2020 Boise Idaho Real Estate Blog
Boise Valley Commercial Real Estate - Tenant Improvements - "But I'll Be Improving The Owner's Building" Main Boise Valley Commercial Real Estate
Why your proposed tenant improvements (TIs) aren't as valuable to the Owner as they are to you, the Tenant. Many tenants ask to have the building owner participate in their TIs only to hear the owner doesn't see a continuing value in those improvements.

Many tenants are curious about tenant improvements (TIs) and they commonly ask if the owner will give them free rent or if the owner will help pay for the TIs.  I had a food service company make an inquiry into how that works a month or so ago and I had another tenant express concern that their improvements would benefit the owner, so the owner should give them credit or even pay for some of the improvements.

Here's the deal.  Those TIs may be valuable to you and the next tenant may ask to have those TIs removed to accomodate their particular application.

For the caterer, no doubt their TIs will be expensive.  An installed vent hood can easily exceed $30,000 just for starters.  For that vent-hood to be of value to the owner, that space would have to be marketed to another food service tenant after lease termination.  That's too restrictive a use to be of interest to the owner.

On the other hand, if you represent a strong tenant and are proposing a reasonable lease rate and a significant lease term (e.g.; 5 to 10 years), you're going to have some bargining power and will most likely get credit in terms of free rent & / or owner contribution.

If you're proposing a lease of 1 year or less, in this market, you're not likely to get any concessions.  In that circumstance, you pretty much get what you see ("as-is").

Good luck to all in this new year!

Posted by Scott Nicholson at 1/13/2008 3:45:00 AM
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Michelle Penick, Build Idaho Client Real Estate Services

Michelle Penick

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