Competition is cutthroat in the real estate market. Clients’ tastes constantly evolve as they want better design and features for their spaces.
As a real estate owner, you cannot allow your building to lag behind as you risk high tenant turnover in such a competitive market. The only way to stay on tenants’ good books is to engage in good old renovation projects.
Commercial contractors work with real estate owners to renovate or remodel commercial properties to suit tenants’ needs. This article looks at what a tenant improvement project is, what you need to remember while undertaking such a project and how to choose the right design partner.
What is a Tenant Improvement Project?
Also known as leasehold improvements, these are modifications made to commercial property to meet tenants’ requirements. Some of these modifications include ceilings, lightings, walls, and floors.
If you are undertaking a tenant improvement project, here are some tips to guarantee its success:
1. Plan
You must plan the entire project before starting. A tenant improvement project is expensive, and any misstep could prove costly. In short, always keep the following in mind:
- Budget – do not commence a project which will cost more than you can afford.
- Timeline – even if money is not an issue, will the contractor complete the project within your timeline to avoid income losses?
- Potential restrictions – although some properties may seem physically appealing, there may be legal restrictions on remodeling or improvements to said properties. You don’t want to buy expensive material only for the authorities to block the renovations.
2. Be Flexible
You want to work with the property and not against it. Instead of trying to tear down or completely remodel certain features, you should consider working around them instead.
For example, if the new restaurant has a unique ceiling, do not destroy that. Instead, work with that aspect and improve on it. Add attention-grabbing chandeliers or special lighting features to compliment the ceiling.
Another example is a potential dentist’s office with great natural lighting. Think of exposed beams or fancy woodwork to catch that light. It is worth remembering that natural lighting significantly impacts people by boosting moods and health.
The right tenant improvement contractor will anticipate costs for the project and advise you on flexible alternatives to ensure the project stays within budget.
3. Manage Expectations
To keep the project on budget and on schedule, you’ll have to manage expectations. You may need to adjust your needs and wants. In short, separate the needs from the wants.
Start with what is non-negotiable for the project, and then finish with things that you’d like to include but are not essentially necessary. Do not make a mistake and become attached to a feature that is merely on your ‘want’ list.
4. Always Choose Function over Aesthetic
There’s nothing wrong with wanting the space to look aesthetically pleasing, but do not sacrifice function at the altar of looks. You want a space that meets tenants’ needs. There is no point in blowing a budget over fancy looks while completely ignoring the functionality of the space. Some factors you’ll need to keep in mind include:
- ADA Compliance – does the space meet the requirements of the Americans with Disabilities Act? By law, you must ensure the space is compliant and accessible for people with disabilities.
- Fire alarms and sprinkler systems – the space must be up to code for local fire alarms and suppression systems requirements.
- HVAC – consider whether the space you’re improving will be expensive to heat or cool. On the flip side, consider whether it will suffer from poor cooling and heating.
5. Keep the Customer or Clients’ Perspective in Mind
As you undertake the tenant improvement project, remember that the tenants will utilize the building, not you. That means always having the actual tenants’ needs in mind, so think from their perspective. It’s also essential to involve the actual tenants to learn what they want in their space.
You can also check out local businesses to see what they did with their buildings. If possible, carry out surveys on customers to see what they’d want in the space.
6. Choose a Great Local Design and Construction Firm
Lastly, you want to ensure you pick the right design partner to help with the project. Hiring a great design and construction partner positively impacts the outcome of the tenant improvement project. Consider the factors below when hiring the best team for the project:
A) A Positive Attitude
You want to choose a contractor with a positive can-do attitude. The right contractor believes that every problem is solvable with a blend of creativity, innovation, and expertise. Persistence is a crucial factor you should consider in a contractor.
When evaluating a contractor for the job, ask them how they’ve tackled specific challenges they’ve met in the past. Also, ask them for details on tackling your project. They must be willing to talk you through your vision, adding valuable input where necessary.
B) A Communicative Team
Tenant improvement projects tend to be demanding. Each passing day that the building lacks occupancy is a loss in profit for the owner, not to mention the project’s cost itself. You want to choose a design team with good communication to relieve that.
The contractor will need to appraise you at every step of the project. If there are any hiccups, the team must communicate in good time and present alternatives to any challenges they may encounter.
The contractor needs to practice prompt and open communication at every project stage. Also, always ask a potential contractor for client references. You want to hire a contractor who’s genuine and willing to share references from past clients.
C) Experience and size of the project
Ideally, most contractors may do a decent job of improving a simple tenant project. However, it would help to choose only the most qualified before assigning the tenant improvement construction contract. It is not uncommon for a seemingly simple construction job to develop complications along the way that leave most contractors floundering.
Go for a team that has the most experience dealing with multiple types of construction projects. There are high chances that they’ve encountered a wide range of issues in those projects and know how to handle any challenges that may arise in your project.
D) Budget
It may seem obvious, but you want to choose a design partner that falls within your budget. Even though the actual project may already cost an arm and leg, do not choose the cheapest contractors you find as they may prove costly in the long run.
Ensure you select a team that offers the best value for money and with a proven track record of completed projects.
Conclusion
If you intend to keep your commercial building relevant in the real estate market, you may have to undertake a tenant improvement project in due course. These are modifications meant to transform a worn down or dated building and upgrade it to attract better clients.
To conduct a successful tenant improvement project, you need to pick the right contractor, plan the entire project before commencing, and be flexible in your requirements. Keeping the tenant’s needs in mind or choosing functionality over looks doesn’t hurt.
