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What is a Tenant Build Out?


This is a construction term that describes the activities undertaken by either the owner of a commercial property also known as Tenant Improvements or the tenant of a commercia space. A build out may or may not involve an architect that focuses on the interior while a contractor's focus is on the exterior. When a commercial space is leased to a new tenant the old finishes are usually removed and replaced with a new design. 

Both the architect and the contractor must work together comply with local building codes. The build out will also be coordinated with the building manamgment, landlord and tenant. We understant that every tenant has different needs and customization requirements. 

How are the build out cost paid for? 

Generally, the lease agreement will allow some consideration for the build out cost called Tenant Improvements allowance (TIA). A commercial real estate agent will negotiate this allowance during the lease negotiation. Before final execution of the lease, the landlord or his agent and the tenant and his agent will discuss the scope and cost of TIs. An experienced real estate agent will be aware of the common TI's allowances in your local area. 

What are the most common TIs?

Tenant needs usually dictate the type and scope with TIs. There are two general types of improvement costs:
1. Cost of TIs that will stay with the space like walls, doors, windows, carpet, HVAC, electrical and plumbing inprovments but often time items called fixtures.
2. Cost of TIs that go with the tenant after the end of the lease period like appliances, electronic quipment, furniture and sometimes fixtures.

What does a TI Contractor  do?

A Tenant Improvement contractor makes changes to the interior of a leased property to accommodate the needs of a tenant. These changes are usually made under a long term  lease agreement. The TI construction process begins with understanding the tenant's needs for the space. Some common tenant improvements include the following:
  • Drywall
  • Repairs
  • Ceilings
  • Flooring
  • lighting
Changes to the exterior are not considered TIs. Once the scope of work is approved, the scheduling phase begins. 

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