Are you familiar with the term “tenant improvement” in the construction industry? If not, you’re not alone. Many people are unaware of what exactly a tenant improvement (TI) entails and how it can benefit both tenants and property owners.
In the world of commercial real estate, tenant improvements play a crucial role in attracting and retaining tenants. Whether it’s renovating an existing space or customizing a new one, TIs are essential for creating a functional and appealing environment that meets the unique needs of each tenant.
TI in construction means customized structural modifications the owner makes on commercial rental space as part of the lease agreement to meet the custom preferences of a particular tenant.
Tenant improvement construction may differ based on the tenant’s needs and property type. Various renovations that count in meeting tenant improvement definition include:
These are permanent or semi-permanent improvements that cannot be easily taken away. They also add value to a property and remain when a new tenant leases it.
However, other tenant alterations that don’t count as TI in construction include:
These are temporary changes on the leased property, often removed when a new tenant leases the space.
If a tenant wants to make improvements to their rented commercial space, the first step is establishing the tenant improvement allowance on the property. Usually, the tenant improvement construction allowance is indicated on the lease agreement.
