Tenant and property owner relations can be a bit tricky at times. There are so many aspects of a commercial property lease for both parties to acknowledge and understanding your lease details isn't always easy.
One section typically included in leases but seldom fully understood by tenants before entering lease negotiations is the tenant improvement construction process.
The Certified Commercial Investment Member (CCIM) Institute defines “Tenant Improvements” -- also known as “Leasehold Improvements” -- as “the customized alterations a building owner makes to rental space as part of a lease agreement, in order to configure the space for the needs of that particular tenant. These include changes to walls, floors, ceilings, and lighting, among others.”
In short, tenant improvement construction is done to configure a space to better suit the tenants’ needs. But it is important to understand the tenant improvement construction process and what to look for within the confines of your lease. Kenwood is here to deliver some insight into the tenant improvement construction process:
When it comes to leasing commercial space, discussing tenant improvement construction is generally part of the lease negotiation. This is done so that the lease agreement can outline details such as the extent of the landlord’s contributions to the project.
When negotiating tenant improvement construction in your next lease for a commercial property, be sure to go over the following details:
The planning for tenant improvement construction can be broken down into three parts:
If possible, work with an experienced architect to design and plan the project. They will be able to guide you through the process and ensure that you’re satisfying building codes and ADA requirements. When choosing an architect or contractor be sure to ask the following questions:
The architect or contractor you’re working with can help you estimate the cost of your project. However, when it comes to estimating construction cost, a completely accurate and final estimate may not be able to be completed until the final plans for the project are submitted to the city/municipality for approval.
The construction of your project should be evaluated regularly. Ask to receive weekly reports to make sure milestones are being met and everything is aligned with the original project schedule. Reports should include inspection results, pictures of project progress, and any schedule updates or notifications of potential delays.
It’s also important to make sure utilities are all set up and ready for construction to begin to avoid delays.
Make sure you hire an experienced, licensed team that is familiar with building codes and regulations in the area where you are working to manage your construction.
The way contractors receive payment can vary; Generally, they are paid once the work is completed. There can be exceptions to this depending on the project requirements and contract terms. It’s important to make sure that these terms are clear and agreed upon upfront before any work is done to avoid any misunderstandings.
After the project is finished and all inspections have been completed, you should receive a certificate of occupancy. This certificate shows that the work you’ve done to the property has been inspected and approved by all necessary local authorities and the structure is, in fact, livable and safe. Once you receive a certificate of occupancy, your space is officially ready to use for your business.
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At Kenwood, we are always happy to discuss tenant improvement construction with our prospective tenants. If you're interested in more information, contact Kenwood here: