Commercial Tenant Improvements: An Owner and Tenant Playbook

8 min read

Tenant improvement projects operate under a fixed deadline that someone else set: the rent commencement date. Every scheduling decision downstream inherits that constraint.

The lease is the project plan

Most TI risk is created at lease execution, not at construction. Terms worth negotiating carefully:

**Delivery condition.** Exactly what condition the space arrives in, in writing, with a defined checklist.
**TI allowance and disbursement.** Amount, what it can be spent on, documentation required, and timing of payment.
**Rent commencement trigger.** Tie it to substantial completion or certificate of occupancy, not to a calendar date that assumes a perfect permit timeline.
**Landlord delay.** Define what happens if landlord-side work or approvals slip.
**Approval turnaround.** Cap landlord review time on plan submissions.
**Base building responsibilities.** Restrooms, life safety, HVAC capacity, electrical service, accessibility path — clarify who provides what.

Verify the existing conditions

Assumptions about existing space are frequently wrong. Before design:

Confirm HVAC tonnage and distribution against your actual occupancy and equipment load
Confirm electrical service capacity and panel space
Confirm restroom count and accessibility compliance for the proposed occupancy
Confirm sprinkler coverage and whether your layout requires head relocation
Confirm ceiling height above grid and structural capacity for any hung equipment
Check for asbestos or lead in older buildings before demolition is scheduled

Change of use triggers obligations

If your use classification differs from the previous tenant, code obligations can expand quickly: occupancy separation, exiting, accessibility upgrades, and sometimes fire protection changes. Grease-producing food service, assembly uses, and medical uses are the most common triggers.

Ask the building department directly during design, not during permit review.

Long-lead items decide the date

The finish schedule rarely drives the completion date. These do:

Electrical switchgear and distribution equipment
Rooftop HVAC units
Storefront and glazing
Custom millwork
Specialty equipment supplied by the tenant

Identify long leads at schematic design and place orders as early as the contract structure allows. An early procurement package is often worth its administrative cost.

Build the schedule backward

From rent commencement, work backward through:

Furniture, fixtures, equipment installation and tenant move-in
Certificate of occupancy inspection and any punch corrections
Construction duration
Permit review and any resubmission cycle
Landlord plan approval
Construction documents
Design and pricing

If the result requires signing the lease before design begins, that is the finding. Negotiate the commencement mechanics accordingly.

Managing the allowance

Allowance dollars usually reimburse after work is complete and documented. That means you carry cost in the interim. Confirm documentation requirements, lien waiver forms, and payment timing before construction starts, and align your contractor''s pay application format to what the landlord requires.

Closeout is a lease obligation

Certificate of occupancy, as-builts, warranties, air balance reports, and operations manuals are frequently required deliverables under the lease. Missing them can delay allowance payment. Put them in the contractor''s scope explicitly.

Next step

If a lease is still in negotiation, that is the moment where schedule and cost risk are cheapest to shift. Review the work letter and commencement terms before signing, not after.