Commercial tenant improvement, simply put, means customizing a commercial space as per your business needs. Many commercial buildings will offer you just a skeleton, a shell as an office space. These spaces are just structural elements that can be easily changed, altered, designed or redesigned the way you want them. How you do these spaces will depend on your business requirements, personal choices, budget, etc.
An important part of commercial tenant improvement also includes alteration or modifications done to a commercial space. This could include changing or redoing interior partitions, installations, changing appliances/equipment, flooring, kitchen, wall colors, electrical and plumbing systems, etc.
Commercial spaces can never be one-size-fits-all, as every business and every office has its own unique needs. Tenants could choose the right space primarily based on the size or location, but customizing the interiors is also an important factor in ensuring that their business runs smoothly.
Key Aspects of Tenant Improvements
Even though each tenant may have very specific requirements for their commercial space, there are some standard improvements that tenants often ask for. These include:
Interiors / modifying existing layouts
Tenant improvement projects involve modifying commercial interiors to meet a tenant’s specific needs. This can include redesigning layouts, upgrading fixtures, and adding unique branding elements. Whether it’s creating open spaces for retail displays or private rooms for medical offices, these improvements ensure the space is functional and aesthetically pleasing.
HVAC Repairs
One of the most common commercial tenant improvement requirements, HVAC repairs, may include refitting the existing units and updating them with more eco-friendly and affordable units. This helps in reducing the carbon footprint and energy consumption, resulting in lower usage costs.
Electrical Fittings
Electricity is the most common requirement for any kind of office space. However, the electric fittings may vary as per the nature of the business. A design firm, for example, may need more plug points for computers, wifi, etc.
Plumbing Needs
Plumbing needs may also vary as per the staff size and composition. Some of the most common plumbing-related needs include additional sinks/wash-basins, break rooms, kitchen sinks, additional water supply, bathroom-related changes, etc.
How Do Tenant Improvements Vary Across Industries?
Tenant improvements (TIs) are customized to fit the unique needs of different industries. Here’s how TIs are tailored to various sectors:
Retail
Retail businesses (Group E as per BCBC 2024) require TIs that focus on creating an inviting and efficient shopping environment. This often involves installing custom shelving, display areas, and fitting rooms, as well as ensuring that the overall design aligns with the brand’s identity.
Healthcare
Healthcare (Group B or D as per BCBC 2024) TIs emphasize functionality and safety. Medical practices, walk-in clinics, and therapy clinics often need specialized spaces like exam rooms, treatment areas, and laboratories.
Restaurants and Cafés
For restaurants and cafés (Group A as per BCBC 2024), TIs typically focus on creating efficient kitchen spaces, ensuring compliance with health codes, and designing customer-friendly dining areas.
Office Spaces
Office space (Group D as per BCBC 2024) TIs are designed to optimize workflows and create comfortable work environments. This might involve building open office areas, private meeting rooms, and breakout spaces.
Industrial and Warehousing
In industrial settings (Group F as per BCBC 2024), tenant improvements focus on maximizing storage and operational efficiency. This could involve installing heavy-duty shelving, racking systems, and loading docks.
The British Columbia Building Code (BCBC) sets specific standards and guidelines for various types of spaces (Group A, B, D etc. ) to ensure safety, health, and accessibility. These standards can vary significantly, depending on the use of the space.
What Challenges Can Arise During Tenant Improvement Projects?
No project is devoid of challenges, and tenant improvement is no exception. Here are a few things to stay clear of:
Permits and Compliances
Navigating the permit and compliance process is often the most challenging part of any Tenant Improvement. Securing a building permit from the city to meet compliance can sometimes take longer than the construction itself. It’s crucial to obtain all required construction permits and ensure your renovation plans adhere to existing building regulations. To avoid delays, it’s best to secure permissions in advance. Finding the right team with a solid understanding of codes and bylaws can significantly expedite your Tenant Improvement (TI) process, as the city is more likely to approve well-prepared applications swiftly.
Overshooting Budget
Overshooting the budget is one of the most common tenant improvement challenges people face. This could be due to a change in plan, underestimating expenses or other unforeseen circumstances. Finding a right contractor and doing a thorough due diligence on pricing can keep a check on the proposed budget. It is also recommended to have a contingency plan to avoid major mishaps.
Delays in Project Completion
Delay in completing the work is another challenge you may face during tenant improvement. This could be due to permit delays, disruption in the supply chain, shortage of workers, change of plans, payment delays, etc. Planning well is again the way out and avoiding unnecessary delays.
Proper Communication
Poor communication, whether with the tenant or with the construction team, can lead to unwanted delays and changes at the last moment. It is best to have all aspects of the tenant improvement plan covered with all parties before you start your work.
Steps to Apply for a Tenant Improvement Building Permit
Before submitting your application, ensure you understand your area’s zoning regulations and land use bylaws, including any requirements for development permits. You can also hire a consultant to assist with the approval process.
Step 1- Determine If a Permit Is Required
A building permit is NOT required for:
- Painting
- Installing new flooring
A building permit is required if the tenant improvement includes:
- Change of use
- Adding/removing load-bearing or non-load-bearing walls, partitions, or curtains
- Change in path of travel
- Finishing unfinished space
- Amending the current floor plan
Step 2: Consult a Professional
Hire a team to create detailed and dimensioned construction drawings that comply with BC Building Code and municipal regulations.
Architectural Drawings
- Floor Plans (Current & Proposed Layouts complying to BCBC)
- Elevations & Key Plans (Building & Adjacent Tenant Uses)
- Site plan and Parking areas
- Building assemblies
Engineering drawings: Structural, Mechanical, Plumbing, Electrical and Fire suppression system with their respective schedules
Building Code Data Sheet and analysis
Step 3: Gather Required Documents
- Property information: Copy of the lease agreement, Certificate of Title, property ownership details.
- Contractor’s information with a valid business license.
Step 4: Prepare the application package
- Application form: Complete the relevant building permit application form with accurate information about the project.
- Drawings: Submit the required set of construction drawings, including detailed specifications for proposed changes.
Step 5: Obtain Additional Approvals (If Required)
- Liquor/Cannabis Sales: Obtain approval from the Liquor and Cannabis Regulation Branch.
- Special Waste Discharge: If required, contact the City Engineering Department.
- Health Department Approval: Recommended before submitting plans to ensure plumbing and layout compliance.
Step 6: Pay Fees and submit the application
Step 7: Wait for Review and Permit Issuance
Once submitted, the application will be reviewed by officials.
A permit number will be assigned, and the official review process will begin.
Step 9: Begin Construction & Book Inspections
Upon permit approval, construction can begin.
Frequently Asked Questions About Commercial Tenant Improvement
Who Pays for Tenant Improvements?
It typically depends on the lease agreement and negotiations between the landlord and the tenant.
Can a tenant make improvements to the leased property?
A tenant can make improvements to the leased property. But these must be specified in the lease agreement beforehand. Taking written permission for such changes is necessary.
How long do tenant improvement projects usually take?
Tenant improvement can typically take anything between 4 to 8 months, depending on the space, complexity of the project, materials used, etc.
Who owns the improvements after the lease ends?
In most cases, tenant improvements belong to the landlord unless otherwise is mentioned in the lease agreement.