Tenant Buildout
The process of finishing a space so that it is suitable to meet the tenant’s needs is known as tenant build-out. An important component of any lease negotiation is the tenant build-out. Sometimes landlord’s price the space as is and any changes or improvements are the responsibility of the tenant. Other times, landlords provide an allowance to renovate an office space for the tenants specific needs. This cost may be reflected in the rent rates.
An important component of any lease negotiation is the tenant build-out or improvement allowance provided by the landlord to renovate an office space for the tenants specific needs. The amount of the allowance will depend on several things such as: the length of the lease and the negotiated rental rate.
During the negotiations of the lease, it is important to determine:
What improvements will be made?
Who will pay for these tenant build-outs?
Who is in charge of overseeing that the work is done?
At the end of the lease, how does the tenant need to leave the space? Must he or she return it to its original specifications? Or, do only certain aspects of the improvements need to be removed or altered?