Written on 9-14-21 by: Sharon Kelley with SCUDO Real Estate & Property Management in Overland Park, KS https://scudore.com/

What Is Commercial Tenant Finishing for Businesses?

Most commercial spaces are configured for use by certain kinds of businesses. Commercial tenant finishing is when you remodel or refinish a commercial space to accommodate a new type of business or tenant. The aim of doing this is to create a workplace that is completely tailored to the specific needs of the new tenant. It could also be done to adapt a building more fully to the needs of an existing tenant.

Tenant finishing explores the business style and workflow of specific types of businesses or tenants and changes the structure of the work environment to accommodate those requirements. It creates a space that is aesthetically appealing to the tenant and their customers. In addition, it improves the business’s productivity.

Commercial tenant finishing encompasses alterations to the inside or outside of a building but typically doesn’t include adding new structures or expanding existing ones. They can do it with all kinds of commercial spaces; offices, retail stores, warehouses, restaurants, industrial or flex areas.

The main reasons for doing commercial tenant finishing are:

• To make existing spaces more viable by reinventing, rebranding, or modernizing it.
• To enable the space to meet the changing needs of businesses and customers.
• To communicate a brand’s identity by aligning the appearance of the space with its brand message.
• To enable a commercial space to accommodate a different kind of tenant or business than it previously did.
• To comply with zoning or building code requirements for change of use or change of occupancy.

Commercial tenant finishing projects can be undertaken by:

The tenant

These upgrades require the owner’s permission. The changes may be standardized improvements, such as applying a new coat of paint, upgrading the flooring, or updating the lighting. They could also be customized remodels, such as demolitions, electrical upgrades, and highly customized modifications that meet the unique needs of the business.

The owner

Improvements made by the landlord (known as white box improvements) are mostly done before a lease agreement and are usually standardized. The primary goal of such upgrades is to expedite the turnover of the space to a new tenant. They do not necessarily address the unique requirements of the tenants (tenants often have to take care of those by themselves).

Types of commercial tenant finishing projects

1.      Tenant Finish

These projects incorporate features unique to the tenant’s brand or operations and the customers they attract. The goals are to make a lasting impression on the customer, improve the staff’s productivity, and promote the brand. Typically, the tenant pays for the project, but on occasion, given that the changes will boost the value of the building, the owner may pay part of the costs.

2.      Leasehold Improvements

Owners or leaseholders perform this type of project as part of the lease agreement with a new tenant (this is why leasehold improvements are also known as tenant improvements). The alterations follow the specifications outlined in a lease agreement. Leasehold improvements are a popular practice for commercial real estate owners and operators who use them as a means of attracting new tenants or retaining old ones. Old tenants may also require them when negotiating a new lease.

3.      Interior Improvements

These are minor and major alterations to the interior configurations of the commercial space. Tenants can perform interior improvements (tenant finish), and the owner or leaseholder can do so too (landlord improvements). The range of updatable features within the space is endless, and there are no limits to the scope of an interior improvement project. They can be essential upgrades (lobbies, entryways, and conference room design) or minor improvements (painting and improving electrical & plumbing fixtures).

4.      Outdoor remodeling

Improvements to the exterior of a commercial building are less common than interior improvement but not unusual. As with interior improvements, the property owner or tenant may perform them. The aim of outdoor remodeling jobs is often to complement interior remodeling and ensure uniformity between the interior and exterior of the building. Examples of outdoor projects are;

• Installation of siding.
• Roofing restoration.
• Fence installation.
• Repair or replacement.
• Concrete repairs or replacement.

5.      Commercial remodeling

These are large-scale projects that do more than upgrade the aesthetic elements of the structure. They also address the essential structures and systems of the building; roofing, walls, flooring, HVAC, plumbing, and electrical. A commercial remodeling project often involves the reconfiguration of the entire complex. These projects can be expensive, but they are often a more cost-effective option for companies that want to expand but cannot afford the cost of a new building. A business may also choose a commercial remodel to maximize the efficiency of its current space.

Written on 9-14-21 by: Sharon Kelley with SCUDO Real Estate & Property Management in Overland Park, KS https://scudore.com/

Link to ARC projects: https://arcgc.com/projects/