Hard Costs vs Soft Costs

admin  /   September 22, 2021

Hard Costs vs Soft Costs

By: Robby Eaves, CCIM

When it comes to construction and Tenant Improvements, you may hear people refer to hard costs and soft costs. Since a Tenant Improvement Allowance usually only applies to hard costs, it’s important to know the difference between the two.

Hard costs refer to the costs related to the physical construction of the building. Typically, they are tangible in nature and can be forecasted with accurate pre-construction numbers. 


  • Labor
  • Cost of Materials
  • Concrete / Cement
  • Drywall
  • Doors and Doorframes
  • HVAC installation or replacement

While Hard Costs are easier to estimate than soft costs, the price of materials, region, and labor supply all play a part in the final numbers.

Soft costs, on the other hand, are any costs that aren’t directly related to construction costs. These costs are typically tied to less tangible things, such as plans, permits, or contracts.


  • Architectural fees
  • Engineering fees
  • Legal fees
  • Permits

Think of it this way: If the cost is tied to something physical that will remain with the property after the Tenant moves out, chances are it is a hard cost. If it isn’t, it’s probably a soft cost.

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All information provided has been obtained from sources deemed reliable.  However, neither CIP Austin nor any of its brokers, agents, employees, officers, directors or affiliated companies (collectively, CIP Austin and Related Parties) have made an independent investigation of the Information or the Information sources, and no warranty or representation is made by CIP Austin and Related Parties as to the accuracy of such Information. The Information is submitted subject to the possible errors or omissions, and no person or organization should rely on the Information, unless such person or organization has conducted and independent investigation to confirm the accuracy thereof.

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