In the fast-paced world of commercial construction, the term ‘white box’ signifies a specific stage of finish a property undergoes before a tenant moves in and customizes it. This concept is crucial for business owners seeking new commercial spaces, as it sets realistic expectations and helps in planning renovations effectively.
White box is also synonymous with vanilla shell, lit shell, plain vanilla shell, plain vanilla box, warm vanilla shell, warm vanilla box, warm white box, and warm white shell.
In this blog, we will understand the meaning of white box construction, its inclusions and exceptions, and why commercial business owners should trade in ‘white boxed spaces’. You will also know how much of a budget to allocate for shell build-outs, its step-by-step process, and how to distinguish white boxes from other types of box construction.
In addition, learn how whiteboxing various commercial spaces is useful, essential design considerations, and the latest trends in the sector.
White Box Construction Definition
White box in construction is a partially built lease space finished with HVAC systems, plumbing, lighting, basic electrical wiring, ceiling, and white painted walls (thus, the term ‘white box’). The space is built according to the regulations and codes of that particular area. This practice of ‘whiteboxing’ removes all traces of the previous tenant from a second-generation commercial space. Then, the owner strips the space back to a raw, shell-like state with no finishings. Hence, the white box real estate space serves as a blank canvas for new tenants to build out their space by performing tenant improvements (TIs) at much lower costs.
Whiteboxing is popular among commercial landlords who keep the developed white boxes ready for potential tenants and attract them with tenant improvement allowances (TIA). Until the tenant hires a contractor and finishes the space with their customizations, a white box building is not move-in ready.
A potential misconception one may hold is that the white box condition merely contains a basic structure with minimal work done. In reality, several components contribute to building it to local code and preparing for TIs to be implemented on the interior, at times on the exterior.
What Includes and Does Not Include in a White Box Condition?
When the landlord delivers the commercial space to the tenant in a white box condition, it has foundational components already installed before leasing. This white shell does not include tenant-specific improvements.
Following are the provisions that you can and cannot expect from a white or vanilla box construction:
| White Box Includes | White Box Does Not Include |
|---|---|
| Exterior Shell (Exterior Walls, Finished Roof, and Rear Wall) | Interior Walls Finishing (Painting or Wallpaper) |
| Interior Finish (Sheetrock Walls, Separation Walls, Windows and Doors, and Concrete Flooring) | Additional Plumbing Fixtures |
| One or Two ADA-Compliant Restrooms and Drinking Fountain | Upgraded Electrical Fixtures |
| Standard Electrical Wiring | Telephone, Cable, and Data Wiring |
| Plumbing Fixtures | Security Systems |
| Heating, Ventilation, and Air Conditioning (HVAC) | Specifications for the HVAC system |
| Fire Protection System | Tenant Equipment and Furniture |
| Accessibility Requirements (Elevator or Staircase) | Tenant Improvements (TIs) |
| Building Permits and Required Licenses |
Benefits of White Box Construction
A landlord prefers to deliver space in white box condition because it becomes more presentable to prospective tenants and enables them to visualize their desired layout within the space. Likewise, tenants and their contractors receive more creative freedom to make the space efficient.
The noteworthy benefits of whiteboxing a business space are explained below:
-
Greater Scope for Customization
Every business space needs unique design and layout options based on its company’s brand or industry preferences. When leasing out a commercial space, a white box finish provides tenants with a clean slate to be customized with their detailed improvements. You can change the floor plan at the initial stage, choose designs and materials, hire workers, track work progress, and make repairs.
-
Budget-Friendly
With the core elements of the build already installed, potential tenants have to spend less money on preparing the site before tenant improvements. The difference between spaces with and without white box finishes can reach up to 20-30%. Furthermore, landlords offer lessees tenant improvement allowances that help to offset the costs while still allowing them to enjoy the benefits of a customized space.
-
Faster Move-in
One major advantage of white box construction is that you will receive the keys to your new commercial space as soon as possible. When the property is in ready-to-build condition, you can complete the design and build process faster and move in quickly to start your business. Some landlords allow tenants to make repairs even before the building is put into operation, which gives you the opportunity to repair it in a shorter time.
-
Quality Check of The Space
Buying a new space with a white box finish is the safest to purchase in the sense that you can easily spot any construction defects. Suppose the developer has violated construction technology, for instance. In that case, you can see cracks in the walls or leaky corners immediately and not years later when the damage becomes severe.
-
Zero Damage or Wastage
Since there are no previous fixtures for the new tenants to remove or throw away post whiteboxing, zero waste is produced. This also eliminates the possibility of any unnecessary damages before starting the tenant improvement work.
-
Versatility Appeals Tenants
The absence of specific interior finishes in white box spaces makes them extremely versatile and adaptable. Tenants can customize the white box to fit their business or branding requirements. Hence, this level of versatility appeals to a wide range of commercial tenants, increasing the number of lessees for landlords.
White Box Construction Across Various Industries
White box construction enhances various industries by offering customizable solutions that improve efficiency and innovation. Here’s how it helps:
Retail Spaces
White box construction is particularly advantageous for retail spaces due to its adaptability. Retailers can easily customize the space to reflect their brand identity and layout preferences. Essential elements such as lighting, shelving, and display areas can be tailored without major structural changes, allowing for a quicker and more cost-effective setup.
Office Buildings
For an office space, white box construction offers a blank slate that can be configured to accommodate open-plan layouts, cubicles, or private offices. This flexibility supports diverse business operations, from startups needing dynamic workspaces to established firms seeking a professional atmosphere. White box spaces in office buildings also facilitate future reconfigurations with minimal disruption.
Restaurants and Cafes
In the restaurant industry, white box construction provides a foundation that meets health and safety regulations while allowing for extensive customization. Restaurateurs can install specialized kitchen equipment, design unique dining areas, and create ambiance through decor and lighting. This approach is particularly beneficial for franchisees who need to replicate a consistent brand experience.
Industrial Spaces
Industrial and warehouse spaces benefit from white box construction by offering a basic but functional environment that can be modified to suit specific operational needs. Whether it’s installing heavy machinery, creating storage solutions, or setting up assembly lines, the flexibility of a white box setup supports a wide range of industrial activities.
Healthcare Facilities
Healthcare providers use white-box construction to create adaptable clinical environments. From small clinics to large hospitals, the ability to customize exam rooms, surgical suites, and administrative areas ensures that the space meets the stringent requirements of medical operations while remaining scalable for future growth.
Why is White Box Construction Gaining Popularity?
One of the biggest reasons contributing to the white box’s popularity in commercial real estate is its flexibility. White box construction offers contractors, business owners, and interior designers the power of personalization to transform an existing space as per their exact specifications.
Moreover, white box construction is environmentally friendly because it reuses existing structures and reduces the need for fresh construction materials. Therefore, commercial building owners prioritizing sustainability are viewing white box construction as a low carbon footprint, modern real estate solution.
In luxury commercial real estate, whiteboxing is becoming an effective property-selling strategy. Most high-end buyers have the budget to customize and remodel the function of a space extensively. Whiteboxing strips off all decor and clutter which shifts the buyer’s focus to the space’s distinctive architectural features.
Josh Greer of Hilton & Hyland tells CNBC, “There’s increasing recognition that ‘designer-ready’ is exceedingly more attractive than ‘move-in ready’ to the ultra-wealthy.”
Other Types of Box Finishes
Now that you have learnt what is a white box in construction, it is equally helpful to familiarize yourself with different types of ‘box finishes’ in commercial construction, so you can better communicate with your contractor about what exactly you need.
White Shell / Vanilla Shell vs Gray Shell
White Shell vs Grey Box/Cold Shell – A gray shell is an unfinished commercial space with unfinished floors, bare unpainted walls, and no plumbing, electrical, HVAC or sprinkler systems. The space is cold due to the absence of HVAC and grey due to the untreated concrete walls and floor.
White Shell vs Warm Gray Box – A warm gray box finish is when HVAC systems, electrical fixtures, and plumbing systems are in place. There is no permanent ceiling lighting, only minimal lighting, and fire alarm protection in a warm gray box finish.
White Shell vs Cold Gray Box – A cold gray box finish does not have a permanent HVAC system. Basically a weather-resistant roof, with unfinished walls and floors. This cold gray box stage is as bare as the space can be.
White Shell vs Cold Dark Shell – A cold dark shell includes unfinished walls, no ceilings, unfinished floors, and no HVAC ductwork. Plumbing and electrical systems, room separators, and sprinkler systems are also absent.
White Box Construction Costs
Like a typical construction project, the construction cost of a white box building depends on the existing condition and size of the area, definitions, and scope of work. Extra expenditure includes securing specific permits and any demolition or construction that needs to be done.
Here are some common costs for tenant improvements or whiteboxing in the US:
- HVAC Units with Supply/Return Air Systems and Controls – $5-$10 Per Square Foot
- HVAC Units Replacement – $5,000-$8,000 Per Unit (Generally for Retail)
- Drywall – $5 to $10 Per Square Foot
- Drop Ceiling with Tiles – $4 Per Square Foot
- Lighting and Electrical Switches – $4 Per Square Foot
- Restrooms – $5,000-$10,000 Per Restroom
- Flooring – $4 Per Square foot
- Architecture – $3 Per Square Foot
- MEP Services – $1.50 Per Square Foot
- Project Management – 4-5% of the Construction Costs
- ADA Inspection – Greater than $50,000
- Permitting Costs – Demo Permit $250, Full Building Permit $1,500
- Licensing and Registration – $1,500 (Texas)
Design Considerations for White Box Construction
White box construction offers the advantage of creating a flexible and adaptable space. Key design considerations ensure the white box construction project meets the needs of future occupants effectively:
Flexibility and Versatility:
The primary benefit of white box construction is its flexibility. Design should incorporate elements that facilitate easy reconfiguration and adaptation. Features such as demountable walls, modular furniture, and versatile electrical and data connectivity options enable future layout changes, catering to diverse tenant requirements.
Infrastructure and Utility Provision:
Essential infrastructure, including HVAC distribution, electrical wiring, plumbing, and lighting systems, must be properly installed. The white box design should allow for future expansions and modifications. Furthermore, adopting energy-efficient systems and sustainable practices increases long-term cost savings.
Neutral Color Palette and Finishes:
Utilizing a neutral color palette and basic finishes provides a blank canvas for future customization. Colors like white, beige, and light gray for walls, floors, and ceilings offer a clean and cohesive look, allowing occupants to personalize the space according to their branding and preferences.
Lighting and Acoustics:
Effective lighting and sound design are crucial for creating a functional and inviting space. A combination of ambient, task, and accent lighting should be used to provide adequate illumination for various uses. Acoustic treatments, such as sound-absorbing materials and proper insulation, help minimize noise transfer and ensure speech privacy, enhancing the overall comfort of the space.
Accessibility and Universal Design:
Incorporating accessibility and universal design principles ensures the space is usable by all individuals. Features such as wide doorways, accessible restrooms, and properly placed electrical outlets and switches make the space inclusive and functional for everyone.
By addressing these design considerations, white box construction projects can maximize customization potential, functionality, and aesthetic appeal, meeting the specific needs of future occupants.
Key Elements of a White Box Build-Out Project
A white box build-out means preparing the commercial space for occupancy. The process involves installing lighting, flooring, interior walls, dividers, and other furnishings. A landlord may purchase materials for the tenant build-out or offer a ‘rent-free’ period to tenants for the construction process.
Since white box buildings are not ready for occupancy, there is plenty of scope for customization. Your landlord will offer you a tenant improvement allowance that is negotiated through a lease agreement to build out your space. Once the lease agreement has been finalized, your project team can proceed with the whiteboxing construction process.
Here is the elaboration of the key elements in the white box build-out project:
-
Tenant Improvement Allowance
When the landlord is offering TIA, it excludes costs for furniture, fixtures, equipment (FFE), paint or wallpaper, and other upgrades related to your business. These allowances are granted only for aspects related to the white box construction and not for the business occupying it.
The tenants pay for the initial build-out costs. The landlord will either disperse funds through progressive payments or a lump sum payment at the end of the construction process. Finally, the landlord and tenant finalize the amount during lease negotiations.
-
Lease Negotiations
Property owners or landlords may not always offer 100% of the total improvement costs, but smart negotiation skills can land you a better deal. Depending on your level of specialty upgrades, negotiate the allowance amount considering the lease term and the improvements the owner will retain at the lease end.
Both the tenant’s specifications and TIA amount should be mentioned meticulously in the lease agreement. This will help you secure the landlord’s investment and save both parties from legal troubles.
-
Lease Agreement
The lease agreement should be negotiated and finalized before the completion of the build-out. Although landlords and tenants have different interpretations of the lease agreement contract, the contract should be detailed and all-encompassing. This removes the risks of confusion, extra costs, and legal complications associated with your box white box construction.
During finalizing the agreement, legal consultation is a must to confirm all the contract stipulations are clear and acceptable to both parties. You have to be extremely cautious, especially for long-term and high-value leases.
-
Build-Out Contractor
For executing a successful white box build-out, hire a reputed commercial contractor who is experienced in whiteboxing projects similar to yours. In collaboration with architects, your contractor should plan the space’s design which is compliant with building code requirements. Your commercial contractor should also acquire all necessary permits before construction.
Make sure the contractor provides a comprehensive cost estimate that covers itemized bids. If there comes additional expenses or changes in the future, the contractor must inform you and not keep any hidden costs. Hence, hire someone who clearly communicates and delivers a fast turnaround without compromising quality.
Drawbacks of White Box Construction
Although a white box space provides numerous benefits to property developers and business owners, it comes with some disadvantages too. Here are the potential drawbacks of white box construction:
-
Longer Build Time
White box may seem like a quickly convertible shell space, but the underlying process behind is thorough. All components must be built-to-code and ready for new interior tenant build-out. It should obtain all necessary licences and permits depending upon the local jurisdiction.
-
Not Move-In Ready
With older white-boxed spaces, tenants might need a whole lot of replacements and improvements, which can be expensive. Also, since a white-boxed space is not move-in ready, tenants have to wait until the remodeling is finished.
-
Costs for Landlords
If the tenant has specific customizations for their space, landlords may have to spend extra money to remove them and install new finishes once the lease term comes to an end.
-
Tenant’s Responsibility
A white box space is unfinished, so the chances of encountering unexpected issues during the construction process are greater. It’s the tenants who have to undertake responsibility for all aspects of the white box build-out.
Is White Box Construction Ideal for Your Space?
Whether white box construction is right for you or not depends on your specific goals and preferences as a business owner. Consider the following factors before making your decision:
- Budget
- Timeline
- Design flexibility
- Brand image
- Target customers or clients
- Long-term vision for the space
- Market trends for white-boxed properties
White box construction must help you achieve your project requirements and business objectives. Ensure you have the resources to handle the added responsibility that comes with the build-out process. Work with an experienced commercial general contractor carrying a proven track record of white box construction projects.
Property owners thinking of whiteboxing their space should assess its potential based on additional factors like business location, scenic views, and proximity to amenities. Even if the commercial space needs significant repairs, the buyers will focus more on possibilities.
Emerging Trends in White Box Construction
There are emerging trends in white box construction that promote innovation and adaptability. This futuristic approach includes creating efficient, flexible commercial spaces that incorporate smart technologies and sustainable materials while meeting evolving tenant needs.
Sustainability and Green Building Practices
White box construction increasingly focuses on sustainability, using eco-friendly materials and energy-efficient systems. Recycled steel and low-VOC paints are now popular among commercial contractors. According to the US Green Building Council, green buildings with LEED certification in the US consume 25% less energy and 11% less water compared to non-green buildings.
Technological Integration
Integrating smart technologies is a revolutionary white box construction trend. Commercial spaces are being whiteboxed with IoT devices controlling lighting, heating, and security. By 2030, it’s projected that there will be 25.4 billion connected smart devices globally.
Flexible and Multi-Use Spaces
The demand for flexible spaces has grown, driven by remote work trends. White box constructions are now designed with modular elements, like sliding walls, allowing quick reconfiguration. According to JLL, flexible or coworking spaces are expected to constitute 30% of corporate real estate portfolios by 2030.
Health and Wellness Features
Post-pandemic, there’s a focus on health and wellness in commercial spaces. Business owners are now personalizing white box construction with improved ventilation, touchless tech, and pathogen-reducing materials. The Fellowes Workplace Wellness Trend Report highlights that a striking 87% of employees desire their employers to provide healthier workspace features.
These trends make white box construction a versatile, future-ready option for commercial spaces.
Examples of Successful White Box Projects
The Penthouse in Sierra Towers, Los Angeles
Billionaire heir Evan Metropoulo merged and white-boxed two units of a 32nd-floor penthouse atop the Sierra Towers to create an interior space ready for renovation. Through white box construction, Metropoulo stripped everything from floors, exterior walls, and other interior finishes. The 7,000-square-foot West Hollywood penthouse enjoys panoramic views of the city with a 4,000-square-foot wraparound balcony. (Source)
Tech Training Hub, San Francisco
A former commercial office space located in a business district of San Francisco, California underwent white box transformation, evolving as a tech training hub. The whiteboxing process removed all of the previous interior elements to create a blank canvas. It allowed the new tenants layout customization to build tech-integrated workspaces and infrastructure.
Coffee Shop to Storefront
The owners of the Urban Bean cafe decided to sell their property situated in the city’s square. To attract high sale prices, they outstripped the coffee-centric interiors and finishes, creating an empty space. Whiteboxing the cafe enabled the new tenants to build a modern retail storefront at a prime location.
Summing Up
White box construction is the process of preparing a commercial building for new tenants to finish the space with their own specifications and move in. It acts as a blank template that provides tenants with a wide range of creative possibilities. At the same time, whiteboxing minimizes the additional work to build-out space compared to a cold shell condition.
Are you planning to buy and develop a white box space for your business? Constructive Solutions will offer you exceptional white box construction services and implement tenant improvements suitable for your company’s needs. Our commitment lies in client satisfaction from the beginning of the project to its construction end.
Contact our team for your next white box construction project!
FAQs
What is the meaning of whiteboxing?
Whiteboxing involves stripping a commercial property to its basic features—such as lighting, ceiling, HVAC, and utilities—creating a blank canvas that allows tenants to visualize the space and customize it with their own finishes.
What is included in a white box?
A white box typically includes basic features such as finished exterior walls, ceilings, flooring, lighting, HVAC systems, plumbing, and electrical systems, ensuring the space meets building codes and is ready for tenant-specific customization.
What is the per square foot cost for a vanilla shell build-out?
Depending on the level of finishes, a general contractor in the United States may charge between $20 to $50 per square foot for building out a warm white or vanilla shell space.
How gray box differ from a white box construction?
A gray box is an unfinished commercial space with no HVAC, plumbing, electrical, or sprinkler systems, while a white box includes these systems but lacks finishes like flooring, walls, and ceilings.
What is the distinction between a white box and a warm shell?
A white box has basic plumbing, electrical, and HVAC systems installed, while a warm shell also includes these systems along with minimal lighting and fire protection alarms.
Relevant Resources;
- How to Choose Right Tenant Improvement Contractor in San Francisco?
- Everything You Need To Know About Build-Out
Constructive Solutions, Inc. is a full-service commercial construction company serving San Francisco and Bay Area.
Whatever your vision, we have the resources, experience, and insight to make your concept a reality, and a space where your business can flourish.
Call Us Now for Estimate
