A tenant build-out is the process of transforming a space leased by a commercial tenant in order to meet a tenant’s requirements. The process might involve changing the design or the layout of the offices, of the commercial space or of the restrooms and in most cases, it involves painting work and other types of internal finish work as well as the accommodation of new technology.
Depending on the complexity of the project, tenant build-outs might require building or demolition permits issued by local authorities and the involvement of professional designers and architects in the creation of detailed plans, layout designs and blueprints, followed by the actual work processes carried out by building contractors. Like any building project, a tenant build-out also needs to be meticulously planned and managed – the teams that execute the build-out plans need to be coordinated the same way as in the case of a larger construction process.
Budget planning also needs to be made an integral part of the overall planning – like in the case of any building project, the allocated budget should be at least 15% higher than the total amount calculated for materials, labor fees and documentation costs to allow for easier accommodation of unexpected expenses and situations.
When someone wants to move their business into a new location, they typically rent the space and renovate it, to fit their business` needs. These improvements are known as “tenant build out”, or “leasehold improvements” and represent an important part of the leasing negotiation between the landlord and tenant.
A tenant build out consists in custom interior finishes that may include demolition of existing walls, construction of new walls, adding new flooring, blinds or paint, making modifications to the electrical, plumbing or HVAC systems etc. The landlord covers only a certain amount of the costs, therefore it is important to understand, before signing the contract, how these improvements will affect your budget.
The right time for a tenant build out
It is very rare to find a commercial space that meets your business needs exactly; in most of the cases, interior build out is necessary, and the right time to do it is always at the beginning, right after you negotiate a favorable allowance and find a commercial general contractor Dallas specialist to help you maximize the potential of your space. The right time is also when you find financing sources for the build out project.
Since finding a commercial space that meets your needs exactly is almost impossible, tenant improvements are in order, before starting to use it. These improvements consist in various custom interior finishes that must be negotiated up front with the landlord and written in the lease agreement. They may include:
Installing new flooring (hardwood floor, laminate, carpet…)
Demolishing existing walls or constructing new ones
Re-painting the walls
Making modifications to the electrical, HVAC or plumbing systems
Other upgrades previously negotiated.
If you are in the position to start your tenant build out, make sure to communicate properly with the landlord and find out how much of the costs are they willing to cover. Also, it is good to know that some operations are not typically included in a tenant build out: office furniture, data cabling, phone cabling and other upgrades considered above standard.
You must also be aware that for starting your tenant build out, you need a lot of documents from property management, as well as from engineering: appropriate certificates, licenses, insurance, declarations, construction plans reviewed and approved, a proven Dallas general contractor and sub-contractors, permits, confirmations, other plans if necessary (such as fire safety plans), as well as a detailed schedule.
If you are looking for efficient ways to improve the appearance and the energy-efficiency of the commercial building you manage or own, here are some upgrades for 2019:
Roofing improvements – the integrity of your roof is essential for the safety and the energy-efficiency of your building. Whether you have a sloping roof or a flat system, it is a good idea to hire a professional roofer to perform a detailed inspection of your roof and to make recommendations regarding the necessary or optional upgrades. Roof coatings, for example, are easy to apply solutions that can make a huge difference in your energy bills;
Solar panels – these great modern solutions will not only help you cut your costs, but will also reduce the carbon footprint of your operations;
Fenestration upgrades – replacing your existing windows with modern, energy-efficient solutions is also an investment that soon returns in the form of lower energy bills;