If you’re a small business owner looking to open a physical location, one of the first decisions you’ll face is choosing between a brand-new shell space or an existing one that was previously occupied by another tenant. This is where the idea of a second generation remodel comes in. It's not just a cost-saving strategy—it can also be the smartest way to open faster, reduce stress, and focus more on serving your customers from day one.
Let’s explore what second-generation remodels are, why they matter, and how they can be a great fit for your next business location.
What Is a Second-Generation Remodel?
A second generation (or "2nd gen") remodel refers to updating and modifying a commercial space that was previously built out for a different business. Maybe it used to be a nail salon, a chiropractor’s office, or a clothing store. The bones of the space are already there: walls, HVAC, plumbing, electrical, and sometimes cabinetry or fixtures. Rather than starting from scratch, a second-generation remodel reuses much of the existing layout and infrastructure. The new tenant makes cosmetic or functional changes to make it work for their business.Why Small Business Owners Should Consider It
For many business owners, especially first-timers, build-out costs and timelines can feel intimidating. Starting with a second generation space makes the process a lot more approachable. Here are the main reasons small business owners benefit from this kind of remodel:1. Lower Build-Out Costs
New shell spaces are expensive to finish. Installing plumbing, electrical, HVAC, drywall, ceilings, and flooring from scratch adds up fast. Second generation spaces already have much of that work done. Let’s say you’re opening a 2,000 sq ft retail space. A brand-new build-out could run $100–$150 per sq ft, totaling $200,000–$300,000. A second generation remodel could cut that cost nearly in half, depending on how much of the existing setup can be reused. Even repainting, adding a few walls, or updating lighting can be far more affordable than starting from a blank slate.2. Faster Timelines
Time is money when you’re trying to get open. Every month you’re not generating revenue is another month of paying rent without income. Because many of the major construction items are already completed, second generation remodels often move much faster than full build-outs. Permits may still be required, but fewer inspections are needed when fewer systems are altered. In some cases, you could be up and running in 4 to 6 weeks instead of 4 to 6 months.3. Easier Permitting
Getting city permits for a full build-out can take weeks—sometimes longer if architectural plans need changes or if the city is backed up. But if you’re working within an existing layout and not moving major plumbing or HVAC components, permitting tends to be faster and simpler. In some municipalities, certain cosmetic upgrades or minor layout tweaks may not even require new MEP (mechanical, electrical, plumbing) drawings, which also saves money on design fees.4. Budget Flexibility for Finishes
When you don’t have to spend as much on behind-the-walls work like plumbing and HVAC, you can shift more of your budget toward the features your customers will actually see. Think upgraded floors, stylish lighting, accent walls, and custom signage. This flexibility helps create a professional, brand-aligned space that leaves a great first impression—without blowing the budget.5. The Layout May Already Make Sense
If the previous tenant was in a similar business, the existing layout might already be close to what you need. For example, a previous chiropractor’s space might already include treatment rooms, a reception area, and an office—all features you could repurpose. Even if you need to move a couple of walls or update the finishes, it's still far easier than starting from scratch.Examples of Businesses That Benefit from Second-Gen Remodels
Second-generation remodels can be a great fit for many industries. Some of the most common include:- Medical Offices: Doctors, dentists, chiropractors, physical therapists
- Beauty and Wellness: Nail salons, med spas, massage studios
- Retail: Clothing stores, pet supply shops, convenience stores
- Professional Services: Real estate offices, insurance agents, accountants
- Fitness & Health: Yoga studios, martial arts gyms, personal training studios
What to Watch Out For
While second generation remodels come with many advantages, there are still a few things to be aware of:1. Unexpected Repairs
Just because the space looks good doesn’t mean everything is in great shape. HVAC systems, plumbing, and electrical panels should all be inspected before you sign a lease. Repairs or replacements can eat into your savings fast.2. ADA Compliance
You’ll still need to meet current building codes, including ADA (Americans with Disabilities Act) standards. That might mean updating door widths, ramps, or bathrooms, even if the prior tenant didn’t need them.3. Layout Limitations
Not every space will match your business’s flow. If the existing layout requires too many changes, it could end up costing just as much as a full build-out.4. Design Restrictions
If you’re leasing in a shopping center or office complex, the landlord may have guidelines on what your space can look like, both inside and out. Always review the lease terms before signing.Tips to Get the Most from Your Remodel
If you’ve found a promising second-generation space, here are some tips to make the process smoother:- Hire a contractor early. Don’t wait until after you sign the lease. A contractor can walk the space with you and point out potential challenges or costs you might miss.
- Ask for a tenant improvement allowance. Landlords may offer money to help cover remodel costs, especially if your improvements will increase the value of their property.
- Get everything in writing. Verbal agreements on what will be repaired or replaced are easy to forget. Make sure responsibilities are clearly outlined in your lease.
- Check existing utility capacity. Will the current electrical panel support your equipment? Is the water pressure good enough for your needs? These things matter.
- Plan ahead for finishes. Even if your remodel is simple, certain materials (like custom countertops or flooring) can have long lead times. Make decisions early to avoid delays.
