When Tenant Improvements Are Unnecessary

The most efficient way to avoid excessive tenant improvement costs is to know your audience, according to experts from RSM, Taconic Investment Partners and TIAA.

When it comes to adding value in commercial real estate, landlords need to be creative—but only in a way that caters to the potential tenants. The key is to not overthink it and pay for unnecessary tenant improvements, Jason Sevier of RSM recently told Privcap.

For instance, a lot of professional firms are looking to be in the city, which calls for adequate infrastructure. Sometimes it’s a matter of saying, “What could we do to attract tenants to this building, because it’s got great bones but it just needs some updating to today’s modern environment needs,” says Kevin Smith of TIAA. And sometimes landlords should focus on a building’s amenities or building improvements in order to attract tenants.

“You have to know what your audience is for that building, and determine what makes sense for those types of tenants,” says Smith. He’s seen, for example, landlords try to go after tech tenants with high-rise office towers. One trend among millennial employees is open space, which is another thing landlords are trying to achieve with renovations.

You can watch a clip here:

Watch the full video or download the transcript here in which experts from RSM, Taconic Investment Partners, and TIAA also discuss repositioning a property, retaining current tenants, and trends in commercial infrastructure.