Who Pays For a Commercial Interior Build-Out?

Are you preparing to start a new business and need commercial space? Or are you a current business owner looking to relocate your company? Either way, you will likely be in need of a commercial interior build out. After all, commercial space doesn’t come ready and equipped to support your business’s specific operational needs.

Continue below to learn what you need to know about interior build out tenant improvements, including a financial responsibility breakdown that explains who pays for what.

Commercial Interior Build Out Indianapolis IN 317-253-0531
Commercial Interior Build Out Indianapolis IN 317-253-0531

What is a Commercial Interior Build Out?

Commercial interior build-outs are also referred to in the industry as tenant improvements (TI) or commercial leasehold improvements. When you are on the market for a new commercial space, it is very rare to find one that meets all of your needs. From interior design and structure to power fittings, mechanical systems, and more, the majority of commercial spaces require some extent of renovation to personalize the space for the new commercial tenant. This type of commercial renovation is known as an interior build out.

Financial Responsibility Analysis

When it comes to commercial interior build-outs, you might be wondering if the landlord is financially responsible. Since there are many ways for a commercial tenant and landlord to delegate financial responsibility between them in the case of TI improvements, the answer to this inquiry varies depending on many factors.

Here are some possible scenarios on how a commercial interior build-out is financially covered:

If the landlord believes that the new tenant will be a significant asset and bring in more value than other potential tenants, they may cover the entire cost of the interior build out. They may do so by paying the Indiana commercial general contracting company directly or reimbursing the tenant at the completion of the project. Most often, tenants are reimbursed. This protects the landlord from a tenant who changes their mind after the renovations are done.

In another possible scenario, the landlord and tenant might decide to share the leasehold improvement costs a specified ratio. There are a few ways they do this. A landlord can include a tenant improvement allowance in the commercial lease based on square footage, and any renovation costs that exceed that allowance are the tenant’s responsibility. Or the landlord might offer a reduced rent fee or free rent for a specified period of time. These are referred to as rent-concessions.

Are you looking for a qualified and experienced commercial general contractor to deliver an exceptional interior build out within your TI allowance or budget? Contact BAF Corporation at 317-253-0531 for superior commercial remodeling and tenant improvements in Indianapolis, Indiana. We serve clients all throughout the state. Request information or schedule a bid, today.

Related Posts:

Are All Tenant Improvement Allowances the Same?
What is a Build-to-Suit Commercial Lease?
Options for Getting Out of a Commercial Lease

Indianapolis Commercial General Contracting and Design Build Services
Contact Us Today 317-253-0531

How to Make the Most of Your Tenant Improvement Allowance

When a commercial tenant leases a new office space, it may not be exactly what they envisioned for their business. In fact, this happens quite a bit. For this reason, it is strongly encouraged to ensure that there is some sort of tenant improvement allowance in your commercial lease before making a final commitment. A TI allowance will finance any strategic or aesthetic renovations to improve on the function and overall layout of your office.

If you have been granted a tenant improvement allowance, but it isn’t what you expected, there are some ways you can stretch it out. Continue reading for some tips on how to make the most of your tenant agreement allowance, and who to trust in central Indiana for superior TI commercial construction work.

Tenant Improvements and Remodeling Indiana 317-253-0531
Tenant Improvements and Remodeling Indiana 317-253-0531

Be a Part of the Process

When discussing your tenant improvement allowance with your landlord or appointed commercial construction company, be sure to negotiate your role in the process. It is important that you remain involved in the entire tenant improvement construction process to ensure that your allowance is being used efficiently. Maintain a role in bid comparisons, contractor selections, construction supervision, and anywhere else that you feel comfortable in order to mitigate additional or unnecessary expenses.

Prioritize All Square Footage

Your commercial office space’s square footage goes wall-to-wall, but your cubic square footage goes from floor-to-ceiling. It is important to use all of your square footage options efficiently and is much as possible. Doing this can help make the most of your tenant improvement allowance. More importantly, your landlord may insist that your tenant improvement allowance applies to only the usable square footage in your office space, but it is actually based on all rentable office space, including areas in your building that are shared with other tenants.

Reuse Materials Efficiently

Before spending even one cent of your TI allowance, first take a look at your overall office space and consider what can be reused after your renovation. There are many types of building features and materials that you may not have to replace, or can be reused without jeopardizing their integrity, such as granite countertops, mirrors, plumbing fixtures, floors, doors, and more. For instance, rather than replacing the hardwood floors in your office space, consider having them refinished or polished instead, which is much cheaper and renders a beautiful outcome.

Discover What’s Hidden

Just like reusing materials to your advantage, it is also wise to take a look underneath some things to see if there is a way to cut back on costs. For instance, underneath that old carpeting could be original hardwood floors. These floors can be restored and re-polished, as mentioned earlier, which is much cheaper than replacing the flooring altogether. In another example, you can remove acoustic tiles from your ceiling to reveal an industrial ceiling, which poses several aesthetic benefits and costs much less than replacing these materials.

Are you ready to get started on your Indiana tenant improvement project, but looking for the right commercial construction company to work with? Contact BAF Corporation at 317-253-0531 for qualified and reputable tenant improvements and remodels in Indianapolis, Indiana. We serve clients all throughout the state.

You Should Also Read:

Who Pays for the Cost of the Tenant Improvements?
4 Tip for Planning a Tenant Occupied Building Renovation
General Tenant Improvements for Commercial Properties

Indianapolis Commercial General Contracting and Design Build Services
Contact Us Today 317-253-0531

Are All Tenant Improvement Allowances the Same?

It is a common misconception that all tenant improvement allowances mean the same thing. If you hear $35 per square foot, that does not mean that your final cost will be exactly that. What you end up spending on your tenant improvement overall is the real number. Continue reading to learn more about TI allowances, including how they can differ in value depending on certain factors.

Indiana Tenant Improvement Commercial Construction
Indiana Tenant Improvement Commercial Construction 317-253-0531

TI Allowance May Vary Depending On Your Needs and Preferences

Unless you are granted a flat tenant improvement allowance, which is when the landlord agrees to build out your TI project at no cost to you, there are some additional expenditures you might incur when everything is said and done. Are you planning for a dark shell or vanilla shell turnout? Are you open to reusing and repurposing existing materials? Do you envision an open or closed floor plan? Does your commercial building provide an amenity package for things like restrooms, lockers, food, or common areas? All of these factors can influence the value of your tenant improvement allowance.

Dark Shells Versus Vanilla Shells

When you are remodeling a tenant occupied commercial space, the most basic options you will have to choose from are dark or grey shell turnout, or vanilla shell turnout. A vanilla shell TI package generally delivers your basic, smooth aesthetic. This includes drywalling of all demising walls (partition walls that separate one tenant-occupied space from another, or from a building’s common areas), ceiling, lighting, a number of electrical outlets, essential plumbing, HVAC work, and in some cases, bathrooms. A grey or dark shell TI construction remodel will look a lot different, mostly because they only include the construction of electrician and plumbing stubs, and only on the demising walls of the space.

Reusing Existing Materials to Cut Costs

When you are remodeling a tenant-occupied space, you can almost always expect to incur demolition costs. But in some cases, existing materials that are in good condition can be reused or repurposed in the new space, and still done so up to commercial building codes. Materials like plumbing, metal framing, ductwork, lighting fixtures, and even interior doors can all be reused, and therefore, cut your TI costs.

Building Amenity Packages

Adding restrooms, food courts, kitchens, and break areas to a tenant improvement project is a big expense. If your building comes with an amenity package, such as shared restrooms, cafeterias, break areas, and similar public or communal facilities, you can potential lower your TI build-out expenses, or even allocate the budget towards something else in your TI project.

Are you interested in learning how you can meet all of your business objectives with a successful tenant improvement project? Contact BAF Corporation at 317-253-0531 to learn how we deliver organized and professional tenant improvement remodels in Indianapolis, Indiana.

You Should Also Read:

4 Tip for Planning a Tenant Occupied Building Renovation
Who Pays for the Cost of the Tenant Improvements?
6 Building Features That Corporate Tenants are Looking For

Indianapolis Commercial General Contracting and Design Build Services
Contact Us Today 317-253-0531

Who Pays for the Cost of the Tenant Improvements?

Tenant remodels and leasehold improvements are much different from conventional commercial construction projects since they are intended to be an investment for a business owner. With that being said, when it comes down to who pays for what in a tenant improvement project, the answer can be more complex than you would expect.

Continue reading to learn more about who pays for the cost of tenant improvement (TI) projects, as well as, where to get trusted TI construction work near you.

Indianapolis Tenant Improvement (TI) Contractors
Indianapolis Tenant Improvement (TI) Contractors 317-253-0531

TI Cost Planning

Generally, TI costs are considered by the landlord of the property when they agree to a rental rate among tenants. Most often, a portion of a tenant’s monthly rent will reimburse a landlord for the cost of TI construction work, however, this is not always the case. In the case of a turn-key tenant improvement project, it is necessary for the landlord to know specific details on the work being performed, including which areas or spaces are being remodeled. Another reason why a turn-key project requires upfront information for a landlord is so that they know how much the costs are going to be for all the work.

TI Allowances and Lease Signings

At the time of the lease signing, both the tenant and landlord should come to an agreement regarding TI allowances. Tenant improvement allowances are sums of money made available to tenants by the landlord to cover some of the cost of needed remodeling work. Such allowances are usually stated on a per-square-foot basis, and most common for new spaces since more renovations are needed to finish the project. However, the amount of money provided by a landlord for TI work varies greatly, and depends on a wide range of factors, such as the age or current condition of the space, duration and value of a tenant’s lease agreement, market demand, and more.

Furthermore, if the total cost of a tenant improvement project exceeds the original, agreed-up allowance, the tenant is responsible for paying the remainder. Although rare, it is possible for the landlord to take on the excess costs themselves, but they will only do so to a certain capped amount, plus increase the tenant’s rent accordingly.

If a tenant decides to take on the TI work themselves, they risk being subjected to delays and unanticipated setbacks, which can hurt them financially since their rent will still be due on the date in the lease contract, regardless if they can move into the space yet or not. In this case, the tenant takes on all of the risk, and might have to pay more for construction, while also paying rent at the same time, without any revenue coming in.

To avoid this hassle, always hire a professional commercial construction company that specializes in tenant improvement work. You see, commercial building teams use a client-centered partnership approach to accurately understand our client’s business objectives and tenant’s needs, and deliver results that maximize their profitability by driving greater value.

Indianapolis Tenant Improvement Construction Contractors

Contact BAF Corporation at 317-253-0531 for trusted tenant improvement construction in Indianapolis, Indiana and its surrounding locations. Our skilled and experienced commercial general contractors deliver a streamlined construction process that meets all defined engineering and design specifications, procurement, schedules, and budgets for your commercial office space or business. Call today to request free information or to schedule a consultation.

Indianapolis Commercial General Contracting and Design Build Services
Contact Us Today 317-253-0531