The Advantages of Investing in Tenant Improvements, for Landlords

​Introduction
For Landlords of Industrial Real Estate, who are often faced with important decisions that affect their property's short term and long term value, considering whether to invest in tenant improvements, also known as TIs, can have a significant impact on the property’s marketability.  Tenant improvements generally refer to the specific modifications made to a commercial office or warehouse. While landlords often hesitate completing these improvements due to the upfront costs associated with TIs, there are compelling reasons to consider this investment. Let’s now look briefly at some of those reasons.

 
Quality Tenant
Attracting high-quality tenants is a primary concern for Landlords, and delivering modernized space is critical to that end. Tenants are seeking spaces that are tailored to their unique business requirements. A landlord’s investment to make their properties more appealing, more often find high-quality tenants who are typically reliable on-time rent payers, and those who take care of the property, which can lead to a more stable and profitable investment in the long run.
 
Advantage over Competitors
Tenant improvements can give a property a competitive edge by providing features, higher image appeal, functional layouts, and modern amenities that other spaces lack. This will generally lead to shorter vacancy periods and potentially higher achievable rents. Prospective tenants are most likely to choose a property that has already been or can be easily converted or customized to deliver the space they need.
 
Property Value
Strategic improvements enhance both the functionality but also aesthetic appeal of the property or space.  This generally translates to higher rental rates or sales price, if selling is to be considered. Tenant Improvements are investment that can bring significant return in short and long term.
 
Longer Lease Terms
Delivering high quality space that is suited to the tenant, will help landlords secure longer lease terms. This stability reduces turnover cost, and more predictable cash flow as you have to navigate less frequent times of vacant space.
 
Conclusion
It is our opinion that landlords should take their time to consider the benefits of spending money on tenant improvements, as each situation is unique.  However, while the initial investment may seem large, the advantages are there. Attracting quality tenants, gaining a competitive advantage, increasing property value, and securing longer lease terms, are all compelling reasons to embrace tenant improvement.
 
Please call us today to consider your situation and how we can help. ​