If you want to know the tenant improvement definition you could use a dictionary, however, the term is not going to tell you everything you need to know. There are more than just a few things involved in tenant improvements and it may not be clearly described within your current leasing terms. That is why it is important to talk to someone about the options for tenant improvement in your situation.
While all leasing terms vary, options may be available for you to increase on an existing tenant allowance. Each type of real estate contract provides a range of opportunities to build out onto a structure, change paint, add fixtures, update appliances and lightning, plus so much more. The first step to making improvements inside a rental property, whether it is residential or commercial, is clearly understanding your tenant improvement allowance.
What Is the Tenant Improvement Allowance?
Commonly known as a TI, TA, or TIA, a Tenant Improvement Allowance is the money a landlord provides to pay for improvements on rental space. You may be able to change things within the negotiated range of cost to create a more comfortable, functional, or visually appealing home or office.
The allowance is only granted to those who are able to justify the expenses associated with space, due to move-in costs, safety concerns, special issues, or leasing options. Regardless of how you are able to gain an allowance, it is important to maintain a detailed outline.
The leaseholder is given this allowance as part of an agreement to compensate the tenant for any funds needed to make the changes. If you are given the money ahead of time, it may be easier to make the improvements within a reasonable amount of time and with the least amount of problems. Or you can ask for reimbursement later.
Who Pays for Tenant Improvements?
Once the tenant improvements are granted by the property management company or owner, the tenant has a green light to make changes. These changes can include paint, flooring, ceilings, wiring, plumbing, structural additions, and more. There are a few ways to approach the payments, however, no matter how the workers are paid at the end of the day, it is the responsibility of the property owner or their management company.
How Much Will it Cost?
An estimate for tenant improvement costs per square foot is the most common type of TI allowance. It includes a typical mid-range cost of between $50.00 – $75.00. On the higher side, it can range anywhere from $100.00 – $1000.00, and in some cases more.
3 Tenant Improvement Allowance Upgrades
This is one of the most cost-effective ways to upgrade a rental property. If you change an exterior surface, you can use a variety of paints, texturize an interior space, or bring a pop of color to any room with an accent wall. It’s up to you! This low budget upgrade is commonly added to TIAs.
Fixtures, creative lighting, dimmers, and other electrical upgrades can be included in your TIA. If you are looking to make a residential or commercial space more comfortable or functional, lighting upgrades work.
Soften small rooms with dimmer switches, pastel shades, and low-watt LEDs, or bring more energy into a common area with bright fluorescent bulbs. There are endless options you can use to transform any space.
This is a common unexpected repair that can end up costing the owner thousands of dollars. If you are renting the space and are able to prevent damage, you may be able to add maintenance care costs to the allowance. If the existing roof already needs repair, you can add it to a move-in checklist as part of your TIA.
Talking to a Real Estate Professional
Talking about a potential TIA is the best way to know what options are available. Call the offices of LCI Realty to talk to someone with experience and knowledge of TAs, and make the most of your allowances! And if you are looking for the best tenant representative we are here to help you out.