. This can help you access a more holistic consideration of space planning, universal design, accessibility, and furnishing-based solutions to proactively evaluate decision-making impacts.
