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Commercial Tenant Finishes and Warranties: What Every Business Owner Should Know

Commercial Tenant Finishes and Warranties: What Every Business Owner Should Know
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When a tenant leases a commercial space for its business, the tenant often wants to lay out or remodel the rented space to meet its unique operational needs. This is common. The ability to customize a space for their specific needs is often what draws tenants to lease a particular location.

However, the process of implementing commercial tenant finishes (also commonly referred to as tenant build-outs or tenant improvement projects) to achieve this objective requires the tenant to coordinate with the building owner or property manager (landlord) to ensure that the finishes do not interfere with any existing contracts. Those contracts could include the commercial lease and financing arrangements of the building owner or warranties that are already in place.

The building owner or property manager must satisfactorily address these considerations before the tenant proceeds with the commercial tenant finishes.

Two Rackly Roofing workers with safety gear walking beside a building

What Are Commercial Tenant Finishes?

Workers inspecting a flat rooftop with safety equipment

Typically, the landlord and tenant hammer out the terms and conditions of commercial tenant finishes (i.e., tenant build-out) when the parties negotiate the commercial lease terms. The tenant has specific needs to occupy the leased space satisfactorily. The landlord must incentivize the tenant to want to rent the space.

A build-out allows the tenant to customize the space for its business purposes. The landlord is responsible for ensuring that the build-out does not go against other contractual obligations (including warranties) belonging to the landlord. Navigating these (potentially competing) considerations requires adeptness.

Commercial tenant finishes include modifications or upgrades to the interior space, such as the layout, roofing, flooring, ceiling, lighting, walls, doors, windows, fixtures, electrical system, HVAC system, plumbing, and other features. The ultimate goal of these finishes is for the tenant to run their business more efficiently and effectively.

Explaining The Commercial Tenant Finish Process

Customarily, a commercial build-out involves two phases:

The initial step involves planning the layout with a construction contractor, taking into account secured approvals from the lessor and any governing authorities such as a municipality’s building code enforcement agency. Ideally, the tenant should gather crucial information about the feasibility of its plan from the construction contractor before entering into the lease so that the tenant does not risk learning adverse information once it is too late.

After the tenant has received a satisfactory design layout from the construction contractor and the necessary approvals from the relevant parties (including the landlord) to move forward with the project, the construction contractor will execute the work. If any building permits were issued, the landlord would then need to verify that the work received final approval from the municipality’s building code enforcement agency and meets the landlord’s requirements.

Are Commercial Tenant Finishes Warrantied?

In and of themselves, commercial tenant finishes generally are not warrantied. A few construction contractors (like Rackley Roofing) will extend a labor warranty on their work, but it is not the industry norm. Certain construction materials also may have a manufacturer warranty. In limited cases, they might extend a workmanship warranty as well.

That said, a build-out typically functions as a leasehold improvement. Certain landlords could require a tenant to hold a leasehold improvement warranty to protect the value and integrity of the commercial tenant finishes. This warranty covers any defects that might arise with the construction work during the tenant’s lease term.

 

Advantages Of A Well-Executed Commercial Tenant Finish

Commercial property owners, landlords, and tenants mutually benefit from professional build-outs. Consider the following merits of a commercial tenant finish:

 

Added Property Value Well-designed, high-quality commercial tenant finishes often increase a building and property’s short- and long-term value.
Cost-Effective Answer Instead of developing a new building, improving an existing one offers a budget-friendly solution for the lessor or lessee.
Efficient Use of Space Rather than jamming a tenant into a space that isn’t quite the right fit, a commercial tenant finish will maximize its usage.
Long-Term Solution An exceptionally crafted commercial tenant finish provides a permanent remedy for a rental space needing improvement. 
Tenant Satisfaction Keeping a tenant happy and content means it is much more likely to renew the lease and remain in tenancy for a long time.

How To Complete Commercial Tenant Finishes The Right Way And Under Warranty

For commercial building owners throughout the Southeastern United States, Rackley Roofing provides unmatched service and exceptional quality in the field of commercial tenant finishes. They ensure that tenant finishes fulfill contractual obligations and meet the warranty requirements (to avoid running afoul of existing warranty coverage).

Throughout the process, Rackley Roofing provides thorough documentation, including detailed photography. All of their commercial tenant finishes have a two-year workmanship warranty. To learn more about Rackley Roofing’s exceptional commercial services or to schedule a complimentary initial consultation, contact Rackley Roofing today.

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