Shell Condition
The state of completion in which a commercial space is delivered to a tenant, ranging from completely unfinished (cold shell) to move-in ready (warm shell).
Definition
Shell condition describes what's included when a landlord delivers space to a tenant. Cold shell (or grey shell) is the most basic: just the building structure with concrete floor, exterior walls, roof, and minimal utilities stubbed to the space. Warm shell (or vanilla shell) adds basic finishes: HVAC, electrical panel, finished drywall, restroom rough-in, and sometimes a roll-up door. The distinction matters because it determines how much the tenant must invest to occupy the space. Small bay industrial typically delivers as warm/vanilla shell. Understanding shell condition is critical when comparing lease rates—a lower rate on cold shell may cost more total when buildout is factored in.
Example
A tenant compares two 3,000 SF units. Unit A is cold shell at $10/SF—they'll need to install HVAC, electrical, drywall, and restroom ($45,000+ buildout). Unit B is warm shell at $13/SF with all basics in place ($15,000 buildout for office partition). Despite the higher rate, Unit B has lower total occupancy cost.