Investing in other people's property
It can be risky to invest in your landlord's property — but not if you play by the rules! Making “tenant improvements” is a two-way street, and both parties have a lot to gain. (Take the wrong approach, and you may have a lot to lose.) Your interior design team has a lot of experience addressing tenant improvement projects, and can assist owners or tenants in ways for both to come out ahead financially and for mutual future benefit.
Individuals who have commercial or residential property to lease or for rent have their own parameters concerning how much they wish to invest in elements that go beyond basic necessities and provisions. Usually, any additional investment that customizes or improves the space in question falls into the category of tenant improvements.
In many cases the owner of the property is willing to share some of the expense of improving or customizing their property to tenant needs and specifications. When it can be shown that, in doing so, the property will actually increase in value or assist the tenant's success in doing business, an owner is usually willing to consider some course of action.
Negotiating a fair and equitable approach to tenant improvement should be discussed before documentation is finalized on a rental or lease. In that way, all parties' speculations — or intentions — are understood and can be clarified in advance. After-the-fact can cause serious misunderstandings, imply a breach of contract or just plain hard feelings and disappointments on both sides.
In some cases, when the tenant is willing to make reasonable changes and or improvements to leased or rented property, the owner may give permission but may not want to participate in the costs — or the process. They may, of course, reserve the right to approve or disapprove of the tenants plan. When a tenant goes ahead with improvements on their own and with approval, it is important to understand that such investment does not bind the owner in any way. Your investment is yours, and will not, automatically, imply any considerations on the part of the owner regarding your basic rental obligations, or their right to increase the rent according to the documentation.
In other cases, the owner might be willing to assist in the form of a temporary adjustment in the rent to allow the tenant to more easily cover approved improvement costs.
Some commercial leases include (as an incentive) a commitment from the owner to fund tenant improvements up to a certain value. They may also allow the tenant to go further — at their own expense — with additional improvements. Some corporate owners may have standing relationships with qualified interior designers for the express purpose of providing assistance with their tenants' improvements.
With a variety of negotiation possibilities available, one's search for commercial or residential space can broaden. You may need space modified for a specialized use such as medical or dental practices. Ask your experienced design team for guidance. Let a prospective landlord know your intentions and you might be surprised how easily problems can become solutions!