Tenant Improvement vs. Ground-Up: Which Is Right for Your Business?

Article

A tenant improvement reuses an existing building. Ground-up construction starts with a site. Owners usually assume the remodel is cheaper and faster. Often it is. Sometimes it is the more expensive path, and the difference is visible early if you look at the right things.

The case for tenant improvement

• The structure, roof, parking and utilities already exist and are already paid for.
• No land acquisition, entitlement or offsite improvements.
• Permitting is typically lighter and faster than a new building.
• Occupancy can come months earlier, which matters when the lease clock is running.

Where tenant improvements get expensive

The surprises come from the parts of the building you did not intend to touch. Accessibility upgrades triggered by the scope of work. Aging mechanical and electrical systems that cannot support the new use. Structural work required to add roof equipment or cut an opening. Hazardous materials in older buildings. Fire sprinkler modifications driven by a changed layout or occupancy.

A remodel that quietly rebuilds the mechanical, electrical, plumbing and accessibility of an old building is not a cheap project. It is a new building with an old shell.

The case for ground-up

New construction gives you a building shaped around how the business actually operates, current code and energy performance from day one, lower maintenance risk, and, for owner-occupiers, an asset rather than an improvement to someone else's property. The tradeoff is time and up-front cost.

How to decide

Get a contractor and, where relevant, a mechanical engineer into the candidate building before the lease or purchase is signed. A few hours of assessment on the existing systems, structure and accessibility path is the cheapest risk reduction available on the whole project.

We do both, and we are comfortable telling an owner that the building they like is the wrong one. Walk a space with us before you commit to it.