What are tenant improvements and who pays for them?
Tenant improvements are changes made to prepare a space for the tenant's use. They can affect cost, timing, lease economics, and whether a space is practical.
What it means
Tenant improvements, or TIs, are physical changes needed for the tenant's use. They may include walls, flooring, lighting, restrooms, HVAC work, electrical upgrades, plumbing, reception areas, private offices, exam rooms, or warehouse improvements.
Why it matters
Buildout can be one of the largest variables in a lease. It affects move-in timing, capital needs, landlord contributions, and the final business economics.
Common mistakes
Businesses often underestimate cost, assume the landlord will pay for everything, ignore permitting time, or tour spaces without understanding what changes are required.
What to validate
Validate delivery condition, tenant improvement allowance, who controls the work, permit timing, cost overrun responsibility, ownership of improvements, and whether the space can legally support the intended use.
Questions businesses usually ask
Does the landlord pay for tenant improvements?
Sometimes. The landlord may provide an allowance, deliver the space in a certain condition, or require the tenant to pay some or all costs.
Can tenant improvements delay move-in?
Yes. Design, pricing, permits, construction, inspections, and supply issues can all affect timing.