the truth about turnkey leases…
Have you ever stayed at an all-inclusive resort or taken an all-inclusive cruise? If so, you're likely familiar with how these programs work, along with their pros and cons.
The main advantage is cost control - you can enjoy a relatively stress-free vacation while staying within your budget. However, the drawbacks are worth considering. For example, you may find it difficult to stray from the resort’s offerings without facing additional charges or disappointment. While you may be promised unlimited drinks, they often turn out to be low-quality, watered down, or slightly off. Premium options like top-shelf liquor usually come at an extra cost.
All-inclusive vacations aren’t for everyone, but for those who enjoy predictable costs, they can be a good choice.
IMPORTANT TO REMEMBER: A landlord aims to finish a property build-out for less money than the
Tenant Improvement allowance.
These pros and cons are also similar with TurnKey leases. The landlord will present packages in order to reduce your exposure and cost risk during the renovation phase. They sell it as “We can handle this and all you need to do is move in.”
They will offer design services, construction services and project management in exchange for a negotiated rental rate over a negotiated lease term. These packages are all designed in the Landlords favor, and benefit. The less they specify on your renovation the more they make. It’s important to remember that a landlord’s main goal with the turnkey approach is to get the build-out completed at a lesser cost than a Tenant Improvement allowance would cost them. Unless you are a design professional, or have extensive construction background how do you know what you are getting? How can you ensure that you are not getting watered down drinks? Who represents you and your interest? Very rarely will Low Voltage, Audio visual, security and furniture be included in these packages. You should understand these costs prior to executing your lease agreement as they may have a real impact on your overall company's budget.