When the market is down, commercial leasing can take a huge blow resulting in more vacancies, however, tenant improvement contributions from landlords can make spaces significantly more attractive to potential tenants, ultimately resulting in higher occupancy rates.

Typical tenant improvement projects may include floor and wall coverings, ceiling installations, air conditioning, fire protection, improved energy efficiency and floor plan adjustments. While such improvements require upfront costs for the landlord, these costs can be recovered as part of the lease agreement.

In a recent report from JLL on U.S. non-residential construction activity, more landlords are willing to pay for tenant improvements to increase their competitiveness. This allows tenants to customize interiors without paying for a full redesign out of pocket, and are a key piece of lease negotiations.

Here are 3 reasons why investing in tenant improvements can improve your occupancy:

  1. Commercial tenants are actively seeking spaces that allow them to customize so that they can attract and retain top talent. Properties that offer an attractive tenant improvement policy are more likely to have occupancy.
  2. Tenants who believe they’ve gotten a good lease agreement and are happy with the improvements are more likely to take care of and continue leasing their property as well as speak positively about their space. Word-of-mouth advertising and personal referrals are very powerful ways to attract more high quality occupants.
  3. Some improvements will reduce operating costs and result long term savings for tenants which makes them less likely to vacate the property.

According to Todd Burns, President, JLL Project and Development Services, Americas “We expect to see continued growth of tenant improvements,” said Burns. “Companies will continue to grab vacant property both in primary and secondary markets and build out offices to fit shifting trends. That activity will place a premium on strategic capital planning.”

StoneCo Building Group is a San Diego based general contractor. The StoneCo Building Group team has successfully performed hundreds of commercial Tenant Improvement projects in over 500 hundred locations and are dedicated to delivering the highest quality workmanship at a competitive price that meets the requirements of the owners/tenants. To learn more about how you can improve your occupancy rate with tenant improvements, contact us.