The Hidden Costs of Turnkey Build-Outs: How Business Leaders Can Avoid Them

When securing office space, one of the most critical considerations is control over the design and build-out. Whether you're moving into a new lease, renewing, or expanding, understanding the difference between landlord-controlled turnkey build-outs and tenant-controlled improvement projects is essential for maximizing value and aligning the space with your business goals.

Why Turnkey Landlord Build-Outs Aren't Tenant-Friendly

Landlord build-outs, commonly known as turnkey spaces, involve the landlord managing all modifications before a tenant moves in. While seemingly convenient, these arrangements generally favor the landlord, not the tenant. Key drawbacks include:

• Inflated Costs: Turnkey projects typically include cost buffers—often making them 20–30% more expensivethan tenant-managed build-outs—to protect landlords from overruns, not to benefit tenants.
• Quality and Timing Issues: The landlord’s contractor may prioritize cost-cutting measures over quality, and project timelines are often out of your control.
• Lack of Flexibility: If the turnkey design doesn't align with your workflow or accommodate future growth, you face costly modifications later. 
• Lack of Advocacy: While you are the end user, when working with the landlord’s project manager, they take orders from the landlord, not you. Decisions made and dictated to the project manager will favor the landlord’s best interest, not yours. 

Tenant Improvement Projects: Control and Cost Savings

In contrast, a Tenant Improvement (TI) project using a negotiated Tenant Improvement Allowance and a project manager that you as the tenant hire and manage places control and cost transparency firmly in your hands. Key benefits include:

• Customization Flexibility: You dictate the layout, finishes, and branding, creating a workspace that precisely matches your culture and operational needs.
• Financial Control: Transparent budgeting enables you to leverage any cost savings directly, avoiding the inflated costs inherent in turnkey projects.
• Enhanced Visibility: With a tenant project manager overseeing the build-out, you gain real-time insight into costs, timelines, and quality control, significantly reducing risk.
• True Advocacy and Alignment: With a tenant PM overseeing the build out, you have control of and transparency into timelines, costs, and the impact of decisions.

The Essential Role of a Project Manager

Successfully managing a tenant-controlled build-out requires expertise. Hiring a Project Manager (PM) that you control ensures your project stays on track, avoiding costly delays and overruns. A PM provides:

• Vendor and Contractor Oversight: Ensuring quality and deadlines are consistently met.
• Cost Management: Expertly managing budgets and optimizing the Tenant Improvement Allowance to avoid unexpected expenses.
• Seamless Communication: Acting as the liaison between all parties, ensuring clear communication and alignment with your business objectives.

At Keyser, we provide dedicated project management services to help business leaders navigate the complexities of lease negotiations and space build-outs. Our team ensures your space is delivered as expected—without unnecessary headaches, delays, or budget overruns.

Negotiating Essential Customization Rights

Regardless of your chosen approach, negotiating specific customization rights within your lease agreement is crucial:

• Approval Processes: Clearly define the landlord’s role in approving modifications to prevent delays.
• Restoration Clauses: Understand obligations for returning the space to its original condition to avoid unexpected future costs.
• Signage & Branding Rights: Confirm your right to brand the space effectively, ensuring maximum visibility and alignment with your corporate identity.

Making the Strategic Choice

Choosing between a turnkey landlord build-out and a tenant-controlled TI project is a critical decision that will have a significant impact on your timeline and budget, so make sure you choose wisely. By partnering with a tenant-focused commercial real estate project manager, you can execute a build-out that is on time, on budget, and genuinely supports your long-term success.

At Keyser, our approach prioritizes your interests, maximizing flexibility and protecting your bottom line. Ready to align your office space with your business vision?

Contact us today to learn more.

Call: 602.953.9737 

Email: info@keyser.com

Frenquently Asked Questions:

Why should I avoid a turnkey landlord build-out?
Turnkey landlord build-outs typically limit tenant control and often include inflated costs and quality compromises. Tenant-controlled improvements with an experienced project manager offer greater customization, financial transparency, and long-term value.

How does hiring a tenant project manager improve my build-out experience?
A dedicated tenant project manager ensures vendor oversight, effective budget management, and clear communication, significantly reducing the risk of delays, cost overruns, and quality issues.

What makes Keyser the ideal partner for my office build-out and lease negotiations?
Keyser specializes in tenant advocacy, aligning lease terms and build-outs with your strategic business objectives. Our integrated approach, combining lease negotiation expertise with professional project management, protects your interests and ensures optimal outcomes.