There are a few different responsibilities/parties involved in the tenant improvement allowance stratosphere. The landlord and tenant are the main negotiators that take care of the give / take of the initial deal, but there are many occasions where a project manager has to step in and strive towards the maximized profitability of the deal.
Tenant Improvement Allowance Services
What is Tenant Improvement Allowance?
When the commercial real estate is soft, landlords can offer their tenants a certain allowance for remodeling of an office space, commercial building, store front, or apartment. Landlords try to negotiate a profitable offer for their tenant in order to improve their space. It is the incentive for the landlord to fill spaces, improve the value of the property, and more.
Tenants should also try to get as close to funding as possible in the negotiation process. It’s going to be to their long term benefit to have their space improved.
Because a TI allowance typically does not have to be repaid (it is a function of the other deal terms in a lease such as rental rate and term length), it can be a major incentive for a tenant to sign a lease. If you are planning to do renovations to your new space, securing a TI allowance is an important negotiating point
Advantages of using a Project Manager for your Tenant Improvement Allowance
Why pull another external factor into the equation?
- Allow Smooth Project Negotiations: Project managers that have been through a high amount of deals can walk either side through the most beneficial deal for the long term advantage of the project
- Facilitate and own project communications: with all the different stakeholders involved in the improvement projects, there needs to be a central party holding it all together.
- Translate your vision into reality: Occasionally you won’t know how to translate your project goals, ideas, and wants into deliverables, so hiring an owner representative will bring all those to life. They will take your ideas and even enhance and build upon that foundation.
- Run a tight Schedule and Budget: Two very important aspects of a project, the timelines and budget. An extra person driving efficiencies to the bottom line can prove to be a huge asset.
What is and isn’t included in the Tenant Allowance?
In most instances, landlords will agree to cover all hard costs associated with the build project. The portion of the space that will permanently stay with the building after every tenant leaves. The walls, structures, HVAC, plumbing, doors/windows, and paint, etc.
The soft costs are the ones that are customized for each tenant. Things like furniture, wiring, electronics, etc. These things every tenant decides for their custom needs.
Why work with Real Projectives?
We are a professional consulting services firm focused on achieving client objectives. We advise on, oversee and manage projects across a spectrum of technical and managerial issues related to the entire lifecycle of commercial real estate from concept through design, construction, renovation, operations and maintenance. And, we serve in multiple roles including real estate consultant, owner representative and program manager.