What is included in tenant improvements?

Tenant improvements refer to the modifications made to a rental space to meet the specific needs of a tenant. This includes various enhancements that improve the functionality and aesthetics of the interior environment.

Finishing costs, such as carpeting and lighting, are considered tenant improvements because they directly relate to customizing the interior of a space for a tenant's use and preferences. These improvements allow the tenant to create a work environment that suits their operations, branding, and comfort. The installation of finishes is critical because they transform a raw space into an operational area that aligns with the tenant’s requirements.

In contrast, building a new structure from the ground up involves significant construction that is not typically classified as tenant improvements. Similarly, while the installation of essential services like plumbing can be necessary for a tenant's occupation, it often falls under the category of base building services rather than tenant-specific upgrades. Lastly, upgrading the external facade is more related to building maintenance or renovations aimed at improving the exterior look and feel, rather than tailored improvements made to the interior space used by the tenant.