Category A and Category B are the two standard tiers of commercial fitout. The distinction determines who pays for what, how a lease incentive is structured, and how long a tenant waits before they can occupy. It is one of the most common points of confusion in New Zealand commercial leasing negotiations, and getting it wrong at heads of terms stage is expensive to unwind later.
What is a Cat A fitout?
A Cat A fitout is the landlord’s base level finish that makes a floor lettable but not yet occupiable. It typically includes raised access flooring or a finished floor screed, a suspended ceiling grid with tiles, basic lighting to code, mechanical services including heating, ventilation and air conditioning distribution, fire detection and sprinklers, and finished internal surfaces to the core and perimeter. It does not include partitions, meeting rooms, kitchens, branding or furniture.
In practice, Cat A delivers a blank, serviced, open plan floor plate. A prospective tenant can walk it, measure it and imagine their layout, but they cannot move in and start working.
What is a Cat B fitout?
A Cat B fitout is the tenant specific work that turns a Cat A floor into a functioning workplace. It covers partitions and internal walls, meeting rooms and quiet rooms, reception and breakout areas, tea points and kitchens, floor coverings, feature lighting, joinery, data and audio visual infrastructure, branding, and the adaptation of mechanical services to suit the final layout.
Cat B is where the tenant’s identity, culture and operational needs get built into the space. It is also where the majority of cost variability sits, because two tenants on identical floor plates can specify wildly different outcomes.
Who pays for Cat A and Cat B in New Zealand?
As a general rule the landlord funds Cat A and the tenant funds Cat B, but New Zealand practice has shifted materially. Colliers has reported that in a softer Auckland leasing market landlords increasingly contribute to or fully fund the tenant fitout in order to secure a lease. What was once a clean split is now a negotiated position.
The common structures are:
| Structure | Who pays | How it works |
|---|---|---|
| Traditional split | Landlord Cat A, tenant Cat B | Tenant funds and controls their own fitout |
| Fitout contribution | Landlord contributes to Cat B | A capped dollar sum, often expressed per square metre |
| Landlord funded fitout | Landlord pays Cat B | Amortised into the face rent over the term |
| Rent free equivalent | Landlord gives time, not cash | Tenant funds fitout, offset by a rent free period |
| Turnkey or fitted suite | Landlord delivers complete | Increasingly common for smaller floor plates |
The choice has real consequences. A landlord funded fitout usually becomes the landlord’s asset and stays at lease end, which changes the make good position. A tenant funded fitout is usually the tenant’s asset, is depreciable by the tenant, and is usually subject to a removal obligation. Confirm which applies before signing.
How much do Cat A and Cat B cost?
Cat A is the cheaper and more predictable of the two because the scope is largely standardised. Cat B carries the specification risk and is where budgets move.
Indicative New Zealand banding for a combined fitout runs up to around $1,200 per square metre for a basic outcome, $1,500 to $2,500 per square metre for mid range, and $3,000 to $5,000 or more per square metre at the high end.
These bands vary significantly with building grade, base build condition, services capacity and specification. Always price against a specific floor plate.
How long does each take?
Cat A typically runs around 6 to 10 weeks on site. Cat B typically runs around 10 to 14 weeks on site for a standard floor plate. Where both are required sequentially the programme is not simply additive, because a well planned project overlaps procurement and off site manufacture with the tail of the preceding stage.
End to end, from concept design through consenting to occupancy, a New Zealand office fitout commonly runs 3 to 6 months. Building consent and long lead items are the two variables most likely to move that number.
What tenants should check before signing
Confirm exactly what the Cat A includes. “Cat A” is a convention, not a defined legal standard. Some landlords deliver full raised floors and LED lighting throughout. Others deliver a bare slab and call it Cat A. Get a written specification schedule attached to the agreement to lease.
Check the services capacity. Existing mechanical and electrical capacity determines whether the layout you want is achievable without an expensive upgrade. A high density workplace or a floor with a large meeting room cluster can exceed base build cooling capacity.
Understand the reinstatement position. If the landlord funds a Cat B fitout, clarify in writing whether it stays or comes out at lease end. This directly drives the make good cost you will carry in year six or ten.
Test the programme against your lease commencement. Rent often starts before the fitout completes. Build the consent period and the long lead procurement into your date, not just the site works.
Look at the Cat A critically before accepting it. In a softer market with rising vacancy, a Cat A that has sat empty for eighteen months may need remedial work before the Cat B can start. That cost usually lands with somebody, and it is worth deciding who in advance.
What landlords should consider
Cat A quality has become a leasing differentiator. With Auckland CBD office vacancy elevated and occupiers showing a clear preference for higher quality buildings, a well executed Cat A shortens the tenant’s decision cycle and their programme. A poor Cat A adds weeks to a tenant’s timeline and gives them a reason to look at the building next door.
The economics of a landlord funded Cat B are worth modelling properly. The capital cost is recovered through the face rent over the term, which supports valuation, but it also creates a reinstatement and churn liability at expiry. Fitted suites work well for smaller tenancies where the layout is generic enough to re let.
Frequently asked questions
Is there such a thing as a Cat A plus fitout? Yes. Cat A plus, sometimes called a fitted suite or plug and play space, sits between the two tiers. The landlord adds a generic layer of meeting rooms, a tea point, floor coverings and furniture so a tenant can move in with minimal work. It is increasingly common for floor plates under about 500 square metres.
Does a Cat B fitout need building consent in New Zealand? Often yes. Work affecting fire egress, structure, sanitary facilities, or the specified systems in the building’s compliance schedule generally triggers consent. Purely cosmetic work such as recarpeting and repainting generally does not. Confirm early, because consent timing is a common cause of programme slip.
Can a tenant depreciate a Cat B fitout for tax? Commercial building depreciation returned to 0 percent from 1 April 2024, but commercial fitout remains separately depreciable in New Zealand. Where a tenant funds and owns the fitout it is generally depreciable by that tenant. Confirm the treatment with your tax adviser, as ownership under the lease is the determining factor.
What is shell and core? Shell and core is the stage before Cat A. The building’s structure, facade, lifts, stairs and core services are complete, but the floor plates are unfinished. It is most relevant in new developments where a tenant is signing early enough to influence the Cat A.
Related reading
- How Long Does a Commercial Fitout Take in New Zealand?
- Make Good Obligations in NZ Commercial Leases: A Tenant’s Guide
Sources
- Colliers, Auckland CBD Office Report, First Half 2026
- Complete Construction internal pricing data, reviewed by Shaun Francois, Estimator
- Inland Revenue, commercial building and fitout depreciation guidance
This article is general information, not legal, tax or financial advice. Lease terms and tax treatment depend on your specific circumstances.