Leased Space

If the space is leased, the landlord might make basic physical changes, such as installing carpet or painting walls, as part of the negotiated lease terms. When these changes are extensive, the tenant usually completes the remodeling with consent of the landlord (who authorizes any proposed alterations) and pays for these upgrades either directly or as additional charges to the monthly rent.

Most people will not need to substantially alter a leased space. Raw spaces, and those that have been unoccupied for some time, are most likely to require modification. This can also be true if you need to incorporate a new use into a space, or have a long-term lease. For example, you have entered into a 10-year lease for your expanding dance school. To bring the space up to par, you might need to incorporate special floors, dance bars, mirrors, a sound system, etc.

Or, say you move into an open-space warehouse with several other artists, and plan to operate a photography studio. You might have to erect walls to partition off separate studio spaces, create a dark room, etc.

In addition, you might find yourself as the first user in a space that has been vacant for a long time, or is being converted to a new commercial use. If the space will ultimately house multiple users with different activities, know where common hallways will be established, and what impact upcoming construction will have on the access, security and functionality of your space during the conversion process. A written or drawn attachment to a lease agreement or purchase contract will protect you if disputes arise.

You will almost always incur costs for “as is” commercial space. While the landlord may factor in your changes as part of the lease negotiations, ultimately you will shoulder the burden. Spending time finding a space that requires the least amount of remodeling is the best financial strategy.

TIP: Review Chapter 7: Commercial and Industrial Leases for more information about renovating leased space.