Commercial property owners understand that commercial leases contain many details that require deep research and negotiation with their tenants. The tenant improvement construction section of the lease is one crucial element for both the tenant and owner to understand in order to configure the space for the future needs of that particular tenant. Let’s take a deeper look into what property owners need to know about the tenant improvement construction process.
What Are Tenant Improvements?
First, let’s define what tenant improvements are. Tenant improvements are defined as the specific customizations or repairs that a property owner makes to the space that their tenant is renting. As part of a lease agreement, a tenant may find that their new commercial space requires a level of customization and renovation in order to match the demands of their business. Implementing property revisions then falls to the owner so that renovations can be made to adequately support the needs of the tenant and their business. Finding space and time for improvements, minor or major, are crucial for the business of the property itself. Whether it be for a cosmetic refresh, functionality updates, technology upgrades, or simply for the employees’ and occupants’ quality of life, commercial renovations completed by a qualified general contractor are valuable for every party involved.
Tenant improvements are large construction projects that take up a great deal of time, and it’s important that the length of the lease itself is taken into account to figure out where these improvements fit into the agreement’s lifespan. A substantial completion date is normally decided upon once the tenant improvement construction process is agreed upon. However, changes in the budget and timeline will need to be communicated by the property owner to the general contractor hired to apply their renovation services. This way, the design changes and functionality upgrades can still be applied by commercial remodeling contractors to the tenant’s liking.
What Qualifies As Tenant Improvements?
Tenant improvements range from minor cosmetic adjustments, like a new paint job to walls or floors, to fuller reworks, like installation or demolition of walls or adding new rooms. Common customizations desired by tenants include changes to floors, walls, ceilings, HVAC, plumbing, and electrical systems. It is best to make sure you and the tenant are clear on the range of improvements allowed.
Before moving into the construction process, it’s important to understand which customizations fall under the umbrella of tenant improvements. The scope of covered renovations will vary depending on the lease agreement’s terms. Specific changes that can and cannot be made, as well as the allowance for these revisions, will be spelled out and agreed upon by both parties. Misunderstanding this aspect of the project will result in unnecessary expenses that tamper with your property’s allotted budget given to your general contractor.
The total expenses of tenant improvements will depend on how the project allowance is allotted. Expenses vary depending on whether or not the tenant can make improvements to rentable space or useable space. Rentable space means common areas of the building, while usable space is measured by the property’s actual square footage. It’s important that both parties understand the possibility of additional costs initially unaccounted for.
Planning for Tenant Improvement Construction
Commercial building renovation is a lengthy process that requires thorough planning of budgetary needs and timelines. According to Business News Daily, commercial leases are typically three to five years long. Therefore, it’s vital that quality, durable improvements to the property are made that remain 100% compatible with the tenant’s needs and within the confines of the lease agreement.
It’s vital to research tenant improvement contractors that are experienced in making a wide range of renovations to a commercial property. A general contractor will work with you to sort out which renovations will fit into your budget, arrange the project based on your timeline, and carry out the design as you instruct. The right general contractor will be able to make renovations that meet specific building requirements and ADA codes.
The functionality of a property is pivotal for a tenant’s satisfaction and crucial to your property ownership. If you’re looking for commercial property renovation services, reach out to us for high-quality renovation work that is on time and within your budget. Contact us at MattBeth Construction LLC for a free consultation today.