WARM SHELL PROPERTIES-ALL YOU NEED TO KNOW-COMPILED BY ER. AVINASH KULKARNI

WARM SHELL PROPERTIES-ALL YOU NEED TO KNOW-COMPILED BY ER. AVINASH KULKARNI

Saturday Brain Storming Thought (117) 12/06/2021

COMPILED BY ER. AVINASH KULKARNI

WARM SHELL PROPERTIES

The term shell lease is used when the rented property is an unfinished shell of a piece of commercial real estate, where the tenant must complete design and construction and add any necessary furniture, fixtures, and equipment

Warm Shell Property

A warm shell property is best described as a residential or commercial unit with minimal furnishing

A warm property is also known as a vanilla shell

Warm Shell

A warm shell is a residential or commercial building with furnished interiors, cooling and heating system, rest-rooms and plumbing, interior lighting (parameters may vary), etc

These property units are normally ornate and ready-to-use

Warm shell in the residential market is at a lower cost as compared to the projects offering furnished apartments

Warm Shell Fitout

Finished and services are applied to common areas

Needs basic amenities in place before it can be used

Key features of warm shell properties

1) property with minimum furnishing

2) after construction, basic amenities are put in place

3) also known as semi-furnished or vanilla she’ll property

4) includes furnished interiors

5) Ready to use

6) preferred by consumers looking for lower cost of entry when compared to fully furnished homes

7) suitable for those who do not wish to spend a lot on doing up their place

8) more prevalent in office or commercial segments

Benefits of warm shell property

1) you have the power of flexibility

2) save on rent

3) easier to manage

4) longevity assured for the landlord

5) you do not need to invest additional capital to do up the place

6) you can negotiate with the landlord

7) selling or renting is easier for builders

8) buyers have the liberty to develop their space as they might have dreamed

Disadvantageous of warm shell property

1) warm shell properties have empty insides and need warming, ventilation and cooling

2) development is finished but benefits are pending

3) tenants try to negotiate more

4) tenant wants something different

5) there can be a healthy waste of time & money

Warm dark shell

Where space has HVAC, but no lighting

Meaning of HVAC

Heating, Ventilation, and Air Conditioning

Shell Conditions

It refers to office space that generally includes structural elements such as external walls, an exterior roof, and an entry doors

White Box Condition

In commercial construction and real estate parlance, is a partially finished commercial space that a contractor delivers to the landlord or tenant

White Shell Condition

These are more turnkeys, it’s likely to have completed bathrooms, finished drywall, or lighting

Vanilla Box

It is a term used to describe a space with a cement floor, ready to paint walls, working electrical outlets, HVAC

Paying for build Out

The landlord may agree to cover the cost, the tenant might take responsibility, or the cost of the build-out may be shared – based on negotiations between the parties

Reverse build to suit

It is an agreement where the tenant constructs a building for itself using funds provided by the landlord investor

Build-out

The transition from a cold shell to a warm shell is referred to as build-out

Shell Lease

It is a commercial real estate lease agreement for an unfinished interior that the tenant will customize to their specific requirements

Shell lease can exist in many forms depending on the work that has already been completed on the property and the work that remains to be done

Ideally, a warm shell unit should be bought directly from the owner if you are looking for some upgrades to the property

Warm Shells are best for end-users and not for investors

1) unfinished units require a significant amount of money and time

2) buyer has a significant emotional investment

3) the level of customization offered will vary by building

4) help is available for buyers who can’t visualize the finished product

Minimum requirements for shell building

1) construction type

2) Means of egress

3) fire sprinkler and alarm system

4) energy conservation

5) accessibility

6) water and sewer connections

7) plumbing fixtures

8) other misc requirements

Means of egress

Continuous, unobstructed path of travel from any point in the building to the exterior

Contents in the lease agreement of warm shell properties

1) premises details

2) warm shell work
Phase 1 outdoor area
Phase 2 complete all works and improvements
Tree removal
Screening
Measurement of premises
Connector contingency

3) delivery and acceptance of possession
Delivery date
Tenant improvement work
Warranty
Disclaimer
Early access

4) Tenant improvement work
Scope of work
Plans and specifications
Contractors

5) Allowance

6) Tetm
Initial term
Optional extension terms
Arbitration deadline

7) Rent
Rent commencement date
Free rent period
Operating costs & taxes
Taxes
Rent definition
Additional rent
Payment of rent and application of payments
Late payment charges

8) prepaid rent

9) security deposit

10) utilities

11) permitted use and restricted use

12) outdoor areas

13) compliance with laws and recorded matters

14) signs

15) parking

16) tenants maintenance and repair responsibilities

17) landlords maintenance and repair responsibilities

18) tenants alterations

19) liens

20) insurance and indemnification
Tenants insurance
Landlords insurance
Policy requirements
Waiver
Increase in premiums
indemnification

21) landlords right to enter

22) damage or destruction

23) condemnation

24) assignment, subletting, and change in control

25) events of default

26) remedies

27) hazardous materials

28) subordination, attornment – notice to mortgage

29) estoppel certificates

30) surrender

31) holding over

32) notices

33) satellite

34) additional provisions

Lien

A right to keep possession of property belonging to another person until a debt owed by that person is discharged

Compiled by:-

Avinash Kulkarni

Chartered Engineer
Govt Regd Valuer
IBBI Regd Valuer

FOR ALL UPDATES IN EMPANELMENTS & OTHER UPDATED

GET ALL RELATED NEWS UPDATES IMMEDIATELY BY JOINING THE SOCIAL MEDIA PLATFORMS OF CEV GROP BY CLICKING THE LINK PROVIDED AT THE BOTTOM

JOIN SOCIAL MEDIA PLATFORMS OF CEV INDIA FOR ALL UPDATES RELATED TO THE PROFESSION

FACEBOOK PAGE CEV INDIA,                         TELEGRAM GROUP,                                 YOUTUBE CHANNEL

Disclaimer :

We take all possible care for accurate & authentic news/empanelment/tender information, however, Users are requested to refer Original source of the Notice / Tender Document published by the Issuing Agency before taking any call regarding this tender.