Leasehold Improvements: How To Protect You And Your Business
3 min read
If you are looking to grow your business, you may consider leasing a property that suits your needs. Coming across the perfect space can seem like an impossible feat; that is why most ponder making improvements to make it truly their own—this is called leasehold improvements.
What are leasehold improvements?
Leasehold improvements are any renovations a tenant makes to a leased commercial property. This is typically done to make the space more suitable for the business. The landlord typically owns any improvements that are done to the property. This can include anything fixed to the building, such as flooring or built-in shelving.
Follow the steps below to ensure you're protected when making leasehold improvements.
1. Run your plans past your landlord.
To avoid any headaches down the line, it is important to discuss any potential leasehold improvements with the landlord during the negotiation stage—after all, they own the property. Ensure the landlord agrees to current and future plans for improvement before signing the lease. It will be smooth sailing from there.
2. Protect your assets.
Any improvements made to a leased space typically become the landlord's property, meaning you can't take them with you once you leave. The only additions you're allowed to take are easily removable items, and everything else must stay. Discuss what you can and cannot remove once the lease is up with your landlord to ensure an easy move-out process down the line.
3. Seek proper financing.
Making improvements to a property can be pretty costly. That is why it is essential to discuss your financing needs with your bank beforehand to ensure you can follow through with your plans. In some cases, landlords can offer tenant inducements or improvements allowances if they believe the property's value will increase.
4. Work with skilled professionals.
Working with skilled experts that can bring your vision to life is extremely important when undergoing renovations. Don't be afraid to compare experience levels, references, and costs before settling on a group of contractors.
Making leasehold improvements can turn your average commercial property into a space that helps your business flourish. Always consult with your landlord to ensure the renovation goes off without a hitch.
References
13 commercial leasing terms you need to know. BDC.ca. (2021, August 27). Retrieved April 19, 2022, from https://www.bdc.ca/en/articles-tools/money-finance/buy-lease-commercial-real-estate/13-terms-you-need-to-understand-before-signing-your-commercial-real-estate-lease
Leasehold improvements: The 8 steps to follow. BDC.ca. (2021, August 27). Retrieved April 19, 2022, from https://www.bdc.ca/en/articles-tools/money-finance/buy-lease-commercial-real-estate/how-to-protect-your-business-when-making-lease-hold-improvements
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