What does tenant improvement refer to?

Tenant improvement refers to modifications made to a rental space to better accommodate the needs of the tenant or their business operations. This can include alterations such as changing the layout of the space, installing new fixtures or flooring, adding partitions, or upgrading electrical and plumbing systems to suit specific business requirements. These improvements are often negotiated in the lease agreement and can be essential for businesses to create an environment that enhances productivity and meets operational needs.

The nature of tenant improvements reflects a partnership between the landlord and the tenant, where the tenant's business vision is realized within the leased space. This collaborative approach contrasts with simply making upgrades mandated by the landlord or conducting minor repairs and aesthetic changes without permission. All of these actions differ significantly from tenant improvements, emphasizing the importance of understanding the unique nature of tenant modifications.