What is a TI or Tenant Improvement?

By
Probuild Construction WA
December 29, 2020

What is a TI or Tenant Improvement?

If you’re entering into a new lease or you’re ready to transform and customize your commercial or industrial property, contact us today.

When a business enters into a new lease agreement with a commercial or industrial property, one of the most important and complicated factors is around tenant improvements.

What is a tenant improvement or a "TI"? A tenant improvement is the customization and build-out of the commercial space that they just rented or leased.

In short, a tenant improvement is the customization of your new office, restaurant or leased property.

Tenant improvements are usually around air-conditioning, fire protection, flooring, ceilings and space management through partitions. Besides your typical tenant improvements, there’s also a new movement to customize spaces for COVID-19 precautions, particularly ensuring that The business can create a 6 foot separation between individuals as well as a floor plan that makes sense in the new pandemic reality.

The tenant improvement is done to commercial or industrial property to accommodate the needs of a new tenant which can vary greatly.

Photo Source - Souder Brothers Construction in Pennsylvania

What types of commercial tenant improvements will you see?

Typically, there are three categories of improvements that are often typified as tenant improvements but they’re each a little different.

  • Interior improvements
  • Landlord improvements
  • Tenant improvements

A - II’s or Interior Improvements

Interior improvements or IIs are typically done prior to a new lease or as part of a new lease agreement, and they are meant to improve and customize a commercial location so that the interior works for the new tenant and their business.

Interior improvements are generally build outs or renovations for things such as walls, floors, ceilings, lighting and other interior decor items

B - landlord Improvements or LI

Landlords often perform their own landlord improvements in order to is the process of turnover when a tenant leaves. Landlord improvements are usually simple and are often referred to white box improvements where they simply make the space clean, repaired and give it a move-in ready look.

Landlords typically keep their L eyes very simple and can even be hesitant to do much and will often opt for a tenant improvement allowance rather than giving it the white box improvement. Why do landlords tend to lean towards a tenant improvement allowance rather than Landlord Improvements? It’s because they would prefer to avoid making any unnecessary improvements.

C - tenant improvements or TI

Another word for a tenant improvement is a leasehold improvement are you might also hear people call it tenant development. The construction and renovation is either done by the landlord or the tenant and the tenant improvement clause in the lease agreement will determine who is responsible for making the improvements.

If you have a tenant improvement allowance or a TIA, this would be an amount of money that the landlord is willing to put towards customizing the space for the new business. When it comes to tenant improvement allowance is, make sure that you keep good track of the project and have the landlord Pay for the improvements rather than reimbursing the business so that you can keep your tax return simple.

Remember, if you’re a business that is using a tenant improvement allowance to build out their commercial space, the landlord doesn’t pay much attention to your project and you should take complete ownership of the project. Pro build construction specializes in making sure that your tenant improvement projects provide an amazing RY, start and end on time, and that you love your commercial space when you’re finished with it.

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