All you need to know about your commercial leasehold improvement financing optio

Posted by maurerconstruction on November 9th, 2016

If you rent a commercial property for your small business, chances are that it will need some work to make it suitable. Most landlords offer some type of commercial tenant improvement San Diego financing making it a good idea to know what the options are, and what might be best for your specific situation.

Tenant Improvement Allowance (TIA)

This is the most common form of payment for a commercial leasehold improvement. Here, the landlord offers a certain amount of money for the renovations. The exact amount of money depends on a number of factors but is typically paid per square foot. The tenant is responsible for finding and overseeing the San Diego remodeling general contractor as well as footing any cost that goes beyond the TIA offered by the landlord. The biggest advantage with this kind of arrangement is you have direct control over the renovation allowing you to get the exact result you want. In addition to this, you are less likely to experience cost overruns and quality issues because of direct involvement in the project.

Rent discounts

Many landlords offer a discount on rent or free rent for a pre-determined number of months. The tenant then uses these savings to fund the renovation. A common option is free rent for one month every year for the duration of the lease. The tenant is also responsible for overseeing the improvements or renovations. Similar to TIA, you are less likely to experience issues with quality of workmanship or materials as well as cost overruns as long as you choose the right contractor. Some landlords may raise the rent at a later date to recoup the discount so it is worth talking with the landlord about future rent projections before taking the deal.

Building Standard Allowance

This is also known as a build out. It typically involves the tenant offering a package of improvements for all tenants. The tenant chooses the most suitable package from the options available. You will be required to pay for any improvements that are not offered by the landlord. In this case, the landlord will typically oversee the work. Although you don’t have to spend the time or money looking for a general contractor San Diego and other renovation requirements, the customization options are usually very limited. This is a major disadvantage if your business space needs complex work.

Whichever option you choose, it is important to work with a good contractor. This is the only way to ensure quality workmanship, and that you are ultimately happy with your business space.