How To Avoid The Surprise That Will Reduce Your Tenant Improvement Allowance By 20%
September 23, 2015 | Posted In Insider's View, News & Resources, Newsletters
By: Carrie S. Holstead
President & CEO, Carrie S. Holstead Real Estate Consultants, Inc. / ITRA Global
You have secured attractive business terms that will resolve your office leasing issues and protect your firm for years to come. You and your employees are thrilled about the new office lease which will improve the work environment, interject a heightened sense of pride into the company, and help retain and attract first rate employees. All is good… or so you thought.
If you are like many tenants throughout the United States, you are about to get a surprise when you apply for your construction permit and learn that up to 20% of the cost to build your space will need to be dedicated to resolving ADA (Americans with Disabilities Act) deficiencies at the building, as dictated by the International Building Code, Section 3411.7. This 20% will come out of your tenant improvement allowance. By way of example, if you lease 50,000 square feet of office space, and negotiate a $40 per square foot tenant improvement allowance to be provided by the landlord to cover your construction cost, once 20% is deducted for ADA deficiencies, you will need to come up with $400,000 in capital to complete your build out.
To avoid this unwelcome surprise, during the lease analysis process we determine if there are ADA deficiencies in the buildings being considered by our clients and negotiate terms that protect against this cost being deducted from the tenant improvement allowance. Be aware that many landlords have completed an ADA assessment audit and know where the deficiencies exist. Others are less informed. In either event, avoid a costly surprise by identifying and resolving issues that will result in an unexpected capital expenditure to your company. You’ll be glad you did!
About the Author
Carrie S. Holstead is the founder, president and CEO of the longest established tenant representation firm in Pittsburgh, Pennsylvania, and is the chairman emeritus of ITRA Global, one of the largest organizations in the world dedicated to representing users of corporate real estate, with experience in nearly 300 markets around the world. If your company has a local or global corporate real estate need(s), including lease expanding, contracting, merging, relocating or renewing one or a portfolio of office leases, contact Carrie Holstead at +1.412.833.1030. To receive the Insider’s View To Corporate Real Estate electronically, sign up for the newsletter at www.carrieholstead.com.
All information provided herein is from sourced deemed reliable but no warranty, expressed or implied, is made.
