Choosing the Right Commercial Space
Cost & Timeline Differences Between Grey shell, Vanilla shell, & Second-Gen
When planning a commercial lease, many tenants focus on location, square footage, and rent—yet often overlook one of the most critical cost drivers: the condition of the space at turnover. Whether a suite is delivered as a grey shell, vanilla shell, or second-generation space will directly influence your construction budget, timeline to occupancy, and the scope of tenant improvements (TIs) needed before you can move in.
Understanding the differences between these space types allows tenants, brokers, landlords, and project teams to set realistic expectations, avoid budget surprises, and better plan for move-in. This guide outlines the defining characteristics of each condition, the typical construction and permitting implications, and why a tenant might choose one over another based on business goals, timeline sensitivity, or intended use.
Note: These categories are general industry terms. Actual spaces may fall somewhere in between, and classifications can vary by landlord, jurisdiction, or building type.
Grey Shell
Definition:
A grey shell space is an unfinished commercial space. It typically includes the structural shell of the building but lacks most interior systems.
Common Characteristics:
Concrete floors
Unfinished walls (exposed drywall or block)
No ceiling grid or tiles
No HVAC or minimal HVAC rough-ins
Limited or no electrical wiring
No restrooms or plumbing fixtures
Fire sprinklers may be roughed in or absent
Budget Considerations:
Construction costs typically include installation of all mechanical, plumbing and electrical systems, ceilings, flooring, interior partitions, and finishes
Additional engineering and design planning and work is often required by specialists
Permit and inspection fees may be higher due to the scope of work
Timeline Considerations:
Design and permit processes are generally longer
Construction duration may be extended due to infrastructure installation
More inspections are required during construction
Why Someone Might Choose a Grey Shell:
Tenants may prefer a grey shell when they want maximum control over layout, systems, and finishes.
This option may be well suited for specialized uses such as medical, lab, or industrial applications where existing improvements wouldn’t meet functional requirements.
Grey shells are also selected by tenants planning long-term occupancy, where the upfront investment can be amortized over several years.
Vanilla Shell
Definition:
A vanilla shell is a partially finished commercial space that includes completed basic systems and code-required components.
Common Characteristics:
Painted or finished walls
Ceiling grid with lighting
Operational HVAC system
ADA-compliant restroom(s)
Electrical panels and outlets
Concrete or minimal finished flooring
Budget Considerations:
Build-out costs focus primarily on layout changes, finishes, casework, and branding elements
Fewer expenses for core systems compared to grey shell
Some existing systems may require minor reconfiguration
Timeline Considerations:
Design and permit process is shorter than grey shell in many jurisdictions
Fewer inspections
Build-out can begin sooner due to existing infrastructure
Why Someone Might Choose a Vanilla Shell:
Tenants who want to customize the look and layout without installing base building systems may find this condition efficient.
It's often preferred by office or retail tenants who don’t need complex modifications and want to move forward with finishes and layout design more quickly.
Landlords may deliver vanilla shells as a compromise between readiness and flexibility saving time and cost for both parties.
Second-Gen
Definition:
A second-generation space is a previously occupied commercial suite. It contains a full or partial tenant build-out from a prior occupant.
Common Characteristics:
Existing rooms, partitions, or open layout
Operational HVAC, lighting, and restrooms
Flooring, paint, and ceiling in place
May include existing cabinetry, millwork, or signage
Budget Considerations:
Costs depend on how closely the existing layout matches the new tenant’s requirements
Reuse of systems and finishes may reduce construction scope
Selective demolition or upgrades may be required for compliance or branding
Timeline Considerations:
Shorter duration than grey or vanilla shell if minimal changes are needed
Fewer design and permit requirements if major systems remain unchanged
Construction may be limited to cosmetic updates
Why Someone Might Choose a Second-Gen Space:
Tenants with budget constraints or urgent timelines may benefit from reduced build-out scope.
Businesses with basic spatial needs (e.g., professional offices, service retail) may find that existing layouts require little to no change.
Brokers often seek second-gen space for clients who want faster occupancy with lower total project costs.
Each space condition represents a different starting point for construction. Grey shells require the most foundational work, vanilla shells provide basic infrastructure, and second-gen spaces offer the potential for minimal modification. While these categories are helpful reference points, many commercial suites fall somewhere in between, especially if a landlord partially improves a space or a previous tenant leaves behind usable elements. Understanding the starting condition allows tenants and brokers to plan more accurately and avoid scope surprises after lease execution.
Need Help Navigating Your Commercial Build-Out?
Brandise Construction has delivered tenant improvements in all space conditions. Our team provides code-compliant planning, budgeting, and execution to help you move in with clarity and confidence. Submit your project details to start a conversation about your next project.