Negotiating a Tenant Improvement Deal

blueprint-964629_640IT companies, medical practices, insurance agencies, retail businesses, etc., at times, outgrow their space and need to expand. This often means that a building needs a space build out.

The Certified Commercial Investing Member Institute defines tenant improvements as 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.


From the tenant’s viewpoint, many factors are involved in a tenant improvement deal. When negotiating with a building owner, the following topics may come up:

  • A turnkey buildout although this may be tough to find as the demand for space increases.
  • Usable versus rentable space which means the per square foot allowance that tenants may be allowed for improvements and its relation to usable and rental space.
  • When is the project considered completed? It’s important to time the usability of the space with the commencement of rental payments.
  • The handling of cost overruns must also be hashed out into a mutually agreeable approach.
  • Knowing what is included in the tenant improvement allowance is critical to the project. What does it include: materials, repainting walls, HVAC, project management, furnishings? Make sure this is understood by all parties.

After all of this is worked out, then it’s time to start planning for the construction.

About DPT Construction

Staring out as a painting contractor, DPT, Inc, has worked as a Los Angeles commercial and residential space remodeler since 1986. We are a diverse firm with extensive experience in hotel renovations, commercial retail, tenant improvement, institutional, restaurants and residential projects. We design, manage and administrate the construction process from inception to completion while working closely with owners and tenants. Contact us at