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What's in a Vanilla Box?
When negotiating a long-term lease, the landlord and the tenant should specifically agree upon the condition that the premises will be in at the time of delivery by the landlord to the tenant. Too often phrases such as “vanilla box,” “warm vanilla box” and “as-is condition” are utilized by leasing representatives to describe generically the condition that the premises will be in at the time of delivery. However, the differences between what each party means by those terms can be dramatic. By specifically addressing the condition of the premises, landlords and tenants may avoid costly disputes once the lease has been executed and the landlord delivers the premises. This article addresses the terminology and the common pitfalls associated with the terms “vanilla box,” “warm vanilla box” and “as-is condition.”
Vanilla Box
While the definitions may vary greatly amongst leasing professionals as to what the term “vanilla box” means, the general understanding in the industry is that in order to be in “vanilla box” condition, the premises will have a floor (although not necessarily a level floor), metal demising studs with drywall/sheetrock on the outside or corridor side of the demising studs, a roof deck above (with no finished ceiling) and utilities may or may not be available. Since bringing utilities to the premises, leveling the floors, and similar type construction work involves a great deal of construction time and cost, the parties would be wise to address in a specific work letter those items that will be included in the “vanilla box.” In particular, the following questions should be answered regarding the condition of the “vanilla box” space:
- Will the landlord install the sprinkler grid?
- Will the landlord connect the sprinkler grid to the main waterline?
- Will the floor be level?
- Will the landlord provide a heating, ventilating and air conditioning system?
- Will the landlord provide interior sheetrock/drywall? If so, will the drywall be ready to accept wall cover?
- Will metal studs be from floor to roof deck above (as opposed to only the finished ceiling height)?
- Will the landlord bring utilities to the premises?
Further, for any work that will require the use of the landlord's contractors, a detailed list should be prepared to identify the contractors that the tenant must utilize. At a minimum, a savvy tenant should request that the cost for work performed by contractors designated by the landlord should be comparable with that charged by other third-party contractors in the area where the retail facility is located. Further, because the tenant will have no reasonable alternatives other than using the landlord's designated contractors and no real recourse for any delay that is caused by the landlord's contractors, the tenant should request a statement that the landlord's contractors will not unreasonably delay the tenant's construction work.
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