Everything You Need To Know About Tenant Improvement Construction

Whether you're evaluating commercial, office, or residential properties, it's crucial to prepare for the costs associated with retrofitting a space. Planning for tenant improvement construction in the early stages of your project cycle helps mitigate renovation costs. Keep reading to learn: the basics of tenant improvement, different types of tenant construction, best practices for tenant improvement allowances

What Is Tenant Improvement?

Tenant improvement construction refers to the physical updates made to leased building spaces. They can either be orchestrated by property managers or the new tenant, covering anything from new additions to complete build outs.

New additions are the least invasive form of tenant improvement construction—these are where general contractors enhance existing finishes in the facility. Sometimes, though, tenants opt for a complete buildout, which means gutting the internal space and rebuilding it with designs, finishes, and improvements unique to their personal needs.

The logistics behind tenant improvement construction can vary based on your specific industry, as each business has its own unique design goals.

Different Types of Tenant Improvement Construction

The details behind tenant improvement construction vary based on your industry, provider, and stipulations. We’ll dive into the specifics of the renovation proves by isolating the three main industries:

  • Commercial
  • Office
  • Residential

Commercial Tenant Improvements

Commercial tenant improvements allow you to customize your office space while potentially having the upgrades paid for by the landlord. The funding behind these improvements comes in four different forms:


The city of Omaha requires a certificate of occupancy as part of your commercial building permit based on two factors:

  • New business operations in an existing building where the previous business had a different use.
  • New businesses in a brand-new facility with no previous tenants.

Rent Discounts

Occasionally, the new tenant is responsible for the initial renovation costs. You’re still able to customize upgrades but act as the point of contact throughout the entire construction process. In return, your landlord offers free or reduced rent for several months to reimburse you for the tenant improvement construction costs.

Tenant Improvement Allowance

Tenant improvement allowance is when a landlord provides the tenant with a set amount of funding to help pay for construction costs. Like rent discounts, the tenant is responsible for facilitating the construction process.

Building Standard Allowance

Tenant improvement allowance is when a landlord provides the tenant with a set amount of funding to help pay for construction costs. Like rent discounts, the tenant is responsible for facilitating the construction process.

Office Tenant Improvements

Office tenant construction is similar to commercial improvements because they share the same goals and funding options. The difference is that the project details are usually handled by a property management company instead of landlords. While this alleviates some of the stress associated with overseeing the construction process, it also reduces your project flexibility.

Large office spaces hold multiple companies, and conducting tenant improvement construction can be distracting for the other building occupants. Property managers often have specific stipulations on what types of changes you can make in their facility.

Because it’s a temporary space, property managers want to keep a consistent layout for future renters. Your improvements will most likely revolve around existing additions rather than complete build outs. While all four funding options are offered, property management companies tend to provide building standard allowances as they can stick to a fixed cost and already have established partnerships with local contractors.

Residential Tenant Improvements

Residential tenant construction varies from commercial and office improvements in a few different ways. For commercial office spaces, the stakes are higher. Property managers advertise tenant improvement construction services as an incentive to lease with them because they know there’s other options.

For residential properties, the power lies within the leasing company—especially in today’s market. There’s a vast disparity in the supply-and-demand chain between individuals trying to find living spaces and available options.

If you inquire about your leasing company’s tenant improvement packages, they’re unlikely to have any plans to offer. Renovations can get expensive, and leasing companies see these improvements as an unnecessary cost considering the high demand for their property.

But that doesn’t mean it’s impossible. Depending on the age and condition of the facility, your leasing company might be able to work with you. However, your project options will be limited, as construction stipulations are much stricter in residential spaces. If you qualify, your leasing provider will most likely offer tenant improvement allowances or building improvement allowances. These are the two most popular options as it’s an efficient way for leasing companies to accommodate your needs without the hassle of facilitating the construction process.

Navigating Tenant Improvement Funding

Navigating the nuances behind tenant improvement construction can be challenging. Consider the following factors to understand what you need to look for:

What’s Included

If you receive a stipend for renovation work, ensure you know what improvements you can and can’t conduct. Most standard scopes of work include:

  • Basic refurbishment
  • Repainting
  • Replacing flooring/carpets
  • Upgrading HVAC
  • Electrical updates
  • Remodeling

Be sure to pay close attention to your lease, as it covers prohibited projects, preferred contractors, and details on how to disperse payments.

Additional Costs

If your landlord or property manager is responsible for facilitating the construction process, ask them to bid the work among several contractors, as this helps stretch your allowance dollars.

If you were given an allowance for the renovations, make sure to prepare for the soft costs of tenant improvement construction, such as:

As always, the best way to complete a successful project is to partner with a general contractor you can trust to deliver high-quality work.

Nebraska’s Trusted Tenant Improvement Contractors

CK Construction is regarded as one of the top construction companies in Nebraska due to our attention to detail, quality workmanship, and established connections.

Have a new renovation project on the horizon? You’re in the right spot. Reach out to our expert team to discover the CK difference.