All You Need to Know About Tenant Improvements in Arizona
Tenant Improvement (TI) is one of those elements in a tenant-owner relationship that the majority of people don’t fully understand. Also known as leasehold improvement, the provisions of TI must be clear to both parties before they jump into a lease deal and get any seasoned tenant improvement contractor in Arizona on board.
According to a certified commercial real estate body, Tenant improvement is: “the customized alterations a building owner makes to rental space as part of a lease agreement, in order to configure the space for the needs of that particular tenant. These include changes to walls, floors, ceilings, and lighting among others.”
Common Elements of a TI Agreement
Every TI agreement is unique, depending on the property and the needs and demands of renters and owners. However, there are some recurring elements that are part of every negotiation.
Will It Be a Turnkey Build-Out?
It is considered one of the most negotiated points of any tenant improvement deal. If this clause is included in the agreement, the owner has to manage all the elements of construction and bear the monetary risks throughout the process.
Settling the Debate of Improvement of Usable and Rentable Space
Every residential and commercial rental divides into usable vs. rentable square feet. TI deal has to take into account how the money spent on improvements will relate to usable (separate) and rentable (common) space of the building.
Fixing on Substantial Completion
It is important to decide the Substantial Completion cutoff of improvements so that it can coincide with the rental payments from the tenant.
Agreement on Costs Overruns
If the turnkey build-out clause is not part of the agreement, then both parties have to reach a mutual agreement on any potential cost overruns of the improvement.
Finding the Right Contractor
Once the points of TI deal have been ironed out, it’s time to find the right person for the job. Besides meeting the basic requirement of certification and insurance, also assess the following factors while choosing a tenant improvement contractor in Arizona.
- They should be in the business for a long time. (10+ years)
- They can show you some of their similar past projects.
Getting referrals is another way of finding the right company for the job.
Benefits of Tenant Improvement for Owners
For owners, TI agreement is a win-win situation. They can successfully persuade renters to pay the desired amount of rent by agreeing on their tenant improvement clauses. In the long run, tenant improvement is a value-added measure for your own property. All the additions, adjustments, and modification that you incorporate in your property through tenant improvement eventually increase its value on the listing.
Lastly, you can improve your reputation as a landlord by adding TI clause in your rental deal. It shows that you are willing to accommodate the renters’ demands in the deal. Finding new renters of your choice becomes easy when you have a trustworthy and forthcoming reputation as a landlord.
MJM Improvements is a reliable construction company operating out of Glendale, AZ. The company provides its services for all the phases of commercial and residential constructions throughout the state. If you are looking for a qualified tenant improvement contractor in Arizona, then MJM Improvements should be your pick.