Soft Costs Demystified: The Hidden Drivers of an Office Build-out

Part 2 of a 2-Part Series

In Part 1 (Hard Costs), we outlined where most of the Tenant Improvement (TI) 

allowance is consumed Construction & Finishes, HVAC, Electrical & Lighting, and Plumbing & Fire Protection so Tenants know what it takes to "make it look and work like an office."

Part 2 tackles soft costs: the professional services and approvals that make construction possible. In most Greater Boston tenant improvements (TI), soft costs typically land in the 20-35% range of the overall TI budget, and they determine how smoothly your project moves from idea to permit to punch-list.

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Architectural & Engineering Services

Architectural & Interior Design

30-40% of Soft Costs

What it includes: Space planning, code checks, finish choices, and design layouts that meet the landlord's standards. This turns your team size, culture, and desired layout into a buildable plan with real costs.

Quick Take: The cheapest drawing set isn't a bargain if it triggers change orders later.

Good CDs reduce rework, bid spread, and keep the timeline intact.

Engineering 3 MEP/Structural

15-25% of Soft Costs

What it includes: Mechanical, electrical, and plumbing design; load calculations; panel schedules; air balance; and, when needed, minor structural  detailing (e.g., slab penetrations,

stair infill, or rooftop coordination).

Quick Take: Early MEP coordination can save a lot of money because it eliminates 

costly field changes, prevents delays, and ensures systems are sized and placed

correctly from the start.

Concept Development

Initial space planning and design concepts based 

on tenant needs

Design Development

Detailed drawings with material specifications and engineering requirements

Construction Documents

Final buildable plans that contractors can use for 

accurate bidding

Soft costs are the precision layer of a tenant improvement: they align scope, drawings, approvals, and stakeholders so hard costs can execute without drama.

Permitting & Project Management

Permitting & Code Compliance

5-10% of Soft Costs

What it includes: Covers the cost to get your building permit and the reviews for safety, energy efficiency, and accessibility. In Boston, the rules are strict - the cleaner and more complete your paperwork, the faster you'll get approval."

Quick Take: Build time is budget. A well-prepared permit set compresses 

review cycles and keeps timeline on track.

Project Management / Owner's Representation

15-20% of Soft Costs

What it includes: Schedule control, budget tracking, procurement strategy, bid leveling, RFI/change-order management, and landlord/GC/consultant coordination on your behalf.

Quick Take: Treat PM/Owner's Rep as risk insurance. One avoided scope gap or mis-sequenced delivery can offset 

their entire fee.

Legal & Professional Fees

Legal & Professional Fees

5-10% of Soft Costs

What it includes: Lease exhibit negotiations (work letter, delivery condition, submittal protocols), construction contract review, certificate/insurance guidance, and - where appropriate - tax/credit incentives advisory.

Quick Take: Tight work-letter language locks in who pays for what (and when). That's your best protection against rising costs during landlord-managed builds.

Rule of Thumb: If your TI allowance is $100/SF, plan for $20-$35/SF in soft costs depending on complexity, landlord requirements, and whether you pursue upgrades or specialty systems.

Key Legal Documents in Office Build-Outs

Work Letter

Defines scope, standards, and responsibilities between tenant and landlord

Construction Contracts

Establishes terms, timeline, and payment

schedule with contractors

Insurance Certificates

Protects all parties from liability during construction process

Soft Cost Allocation & Conclusion

20-30%

Soft Cost Budget

Percentage of overall TI budget typically allocated to soft costs in Greater Boston

60+

Years Experience

Combined experience of Webster Realty Advisors team helping clients navigate tenant improvements

Conclusion & Next Steps

Soft costs are the precision layer of a tenant improvement: they align scope, drawings, approvals, and stakeholders so hard costs can execute without drama. In a market like Greater Boston - where landlord design standards, base-building 

systems, and permitting norms can vary in every town soft costs can be the 

difference between a buttoned-up delivery and a budget-busting scramble.

At Webster Realty Advisors, we only represent tenants. We negotiate work letters to define reimbursable soft costs, push for open-book pricing, and align design deliverables with your schedule and TI allowance. With 60+ years of combined experience, our playbook helps clients protect dollars, time, and focus so you land in a space that works on day one.