Office Space Build Out Cost Calculator

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Reviewed by: David Chen, P.E. (Licensed Professional Engineer specializing in Commercial Construction Cost Estimation)

Use this calculator to estimate the preliminary costs for customizing and building out a new office space lease. Costs are highly dependent on location, quality of finishes, and design complexity.

Office Space Build Out Cost Calculator

Typical range: $80 (Basic) – $200+ (High-end).
Covers architecture, engineering, permits, and unexpected overruns.

Estimated Total Build Out Cost:

$0.00

Office Space Build Out Cost Formula

1. Base Construction Cost = Leased Area (SF) × Cost per SF ($/SF)
2. Soft Cost Amount = Base Construction Cost × (Soft Cost Percentage / 100)
3. Total Build Out Cost = Base Construction Cost + Soft Cost Amount + FF&E Cost

Formula Sources: Colliers – US Office Cost Guide, Cushman & Wakefield – Construction Costs

Variables Used in the Calculator

  • Leased Area Square Footage (SF): The total square meters/feet of space being renovated.
  • Average Construction Cost per SF ($/SF): The primary cost driver for materials and labor for the physical fit-out (walls, ceilings, electrics, plumbing, HVAC adjustments).
  • Soft Cost/Contingency Percentage (%): Non-construction costs, including architectural fees, engineering reports, project management, permits, and a buffer for unforeseen changes.
  • Furniture, Fixtures, & Equipment (FF&E) Cost ($): Direct costs for desks, chairs, IT equipment, specialized lighting, and decorative fixtures.

What is Office Space Build Out Cost?

The office space build out cost, often referred to as Tenant Improvements (TI) or leasehold improvements, represents the capital expenditure required to customize a raw, or “shell,” commercial space into a functional office environment suitable for a specific tenant’s needs. This cost encompasses all the structural, mechanical, and aesthetic work necessary to transform the leased area.

Key components of the build-out include demising walls, flooring, ceiling installations, lighting, HVAC modifications, electrical wiring, plumbing for restrooms or break rooms, and specialized IT infrastructure. Importantly, the final cost is heavily influenced by the condition of the space (shell vs. second-generation), the complexity of the design (open plan vs. private offices), and the quality of finishes chosen (e.g., basic carpet tiles vs. custom hardwood).

Understanding the build out cost is critical for tenants to accurately budget their move and negotiate the Tenant Improvement Allowance (TIA) offered by the landlord. If the build-out cost exceeds the TIA, the tenant must pay the difference, which directly impacts the total cash outlay for the move.

How to Calculate Office Build Out Cost (Example)

  1. Determine Base Construction Cost: Multiply the square footage (e.g., 5,000 SF) by the average cost per square foot ($125/SF). Result: $625,000.
  2. Estimate Soft Costs and Contingency: Apply the percentage (e.g., 15%) to the Base Construction Cost ($625,000 * 0.15). Result: $93,750.
  3. Calculate Total FF&E Costs: Determine the fixed costs for furniture, IT, and specialized equipment (e.g., $50,000).
  4. Sum the Total Cost: Add the three components: Base Construction Cost ($625,000) + Soft Cost Amount ($93,750) + FF&E Cost ($50,000).
  5. Final Estimated Cost: $768,750. This is the projected total capital outlay.

Frequently Asked Questions (FAQ)

Is the Tenant Improvement Allowance (TIA) included in this calculation?

No. This calculator determines the total project cost. The TIA is money the landlord provides to offset this cost. You would subtract the TIA from the calculated Total Build Out Cost to find your net out-of-pocket expense.

What is a typical Soft Cost Percentage?

Soft costs and contingency typically range from 10% to 20% of the base construction cost. A complex project or one in a strict regulatory environment should use a higher percentage (15% – 20%).

Do I need a high Cost per SF for an open-plan office?

Open-plan offices generally have lower costs than traditional offices with many private rooms, as they require less drywall and fewer doors. However, high-end finishes, advanced HVAC, or specialized collaborative zones can still push the cost per SF into the higher ranges.

Why is Furniture, Fixtures, & Equipment (FF&E) tracked separately?

FF&E is typically depreciated differently from the leasehold improvements and is not usually covered by the landlord’s TIA, making it essential to track this cost stream separately for both accounting and budgeting purposes.

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