Base Building vs Tenant Work: Who Pays for What in an Office Fit-Out
Updated: Sep 27
Two numbers arrive for the same office. One is well under budget. The other is not. Nine times out of ten the difference is not the contractor and not the design. It is where each side drew the line in the base building vs tenant work split.
That line is not a standard. It moves building by building, and it was usually written into the lease before anyone had drawn a layout. Nobody is hiding anything. The document simply got ahead of the design, and the gap shows up later as a cost that neither side budgeted.
Base Building vs Tenant Work: What Base Building Covers
Base building is the landlord's asset: the parts of the property that serve every tenant and stay when you leave.
Structure, roof, exterior walls and windows
The main HVAC plant and the primary distribution loop, usually to a point at or near your demising line
Electrical service to the floor and a panel or bus duct tap
The sprinkler main and a grid of heads laid out for an open floor
Common areas, elevators, washrooms, and the accessible route from the street to your door
Life safety systems: fire alarm, exit signage, emergency lighting in common areas
Two things are worth noting. Base building is built for a generic tenant, because it has to work for whoever comes next. And "to the demising line" is doing a lot of work in that list. Everything past that point is usually yours.
What tenant work normally covers
Partitions, doors, hardware, ceilings, flooring and paint
Distribution of HVAC inside your suite: ducts, diffusers, controls, and any zone you add
Lighting, switching, receptacles and anything you plug in
Sprinkler head relocation to suit your layout
Millwork, kitchens, appliances and furniture
Cabling, audiovisual, security and access control
Signage, and your share of anything the Code requires because of the work you are doing
The six items that actually get argued about
Supplementary cooling. A server room, a large meeting room or a west-facing corner often needs cooling the base system was never sized for. That unit, its power and its condenser location are almost always tenant cost, and the condenser location is worth confirming early because roof space is finite.
Electrical capacity. Base building gives you a service. Whether that service carries your actual load is a different question. Ask for the available amperage at your panel and have your designer check it against the equipment you intend to run, before the offer is signed rather than after the drawings are done.
Sprinkler heads. The main is base building. The heads are laid out for an open floor. Put walls in and most of them move. This is routine tenant work, it is rarely large, and it surprises people every time.
Demising walls. On a multi-tenant floor, someone has to build the wall between suites and finish both faces. Different landlords treat this differently and all of the treatments are defensible. It just needs to be named in writing rather than assumed.
Code upgrades triggered by your work. If your fit-out is large enough to count as a major renovation, requirements apply inside your premises that would not otherwise be triggered. Accessibility provisions are the common example, and they are cheap individually and expensive as a group once the allowance has already been negotiated.
Base building deficiencies found during construction. Sometimes the work opens a ceiling and finds something that was always the landlord's. Most landlords fix these without argument, because it is their asset. What causes delay is not the cost, it is that nobody agreed in advance who inspects, who prices it and how fast. That can be settled in a sentence in the lease.
The lease is where this is actually decided
None of the above is law. The split is whatever the offer to lease and the landlord's work letter say it is, usually in a schedule at the back that is easy to skim past. If that schedule says "base building standard," ask for the base building standard document itself. If it lists landlord's work, read it as an exhaustive list, because that is how it will be read later.
The same applies to money. A tenant improvement allowance is a contribution toward tenant work, not a definition of it. An allowance can be generous and still leave you paying for supplementary cooling, because the allowance and the scope split are two separate questions. A turnkey deal answers both at once, which is part of why it appeals, and part of what you trade.
How to settle it before you sign
Your broker is likely negotiating most of this already. These are the items worth confirming are on the list.
A written scope split, item by item, attached to the offer. Not "landlord to provide base building."
The base building standard document, if the lease refers to one.
Available electrical capacity at your panel, in amps, in writing.
Who builds and finishes demising walls, and who pays.
What happens if a base building deficiency is found: who prices it, who approves it, and what it does to your dates.
A designer in the room before the offer is signed. This is the cheapest move available to you. A good designer will tell you in one meeting which parts of your program the base building will carry and which parts need to be priced separately, and that conversation costs a fraction of the change order it prevents.
The honest summary
Base building and tenant work are not fixed categories. They are a line drawn in a lease, and the parts of your space that make it work for your business usually sit on your side of it. Get the split written down item by item, confirm electrical capacity and cooling early, name who handles a base building deficiency, and bring your designer in before the offer is signed rather than after. None of that is adversarial. It is the same information both sides need, agreed at the point where it is still cheap to agree.
Common questions about base building vs tenant work
What is the difference between base building vs tenant work?
Base building is the landlord's shared infrastructure: structure, envelope, main HVAC plant, electrical service, sprinkler main, common areas and life safety. Tenant work is everything inside your premises that suits your specific use. The exact boundary is set by your lease, not by a standard.
Who pays for supplementary cooling in a leased office?
Almost always the tenant, because it exists to serve one tenant's equipment rather than the building. Confirm the condenser location as well as the unit, since roof space is limited and a location that works is worth securing in writing.
Does a tenant improvement allowance cover everything?
No. An allowance is a dollar contribution toward tenant work. It does not change what counts as tenant work. Read the scope split and the allowance as two separate items, because a strong allowance attached to a narrow landlord scope can still leave a gap.
What happens if a base building problem is discovered during the fit-out?
It is normally the landlord's to correct, since it is their asset. The delay usually comes from process rather than cost, so agree in the lease who inspects it, who prices it, how quickly it is approved and what it does to your dates.
If you are weighing an offer to lease and want a second view on the scope split before you sign, that is a short conversation worth having. You can see how I work with owners and project partners on project solutions.
This article is general information about commercial construction practice in Canada, not legal advice. Have your own advisors review your lease.
Connect with Carolee on LinkedIn: linkedin.com/in/carolee-w-turner-2002417
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