Tenant improvements, also known as leasehold improvements, are custom cosmetic and functional alternations that a building owner or lessee makes to a commercial medical or dental office, warehouse, or retail space. They can be minor in scope or on a large scale, depending on the condition of the space and the lessee’s needs.
In most commercial space rental situations, a lessee negotiates with the landlord for a tenant approvement allowance (TIA) before occupying a space. The lessee, project manager, and landlord will work to determine design, labor, time frame, and who pays for what during lease negations. Every lease agreement should contain an “Improvements and Alterations” clause.
This article will explain custom alterations typically included in tenant improvement construction.
What is a tenant improvement allowance?
A tenant improvement allowance is the amount of money a landlord is willing to spend to renovate a commercial space. It is typically assessed per square foot and represented as a dollar sum. If the construction costs exceed the agreed-upon sum, the lessee will have to take on the additional costs.
Before a lessee moves into a commercial space, they should assess their business needs as this will dictate the cost of renovations, set your tenant improvement allowance, and give you an idea of what the construction process will look like. Remember that office build-outs require more invasive work, resulting in higher costs.
What are the most popular tenant improvement construction projects?
Construction companies need to know what kinds of requests to expect from future tenants to help prepare for construction costs. It’s also not always the responsibility of the landlord to pay for changes to the property, which means you will need to hire a contractor you trust to get peace of mind about the quality of work done.
Some of the most common tenant improvement projects include:
- Soundproofing for gyms, bars, or clubs
- Adding or removing cubicles to a floorplan
- Building business-specific features, such as a barre for a fitness studio or a countertop for a retail store
- Adding conference rooms or a kitchen to an office space
- Upgrading the property’s finishes and fixtures
- Adding aesthetic and stylish features
- Installations to make a space more functional or accessible
In general, improvement projects make a property better suit the new tenant’s business. As part of the lease, you can incorporate the scope of the project, timeline for completion, and finished results.
How to manage tenant improvement projects
Because the landlord is often responsible for the cost of tenant improvement projects, they also handle the management of the project. To adhere to the obligations outlined in the lease, landlords need to ensure construction runs on schedule and communicate any delays to the tenant.
Construction management on a tenant improvement project can become a full-time job, with daily check-ins at the property and sometimes dealing with subcontractors. The best way to manage tenant improvement projects is to work with a contractor you trust to deliver exceptional quality to tenants on time.
Get a quote from Christiansen Contracting for your tenant improvement project in the Pacific Northwest.
The owners of Christiansen Contracting bring over 30 years of experience in residential, industrial, and commercial construction to clients. We’ve operated several construction businesses across the Pacific Northwest, giving us unparalleled knowledge regarding building codes, project management, and more. Since 2011 we’ve been a full design-build contractor based in Redmond. We have an in-house team that can take your project from pre-planning through completion.
Have a commercial property going through lease negotiations? Contact the Christiansen Contracting team for a free quote for tenant improvements.
