A Practical Guide for Estimating Tenant Improvement Project Cost
When leasing a property, most tenants will need to renovate an existing space for their business needs. The scope of your renovation project can vary widely, from new carpet and paint to the complete build-out of an empty shell. Before you begin designing new improvements, it’s important to have a clear idea of what it costs to design, permit, and construct new improvements for the new space. That way, you’ll know if your budget can support the cost of a project before you invest time and energy into developing one.
The best way to avoid surprises is to be prepared. When you’re planning a renovation, the last thing you want is for things to go wrong. But a seemingly simple renovation job can become much more complicated, as you discover problems and have to address them.
In the early stages of a project, underestimating its cost forces you to come up with additional cash or compromise on key elements. It is possible to avoid this problem by better planning and presenting information earlier in the process.
Tenant improvement allowances
When you’re looking at the cost of a build-out, construction costs are just one part of the equation. You also need to consider tenant improvement allowances (TI allowances). You may have heard that landlords are offering tenants tenant improvement packages (TI packages) to help cover the cost of building out your space. If so, you’re not alone. TI packages are more common than ever before—and they’re becoming increasingly popular in major cities like Vancouver and Victoria. In fact, a research by popular commercial real estate company found that in 2018, more than half of all commercial lease transactions involved some kind of TI package.
Geographic location can have a significant impact on your tenant improvement allowance.
Tenant Improvement- Office renovation cost guide
The following are average costs for tenant improvement in typical spaces, including design, permitting and construction:
The cost of building permits vary depending on the city and project. The costs range between 0.5% to 2% of project costs.
Design fees vary significantly depending on scope, size and complexity. you may end up forking up anywhere between 4.5% to 16% of the total project fees.
interior build out cost average – $60 to $80 per SF
Furniture, fixture, and equipment –
FF&E are an important category of costs that tenants need to anticipate. Most landlords will not allow tenant improvement allowances to cover those costs, so it’s important for tenants to plan for them. it is unique depending on business and branding, may cost around 20% to 30% of project cost
There is no one-size-fits-all approach to tenant improvements. The types of spaces you need to build out will vary from property to property and tenant to tenant, which means that you need a project manager with a clear understanding of your specific requirements and project details.
Are you looking for a construction team for your tenant improvement project? Look no further than Jericho general contractors! We provide superior construction management and contracting services to ensure your project runs smoothly from start to finish. Contact us now.