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What is the Meaning of the Term "Build-Out"?

UPDATED: August 14, 2013

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Every business has its own jargon, and the commercial real estate business is no exception. Many office and retail buildings start out with tenant spaces consisting of little more than four walls and a door. The idea is that the spaces will be finished to meet the specific needs of each tenant.

The process of finishing this raw space is known as the "build-out." There can be extensive negotiations between the building owner (landlord) and the tenant over:

(1) What improvements will be made?

(2) Who will pay for these improvements?

(3) Who will be in charge of getting the work done?

(4) What will the tenant be permitted (or required) to remove at the end of the lease?

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