The biggest factor is what is already there
The same 2,000 square foot space can cost $40,000 or $500,000 to open, depending on whether the plumbing, power, restrooms and ceilings are already in place. Before you fall in love with a space, find out which of these it is.
Second generation space
A space that was already built out for a similar use. You paint, replace flooring, adjust lighting and add your signage. A former salon becoming a salon, or a former cafe becoming a cafe, is the best case.
- Typical $20 to $60 per SF
- Timeline 4 to 8 weeks
Vanilla shell
The landlord delivers finished walls, a ceiling, lighting, HVAC and often a restroom. You add your walls, finishes, fixtures and any special plumbing or power.
- Typical $60 to $150 per SF
- Timeline 2 to 4 months
Cold shell or first generation restaurant
Bare walls, a slab and utilities stubbed to the space. A restaurant adds a hood and fire suppression, a grease interceptor, more plumbing, more power and often more HVAC.
- Typical $150 to $350+ per SF
- Timeline 4 to 8 months
What drives the price up
- Grease interceptors and new sewer lines, especially if the slab has to be cut
- Kitchen hoods, fire suppression and makeup air
- Upgrading electrical service or adding three phase power
- Adding restrooms to meet code for your occupancy
- Fire sprinklers and alarm work when the use changes
- Water and sewer tap fees when your use needs more capacity than the space has
- Permit review time, which can add weeks in Denver and the surrounding cities
Example: a 2,000 square foot space
| Space | Cost per SF | Total cost | Typical landlord allowance |
|---|---|---|---|
| Second generation salon to salon | $30 | $60,000 | $0 to $10 per SF |
| Vanilla shell to retail store | $90 | $180,000 | $20 to $50 per SF |
| Cold shell to full service restaurant | $275 | $550,000 | $30 to $80 per SF |
These are planning ranges, not bids. Prices change with materials, labor and the building. Get a contractor walk through and bid before you sign a lease.
How to keep the cost down
Pick the right space
- Look for second generation space built for your use
- Ask what plumbing, power and HVAC are already in place
- Have a contractor walk the space before you sign the LOI
Negotiate the lease
- Ask for a tenant improvement allowance
- Ask the landlord to deliver HVAC and restrooms in working order
- Ask for free rent during construction
- Make the lease contingent on getting your permits
Common follow up questions
Who pays for the build out, the landlord or the tenant?
Usually both. The tenant pays for the build out and the landlord contributes a tenant improvement allowance, a set dollar amount per square foot. Longer leases and stronger tenants get larger allowances.
Can I finance a build out?
Yes. Many tenants use an SBA 7(a) loan or equipment financing for the work the allowance does not cover. Lenders will want a contractor bid and a signed lease.
How long do permits take in the Denver metro?
It varies by city and how complex the work is. Simple interior work can be approved in a few weeks. Restaurants and changes of use often take two to four months of plan review. Ask the city for current review times before you commit to an opening date.
This page is general information, not lending, legal or tax advice. Programs, limits and terms change, and every situation is different. Talk with your lender, attorney and CPA before you decide.