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The Tenant Improvement Workletter: Keys to a Successful Office Space Build Out

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When leasing commercial office space to house your organization, it is rare to find a space that is exactly perfect for your needs. Often alterations, called office tenant improvements, need to be made to the facility. This requires negotiation between you, your office tenant representative you selected to help you get the best possible lease, and the landlord.

It is important that tenant improvements never be agreed upon using a handshake arrangement. The improvements involve costs and legalities, therefore a tenant improvement workletter is developed defining the agreement. The workletter is a legal document created for your protection and some very important concerns should be precisely covered in the agreement.

Questions and Issues Important for Inclusion in the Workletter

·         Is the landlord or the tenant responsible for doing the work to the office space?

·         Which party chooses the contractor and space planner and how exactly will these parties be selected?

·         Who pays for what expenses involved in altering the commercial office space being leased?

·         Is the space involved in the alternations usable or rentable square footage and how many square feet are involved?

·         What relationship does the rent commencement date have to the tenant improvements and construction?

·         What if there are delays caused by the tenant? What if delays are caused by the landlord?

Types of Workletters

Turn-Key: This type of workletter is established before lease signing and the landlord agrees to pay the improvement costs per approved plans. Usually the improvements are completed before the tenant occupies the office space.

Landlord Workletter: In this situation the renter is given an allowance by the landlord to make changes. If there are costs overruns, the tenant is responsible. Typically the lease is signed before this type of workletter is put into effect. The landlord maintains some control over the improvements ensuring they meet approved plans.

Tenant Workletter: This type of workletter may or may not provide an allowance from the landlord. Basically the tenant controls the improvements and accepts the cost risk. If an allowance is negotiated, the tenant is responsible for all costs over the allowance.

Selecting the Best Workletter for Your Office Space

It is important to go over the benefits and risks of each type of workletter with your Office Finder tenant rep before determining which types of workletter is best for your specific situation. It all depends on the work you need, how you want to manage the work, and what terms the landlord will agree to. Your office tenant rep will help you negotiate the best possible deal for your tenant improvement workletter as well as your office space lease. 

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By: James Osgood

Lease Negotiations , Office Leasing Tips , Office Rental , Office Space , Tenant Representation

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