Shell Lease

AAA

DEFINITION of 'Shell Lease'

A commercial lease in which a tenant rents a property with an unfinished interior to which he or she will finish construction and make improvements. The rented property is an unfinished "shell" of a building, often a unit in a new shopping center, where the tenant must complete construction and add any necessary furniture, fixtures and equipment (FFE).

INVESTOPEDIA EXPLAINS 'Shell Lease'

A shell lease exists in many forms depending on the work that has already been completed on the property and the work that remains to be done. The tenant in a shell lease, for example, might undertake considerable portions of the construction by installing ceilings, interior walls, lighting, plumbing, elevators, wiring and heating, and ventilation and cooling (HVAC) systems. A shell lease specifies the construction and improvements for which both the landlord and tenant are responsible. Often the landlord will provide a financial incentive to the renter for completing the work.

RELATED TERMS
  1. Certified Commercial Investment ...

    A professional designation awarded by the Certified Commercial ...
  2. Add-On Factor

    The number of usable square feet divided by the number of rentable ...
  3. Gross Lease

    A type of commercial lease where the landlord pays for the building's ...
  4. Capital Lease

    A lease considered to have the economic characteristics of asset ...
  5. Operating Lease

    A contract that allows for the use of an asset, but does not ...
  6. Lease

    A legal document outlining the terms under which one party agrees ...
Related Articles
  1. Taxes

    Tax Deductions For Rental Property Owners

    Besides creating ongoing income and capital appreciation, real estate provides deductions that can reduce the income tax on your profits.
  2. Home & Auto

    Simple Ways To Invest In Real Estate

    Owning property isn't always easy, but there are plenty of perks. Find out how to buy in.
  3. Entrepreneurship

    Find Fortune In Commercial Real Estate

    Investing in big buildings means big money - and bigger risks.
  4. Insurance

    How to Use a Waiver of Subrogation

    A waiver of subrogation means that a party to a contract waives the right to allow someone (usually an insurance company) to sue the other party to the contract in case of a loss.
  5. Home & Auto

    The Income Property: Your Late-In-Life Retirement Plan

    You're nearing retirement age and you don't have the nest egg you need. Here's how an income property can help you make up the shortfall.
  6. Home & Auto

    5 Rental Red Flags

    Know what to look for before entering into a rental agreement.
  7. Home & Auto

    Tips For The Prospective Landlord

    Investing in rental property can generate serious income, but there's more to it than collecting rent.
  8. Home & Auto

    Top Tips For Successfully Renting Out Your Home

    Renting out your home can be a great way to ride out a real estate slump - if you do it right.
  9. Retirement

    Holding Titles On Real Property

    Find out how best to claim and convey ownership on your assets.
  10. Home & Auto

    Looking Out For Your Finances As A Renter

    Landlords and property owners have their fair share of problems and with responsibility comes great headache, but it ain't all roses for renters, either.

You May Also Like

Hot Definitions
  1. Efficiency Ratio

    Ratios that are typically used to analyze how well a company uses its assets and liabilities internally. Efficiency Ratios ...
  2. Fixed Cost

    A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses ...
  3. Subsidy

    A benefit given by the government to groups or individuals usually in the form of a cash payment or tax reduction. The subsidy ...
  4. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  5. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  6. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
Trading Center