Commercial Tenant Build Outs

[Danielle Zimmerman]

Hello,

I own a commercial building with storefront space. The building itself is historic, but has had updates to plumbing, electrical and HVAC to suit office space needs. I have a tenant who owns a coffee shop who would like to put their business in one of the store fronts. I feel so way over my head! I had them fill out a very basic LOI which laid out their renovation needs for the space. We are now trying to help them find a contractor who is not just fairly priced but has time to do the job. Am I going about this correctly?

They are going to finance the construction they need done to make the space up to code for their coffee shop use. At what point am I responsible for upgrades? Or is it just all negotiable?

I feel like some costs I should cover, like anything that is foundational, electric and plumbing. Help!

[Greg Dickerson]

@Danielle Zimmerman it’s all negotiable. Typically as the owner you would not get involved in the actual construction unless you want to. It’s always best to let the tenants do their own work.

The typical structure is landlord offers a certain amount of TI money and has to approve the plans and specs prior to the tenant starting work. You also want a construction deposit and a qualified GC with proper insurance etc.