A turn-key (turnkey or turn key) property / space – refers to a space listing that is in move-in condition and ready for occupation by a tenant. As with everything, turnkey is subjective and based on what someone else’s standard. You should view the space to make this assessment for yourself.
By definition, turnkey is a phrase widely used for several things like services, products, and real estate. In commercial estate, using ‘turnkey’ simply describes a space ready for occupancy without needing much work. The wiring, doors, flooring, fixtures, and other cosmetic finishes are completed and available in the space.
If the space can be described as “simply, turn the key and move right in”, then the word turn-key is applicable.
Office Space Build-outs
Commercial office lease transaction more than likely to have an interior Tenant Improvement (TI) renovation. The scope work can vary from a simple project like new paint and carpeting to intensive office build-out. It is a common occurrence to provide a TI allowance unless the property owner lists the space “as is”. The property owner will include the tenant improvement allowance as a portion of the lease package as dollars/Rent-able Square Feet (RSF).
Some lease agreements will state that a property owner will provide a Turn-Key Build-Out to the tenant’s requested layout. The property owner takes responsibility for all the costs of any architectural and engineering services, permits, construction and management. Tenants are not responsible for any direct costs of the construction; the costs are integrated into the lease rate. Property owner takes the responsibility for the project and timetable, unless it is tenant caused. After the construction is completely finished, the keys are then handed to the tenant.
The Office Construction Process
The process of building out an office space starts by creating a pricing plan between the property owner, tenant, and interior architect. A pricing plan is essentially the blueprint of the project. It will contain information about any required build-out, finishes, wiring, plumbing, and any other note about the requested construction. The property owner must approve the pricing plan before it is shared with other general contractors involved in the TI construction for their preliminary pricing.
Once all the pricing has been accepted then the construction may continue forward. The property owner preserves the right to refuse to cover the cost if the preliminary pricing is considered too high. The tenant then has several options going forward. They may negotiate, walk away, modify the plans, or offer to pay a portion of the cost. Once both parties agree, then the property owner can authorize the architect to create the construction drawings.
Clearly defined construction plans combined with good communications between all parties involved assist in avoiding any misunderstandings. A main point in the developing plans for construction is for the property owner and tenant to describe clearly the requested build-out and proposed delivery to the Tenant. The property owner and tenant communicate during the negotiation and design plans. The property owner maintains a firm oversight of the construction and general contractor.
Currently available in Manhattan, turnkey office spaces are specializing in restoring older and second-generation properties. The property owners generally manage the available turnkey spaces.
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