Lease hold improvements on Commercial property

[Jason Weber]

I recently purchased a multi tenant business office building. One tenant who has been there for 15 years emailed me stating that his carpets are worn down, always look dirty, and have some areas of balding. He wants me to replace his carpets in his office.  I'm thinking the the he and his staff have been tearing up the carpets so I shouldn't just replace them for nothing in return right?  It's essentially a leasehold improvement which would make the unit a bit more desirable and valuable.  So, I responded that he could replace his own carpet but I would have to approve of the contractor and the material used, no linoleum.   Or, I would contract it out and pay for it out of my expense but in return I would need to raise monthly rent and possible secure a lease contract from him for a longer period of time.  What are your thoughts on how to handle this tenant?

Thanks for all responses.

Jason