When you are a tenant under a commercial lease, you exist in a state of limbo. On one side, you have an interest in your space for a set period of time and, with that interest, carry a bundle of rights to that space. On the other side, it's someone else's building and, ultimately, they get to make many of the rules. One of the most important areas where your rights and the owners' rights can collide is in the area of making improvements to your space.
Tenant Improvements at Move-In
In a perfect world, you would find a space that exactly suits your company's needs and, during the life of your commercial lease, those needs would never change. Most companies don't exist in a perfect world and it's likely that any space you find will need customization to suit your needs from day one and, while you could live with the space as is, it will probably need some reconfiguration over time to meet your changing needs and strategies.
Tenant improvements are all of the work that gets done to make a space work for you. Sometimes, they could be as simple as replacing carpet, repainting and adding a sign to the front door. Other spaces have to be totally gutted out and built from the bare demising walls like completely new space. Most, of course, fall somewhere in the middle of the two extremes.
Typically, landlords will play some role in helping with your tenant improvements as an inducement to get you to move in. Some might provide a full set of brand new TIs at a "building standard" level. Others might give you a dollar allowance. However, just because they help you build out your TIs at the beginning of your commercial lease doesn't mean that they will help you to reconfigure your space while you are a tenant.
Tenant Improvements Under an Existing Commercial Lease
There are two fundamental challenges to doing TIs when you're in the middle of the lease. You have to find a way to pay for them, and you have to get permission to do them. The former is the easy part, since you either have the money or you don't. To understand your rights, though, you're going to have to sit down with your lease and, usually, with your attorney.
Most landlords walk a fine line when granting you alteration rights under your lease. They typically realize that it isn't reasonable for them to tell you what color to paint an internal wall, what font to use on internal signage or even whether or not you can change switch plates. Leases that allow minor alterations might even let you change carpet or floating floors or attached window treatments. However, major changes that could impact the building's structure, other tenants' rights or the value of the property will probably either be banned outright or require the landlord's permission.
Where the complexity comes into play is in the in-between types of work -- like moving non-load bearing walls or reconfiguring an entry area. Furthermore, even if you have the latitude to do that type of work under your commercial lease, your landlord might have the right to specify the contractors you use or even the finishes that you install. While your lease controls, market conditions might also play a role in determining who has the upper hand in the negotiation.
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