Landlord Turnkey Offices: What You Control and What You Do Not
Updated: Sep 20
A landlord offers to deliver your space turnkey. You sign, they build, you move in, and nothing comes out of your capital budget. On a spreadsheet it is the cleanest option on the table. In practice it is a trade, and what you are trading is control.
Turnkey works because the incentives line up. A finished suite leases faster, the landlord's construction cost is amortized into rent at a return that works for them, and a landlord who builds in that building constantly can usually deliver a landlord turnkey office more efficiently than a tenant doing it once. That is a real advantage and it often works in your favour. It also comes with a different allocation of decision making than a tenant-led fit-up, and that is the part worth understanding before you sign.
What turnkey actually means
Turnkey means the landlord takes responsibility for designing and building the space to an agreed scope, and hands you keys. It is not the same as a tenant improvement allowance, where you receive a dollar figure and run your own project. Under turnkey, the landlord holds the contract, the contractor, the schedule and the decisions. Of the construction delivery methods you are likely comparing, it sits closest to a design-build arrangement in which you are not the owner.
The scope is defined by a plan and a specification attached to the offer to lease. Those two documents are the deal. Anything you assumed and did not attach is not part of the work.
Where the decisions sit
The specification
The landlord is building to a defined standard, usually the building standard. That standard exists for good reasons: it suits a broad range of tenants, it keeps the property consistent, and it makes the building easier to maintain and re-lease. It also means the details are set by that standard rather than by you. Door hardware, partition height, whether walls run to deck or stop at ceiling, carpet grade, lighting quality, acoustic treatment. If any of those matter to how your business works, name them in the specification rather than assuming them in.
The schedule
The landlord's contractor is working to the landlord's overall program, which usually includes other suites and base building work. Your fixturing period and your move date sit downstream of a schedule you are not managing. That is normal and workable. It simply means your dates belong in writing rather than in an email thread.
Change orders
When something changes, and something always changes, the decision runs through the landlord rather than through you. Tenant-requested extras are typically priced by the landlord's contractor, who is already mobilized and already holds the contract. Settling in advance how those are priced keeps that conversation short for everyone, and it helps to go in already knowing how scope changes move cost and schedule.
Cost visibility
Turnkey is normally sold as a lump sum rather than open book, so you will not usually see the trade breakdown or the general conditions. There is nothing unusual in that, it is how the product works. The practical effect is that you have no internal baseline later, so it is worth agreeing that changes come with a breakdown even when the base price does not.
Warranty and deficiencies
Your warranty runs through the landlord rather than directly to the contractor, and deficiencies are closed through the landlord's process. Under the Construction Act, the party holding the contract holds the holdback, which is part of why substantial performance is such a consequential date. In most cases the landlord wants the list closed as much as you do, since it is their asset and their building standard on display. Agreeing the inspection process at the offer stage is what keeps it quick.
Design intent
Most turnkey packages are priced from a space plan rather than a full design. That is a scope decision, not a comment on the design work. A good designer will tell you very quickly which parts of your program a standard scope will carry and which parts need to be identified and priced separately. Millwork, feature elements, acoustic strategy and anything that expresses how your business actually operates usually fall into the second group. Bringing your designer into the conversation before the offer is signed, rather than after, is the cheapest move available to you.
What you gain, and it is real
You avoid the capital outlay. You avoid procurement, tendering, consultant coordination and the administration of a construction contract. You transfer schedule and cost risk to a party who builds in that building constantly and knows its quirks. For a small suite on a five-year term, that is often the right answer and the analysis does not need to be complicated.
The calculation changes as the space gets bigger, the term gets longer, or the use gets more specific. A ninety-person office with a client-facing floor, a lab, a kitchen or a trading floor is a harder turnkey candidate, because the elements that make it work are the ones a standard scope is not built to carry.
Six things to pin down before you sign
Your broker is likely negotiating most of this already. These are the items worth confirming are on the list.
A dimensioned plan and a written specification, both attached to the offer. Not a marketing rendering. A plan with room names and dimensions, and a spec that names products and grades. If it says "building standard," ask for the building standard document itself.
What is tenant work. Cabling, security, audiovisual, furniture, appliances, signage, supplementary cooling for a server room and anything requiring extra power are commonly excluded. Get the exclusion list in writing so both sides are working from the same one.
A date, and what happens if it moves. A target date with nothing behind it is a wish. Ask for a fixturing period that begins at substantial completion, and agree what happens if delivery is late for reasons outside your control. Rent abatement or an extension of free rent are the usual mechanisms. The point is to settle it while the deal is being negotiated rather than when the date arrives.
How you inspect and how deficiencies close. A joint deficiency walk before you accept possession, a written deficiency list, and a defined period to close it. Confirm in the document that accepting keys is not accepting the work.
How changes are priced. Agree the mark-up on tenant-requested changes up front, and agree that changes arrive with a cost breakdown. This protects both sides. A change gets approved much faster when the basis of the number is visible.
What happens at the end of term. Standard restoration language can end up handing the landlord's own work back to you as a removal cost. That is rarely anyone's intention, it is simply a standard clause meeting a specific build. If the landlord built it, agree in writing that you are not removing it.
The version most tenants should ask for
There is a middle option that gets overlooked. Ask the landlord to deliver a defined base scope turnkey, and to provide an allowance on top for the elements you care about, with your own contractor permitted to do that portion. You keep the capital relief on the commodity work and keep control of the parts that make the space yours.
Landlords say yes to this more often than tenants expect, because the base scope is what they were building anyway, and because a tenant who gets the space they actually need tends to renew.
The honest summary
A turnkey office is not free. It is financed through rent, and the second cost is paid in control rather than in dollars. That is frequently a good trade, particularly on smaller suites and shorter terms. It becomes a harder trade the moment the space has to do something specific, because the specification you did not attach is the specification you do not get. Attach the plan, attach the spec, name the exclusions, and define the process if something is late or needs correcting.
Common questions about landlord turnkey offices
Is a landlord turnkey the same as a tenant improvement allowance?
No. Under a turnkey deal the landlord holds the construction contract and delivers a finished space to an agreed scope. Under an allowance you receive a dollar figure and run the project yourself, holding the contract and the decisions that come with it. Turnkey trades control for capital relief. An allowance does the reverse.
Who holds the warranty on a landlord turnkey fit-out?
The landlord does, because the landlord holds the contract with the builder. Your remedy for a deficiency runs through the landlord's process rather than directly to the contractor, and the holdback sits with the landlord under the Construction Act. This is workable in practice, since the landlord owns the asset and wants the list closed too, provided the inspection process and the deficiency period are agreed in the offer to lease.
Can I use my own contractor on part of a turnkey space?
Often, yes, and it is worth asking. A common structure is a defined base scope delivered turnkey by the landlord, plus an allowance for the elements specific to your business, with your own contractor permitted to carry that portion. Landlords agree to this more often than tenants expect, because the base scope is what they were building regardless.
How long does a landlord turnkey fit-out take?
It depends on the scope, the building and the permit path, and the honest answer is that the date matters less than what sits behind it. Ask for a fixturing period that begins at substantial completion rather than a target move date, and agree what happens if delivery runs late for reasons outside your control.
If you are weighing a turnkey offer against an allowance and want a second view 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 or financial advice. Have your own advisors review your lease.
Connect with Carolee on LinkedIn: linkedin.com/in/carolee-w-turner-2002417
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