Shell & Core Fit-Out

What Is Shell and Core Fit-Out?

This is the bare bones of a building’s interior space and is often how the developers provide the building. The building may be complete on the outside, but on the inside the office space is just a shell, looking like a bare construction site; with concrete floors and walls, but with no lighting or facilities.

Although the office space is a bare shell, the common areas shared between tenants will have been completed; for example, the lifts, toilets and building reception. Unlike the shell, these core areas are usually finished to a high standard and will be ready for incoming tenants.

The concept of shell and core (or base build) is that the developer’s scope of works is the design and construction of the base building. A range of other construction and fit-out works are left to be completed before the building is occupied.

The concept originated in the USA, where it was applied to office buildings built by developers for rent. American developers initially fitted out offices, installing access floors, carpet tiles, ceilings, air conditioning and lighting based on a notional layout for prospective tenants.

However, the actual tenant’s ideas often differed from the developer’s notional layouts, and so money was wasted taking down ceilings and taking up floors, while mechanical and electrical services had to be altered to accommodate partition layouts.

‘Core and shell’ is undoubtedly a technical term for you will come across during a real estate project. Here is a little bit on what ‘core and shell’ really means and why it should definitely be on your real estate project checklist of questions to ask your project manager, architect or landlord. 

Core and shell is a design method commonly used in commercial office buildings today. The method originated in the United States and has become the preferred method of design and construction for commercial office buildings today, especially buildings with multiple tenants and multiple fit-outs.

The method refers to a process where the interior core structure of the building and the exterior building envelope are fully designed as the first phase of the project. The core (inside) of the building is covered by the shell (outside) as the first part of the construction. Once the core and shell structures are built, the internal architectural elements and tenant fit-out can be integrated throughout building occupancy.

The alternative to the core and shell method is to fit-out tenant space with ceilings, flooring, lighting, HVAC, etc. before a tenant occupies the space. However, oftentimes these items are altered to accommodate a tenant’s ideas and requirements for space. The result is a great deal of wasted time spent altering a space that just had new fittings installed.

There are several benefits to the core and shell method. Firstly, it speeds up the design and builds process. Defining the core and shell elements of the building first allows for progress to be made in the design of other portions of the building while the long-lead items of the core and shell can be implemented. Once those elements have been planned, work can proceed without having to wait on the interior details.

This method typically provides a better finish for the end user since the end-user is able to work from a blank canvas and create a space that suits their specific needs, rather than altering an existing fit-out. There is also more time to develop the internal fit-out allowing for a more careful and specific fit-out design. Be sure that this is a topic on your real estate project checklist to discuss with the professionals you have on your team.

The “shell and core” building concept involves the building owner or landlord planning and constructing the core, or inside, of a building surrounded by the exterior shell. This creates a blank canvas for a tenant to come in and outfit the space to fit their needs with flooring, equipment, furnishings and so forth.

Shell & Core Fit-Out

What’s Involved in the Fit-Out Construction Process?

The term fit-out refers to everything you need to outfit the interior of a building, such as furnishings, decorations, and other interiors. It also includes flooring, walls, woodworks, and anything related to mains services and utilities. The goal of a complete fit-out is to create a building that is ready to be occupied. A shell and core build-out is ready to be occupied, but first, the furnishings and interiors must be added by the tenant.

This type of construction is a long-lead item, meaning it takes to most time to build. A developer can get ahead by building the shell of a building while marketing for tenants.

The word ‘shell’ is exactly as it sounds, a hard or protective covering. In construction, this is the supportive exterior of a building’s structure. The predetermined shape and size of the building is constructed using wood, engineered wood or structural steel erected vertically on a defined base plant.

Doors and windows are inserted according to the specific design, along with egress or exit lighting, and sometimes a minimum number of restrooms are also added. Once this stage is completed, it is enclosed with a chosen siding such as wood, aluminium, brick, stucco, etc. Note: This is not mass wall construction where horizontal layers are stacked one on the other using logs, masonry, rammed earth, adobe or other natural materials.

Sometimes included in this type of construction are paved pathways and roads, boundary walls, drainage and fencing, along with soft and hard landscaping. The above-referenced base plant can also include mechanical, electrical, and fire detection systems. The structure can be completely fire clad on a solid foundation with defined floor heights. Working elevators, basements, and more can also be defined in the scope of the construction.

When construction is complete, the client has an enclosed weathertight shell that is ready for a tenant to take this blank canvas – this clean, bare space – and outfit it to meet the needs of the business that will occupy the building. Our experienced team can progress the project through design and build to the Certificate of Occupancy.

What Does ‘Shell and Core’ Include? 

Shell and core, also known as base build, is a technique that started in the US and has since spread to the UK and other parts of the world. It involves developing the core or shell of a building, including walls and windows, but does not include flooring, furniture or other interior elements. In other words, building owners create a basic shell for renters to outfit as they please. This approach allows more time to finish internal fit-outs and gives the renter more options to customise the space to their specific style or business needs.

Shell & Core Fit-Out

Most Shell and Core Provisions Include:

  • The structure of the building
  • The cladding on the building
  • The base plant of the building

In Other Cases, it May Also Include:

  • Roads and paved pathways around the property, including fencing, drainage, and boundary walls.
  • Hard and soft landscaping
  • Base plant, including mechanical and electrical systems that meet local regulations and building codes.
  • Fire clad structure complete with a solid foundation and “clear structural floor heights defined,” as well as basements, working elevators, etc.

Fire Detection Systems

There’s no way to know for sure what is included without looking at the lease agreement and conducting a formal meeting. Keep in mind, and you can always negotiate before signing a lease.

Does the Landlord or Building Owner Pay for Additional Fit-Out Expenses?

The landlord covers the cost of the base structure and external elements but is not necessarily responsible for carpeting, flooring, furniture, lighting, AC, etc. This allows every new tenant that comes in a chance to outfit the space as they see fit.

It is common for landlords or developers to buy materials necessary for the fit-out and then leave them stacked in the building without installing them. Some landlords do not provide free materials, but may instead offer free rent for X number of months to compensate for costs to outfit the space.

Why is this a popular construction process? Every tenant requires different furnishings and layouts, which makes it impossible for landlords to guess what their future tenants may need. As a result, landlords can end up wasting a lot of money outfitting spaces one way, only to tear things down and redo them based upon a new tenant’s needs. That’s why it’s more cost-effective to leave the space blank until a tenant moves in.

Normal shell and core provision for a high-spec city office. Shell and core will typically comprise the structure, and it is cladding, its base plant completed common areas and external works. More specifically it will generally include:

  • Roads, paths, pavements, external lighting, security systems, fencing and boundary walls, drainage systems, incoming services, hard and soft landscaping, signage and all statutory requirements relevant to the site.
  • Foundations and fire clad structure with column grid and clear structural floor heights defined.
  • The building envelope, including insulation, external walls, glazing, balustrade and roofs.
  • Completely finished circulation and common areas including main reception, lobbies, staircases, toilets, plant rooms, riser shafts, lift shafts, basements, loading bays and car parking. Fire compartmentation should also be part of the shell and core provision.
  • All base plant, mechanical and electrical systems to plant rooms and services in shafts with air capped off by a fire damper to each tenant leased zone, electrical services connected to tenant’s zone switch panels and water and sprinkler services taken to each tenancy where they are capped off. 

The Base Plant Will Generally Include :

  • High and low voltage switchgear.
  • Transformers.
  • Lift systems.
  • A standby generator.
  • Boilers.
  • Chillers.
  • Cooling towers.
  • Water and fuel tanks.
  • Sprinkler plant.
  • Building control systems.
  • Air conditioning chambers and fans.
  • Water and fuel pumps.
  • Dry risers.
  • Fire detection, alarm and hose reel systems.

Scope of Work

The lease agreement between the landlord and tenant must clearly define the following aspects:

  • Scope of the shell and core built by the developer. This includes spaces in common areas for tenant appliances such as generators or chillers.
  • Does the landlord include a type A fit-out?
  • Which tenant equipment will be located in common areas?
  • The landlord’s contract should define practical completion of the shell and core works, and this includes all the requirements under the building regulations for occupation other than those what will be completed by tenants.

Fit-Out Expenses

The landlords are responsible for paying the cost of the base structure and external elements of the building. Still, they are not necessarily responsible for carpeting, flooring, lighting, air conditioning, furniture, and other indoor elements. All charges will be established in the lease agreement beforehand.

There are two common ways to complete the fit-out. One involves the landlord, who buys the materials and then leaves them stacked in the tenant spaces to be used as necessary. On the other hand, some landlords don’t provide the materials but offer free rent during the fit-out.

Advantages of the Shell and Core Method

Every tenant requires a specific layout for working spaces, which makes it almost impossible for landlords to predict their needs. As a consequence, landlords can waste large amounts of money in tenant spaces, which will often be torn down and rebuilt. It is more cost-effective to leave the space empty until a tenant moves in. The main advantages of the shell and core method are the following:

  • The design and construction process becomes faster while reducing costs and waste.
  • Tenants can complete indoor spaces as needed.
  • Common energy efficiency elements can be built into the project, offering their benefits to all tenants.
  • Design flexibility

There Are Several Advantages to the Shell and Core Method:

  • It can speed up the design and build process considerably, which can generate cost savings. It allows progress to be made in the design of portions of the building which will be fitted out later while the items of the shell and core that have a longer lead time (i.e. structures, façade and so on), are being constructed. This allows work to proceed without delays waiting for details of the interiors to be finalised.
  • It creates a blank canvas for occupants, making it more flexible, without impacting on the main fabric of the building.
  • It avoids waste as it is less necessary for occupants to strip out existing fittings.
  • It can result in more energy-efficient buildings, as the typically concrete core creates a thermal mass that enhances heat storage potential of the building.
  • From the perspective of the end-user, shell, and core is particularly beneficial as it can result in a finish more suited to their needs. The ‘blank canvas’ of the building enables the end-user to align it to their requirements better, and there can be more time to develop a proposal.
  • The underlying flexibility of the design means it is generally more straight forward for subsequent occupants to change the interior fit-out.

These types of projects are often executed for property developers or the building owners. It is a design method which is commonly used in commercial office buildings, especially buildings with multiple tenants and multiple fit-outs.

Shell and Core construction is a process in which the interior core structure and the exterior structure is entirely designed as the first phase of the project. The first step in this type of construction is covering the interior core or building with the shell. Once the shell internal and core structure is complete, the internal architectural essentials and tenant fit-out can be combined throughout building occupancy.

In terms of construction, a shell works as a hard or protective covering exterior of a building’s structure. The shape and size of the building, which is predetermined, is constructed with wood, engineered wood or structural steel erected vertically on a defined base plant. Doors and windows can be installed later according to the specific design. The exit lighting and a minimum number of the restroom are also added with doors and windows.

Sometimes, these types of construction also include paved pathways and roads, drainage and fencing, boundary walls, and soft and hard landscaping. There are many benefits of a construction like it speeds up the design and builds process. It provides a better finish for the end users, as they can work from a blank canvas and create a space according to their requirements.

It is not unusual for a tenant to start fitting out their demised areas before the completion of the landlord shell and core works, although the rent-free period (to allow the tenant to fit-out category A works) will be triggered by practical completion of the shell and core works.

Practical completion of the shell and core works should be defined by certification by the landlord’s contract administrator. It will include all requirements under the building regulations for occupation other than those that await completion of tenant’s work.

Because of the complexity of commissioning landlord and tenant’s work contemporaneously, it is advisable that the setting to work of service systems and commissioning activities are carried out by an independent commissioning agency with a duty of care to both landlord and tenant.

Request a free quote.

As a rough guide, the average cost for a fit-out is around $800 to $1250 per square meter.

This depends on the job though, so fill out the form below or call us 0400 421 461 for a job-specific quote.

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