When it comes to running a successful business, the right location is crucial. However, finding the perfect commercial space isn’t always possible. Location, size and zoning regulations are just some of the critical elements that can impact the success of your investment.
One aspect that is often overlooked but can significantly affect the long-term profitability and functionality of a commercial space is leasehold improvements and space customization. Leasehold improvements and custom work can play a pivotal role in transforming a generic space into a tailored environment. This not only enhances your brand but also improves functionality and efficiency for your business.
At Chriscan, we believe in building spaces to best suit our clients’ specific requirements and needs. Whether you’re a business looking to create a new commercial space or a building owner finding new ways to attract tenants, we’re here to help you bring your vision to reality.
Commercial vs. residential vs. mixed-use construction
First, let’s talk about the difference between commercial and residential construction. They represent distinct segments within the real estate landscape, each serving unique purposes.
Commercial Properties
These are designed primarily for business activities and can include office buildings, retail spaces, warehouses, and industrial facilities. They often require specialized infrastructure like HVAC systems and security features to support commercial operations. They’re classified into different categories based on their usage and characteristics to help investors and tenants identify properties that align with their needs:
- Class A: These properties are considered premium and often located in prime areas with excellent access and visibility. They feature modern amenities and high-quality finishes, making them ideal for businesses seeking a prestigious image.
- Class B: Class B properties offer a good balance between quality and affordability. They may be slightly older than Class A properties but are still well-maintained and suitable for various businesses.
- Class C: These properties are typically older and may require significant renovations or leasehold improvements. They offer more budget-friendly options for businesses willing to invest in upgrades.
Residential Properties
These are exclusively for housing individuals and families, offering various styles and sizes of homes or apartments. These spaces prioritize comfort and living amenities.
Mixed-use Properties
Mixed-use properties bridge the gap, combining residential and commercial elements within a single development. They aim to create vibrant, integrated communities where residents live, work, and shop, fostering convenience and a sense of community while maximizing land use in urban areas.
Each property type comes with its unique considerations, target audiences, and investment opportunities within the real estate market. In this post, we’re going to focus on commercial properties.
Understanding leasehold improvements
Leasehold improvements, often referred to as tenant improvements or build-outs, are alterations or enhancements made to a commercial space to meet the specific needs and preferences of you, the tenant. These improvements can range from simple cosmetic changes like painting and flooring to more complex modifications such as adding partitions, installing specialized equipment, or upgrading the electrical to support the business going in.
These are different from building improvements, which are upgrades or enhancements made by the property owner or landlord to the overall structure and common areas of the property. Those are made to maintain or enhance the entire property’s value and functionality, benefiting all tenants collectively.
The Benefits of Leasehold Improvements
For Tenants
Tailored Space
One of the most significant advantages for tenants is the ability to tailor the space to their business requirements. Whether you’re opening a restaurant, a tech startup, or a medical clinic, leasehold improvements allow you to create a functional layout that maximizes efficiency and reflects your brand identity.
Competitive Advantage
A customized space can give your business a competitive edge. It helps create a unique ambiance that attracts customers and clients, setting you apart from competitors in the same building or area.
Long-Term Savings
While there’s an upfront cost associated with leasehold improvements, these investments can lead to long-term savings. Energy-efficient upgrades, for instance, can lower utility bills, and a well-designed space can improve productivity, potentially increasing revenue.
Negotiation Power
When negotiating your lease agreement, requesting leasehold improvements can provide you with valuable leverage. Landlords may be more inclined to accommodate your needs if they see a long-term tenant willing to invest in improving their property.
For Landlords
Higher Rental Rates
A customized space with leasehold improvements can command higher rental rates. Tenants are often willing to pay a premium for a space that meets their specific requirements and saves them the hassle of making improvements themselves.
Tenant Retention
By offering leasehold improvements, landlords can incentivize tenants to stay in the property longer. Customized spaces are not easy to abandon, making it more likely that tenants will renew their leases.
Reduced Vacancy
Properties with leasehold improvements are more attractive to potential tenants, reducing the time a property sits vacant. This leads to a steady stream of rental income.
Asset Appreciation
Leasehold improvements can enhance the overall value of the property. When the time comes to sell, a well-maintained and customized space can fetch a higher price in the market.
Optimizing your Space with the Help of an Interior Designer
When it comes to optimizing the functionality and flow of your space, working with a commercial interior designer can be a game-changer. They’re not just about aesthetics; they’re skilled professionals who understand how to make spaces work efficiently while ensuring they look appealing.
Finding an Efficient Flow
Interior designers excel in creating layouts that maximize space utilization. They consider traffic flow, the placement of furniture or fixtures, and the specific needs of the space’s occupants. This expertise can transform cramped or awkward spaces into open, inviting areas where everything has a purpose.
In a commercial setting, such as an office, retail store, or restaurant, your layout can have a significant impact on efficiency and productivity too. Interior designers can arrange workstations, display areas, and customer traffic patterns in a way that enhances workflow and customer experience.
Tailoring Solutions
Interior designers take the time to understand your unique requirements and vision. Whether it’s creating a calming atmosphere for a spa, a vibrant ambiance for a restaurant, or an organized workspace for an office, they tailor the design to align with your goals and brand identity.
In essence, interior designers bring a holistic approach to space planning. They consider not only how a space looks but how it functions, ensuring that every square foot serves a purpose. This expertise can lead to spaces that not only look beautiful but work seamlessly, enhancing both comfort and functionality. So, when planning your next interior project, consider enlisting the services of an interior designer to unlock your space’s full potential.
Start from scratch or just an update?
The decision between pursuing a new custom build or undergoing tenant improvements to retrofit an existing space depends on various factors. Custom builds offer complete control over the design and layout of the space, but they often come with higher upfront costs and longer construction timelines. Tenant improvements, on the other hand, can be a cost-effective solution to quickly adapt an existing space to your needs. The choice depends on your budget, timeline, and long-term business goals.
Chriscan’s commercial renovations & tenant improvements
As a construction company specializing in commercial spaces, we have plenty of experience when it comes to both renovations and tenant improvements. Read on for some of our examples and check out others on our portfolio page.
Commercial renovations
Type of work:
Building a beautiful yet functional commercial office, complete with unique colour and texture combinations throughout. A highlight is the geometric feature wall in the meeting room.
In our client’s words:
“Every step in our project from initial quote to final walkthrough was stress-free thanks to Chriscan. We now have a beautiful, functional office that we receive compliments on almost daily. Best of all, there are zero lingering issues or deficiencies. We feel lucky to have had Chriscan renovate our office.”
– Monica Brooke, Hillside Law Inc.
Type of work:
Building out a coworking office project comprising 18,000 square feet spread out over three floors that includes individual leasehold office spaces, boardrooms, conference rooms, a lounge area, and a commercial coffee shop.
Tenant improvements
Type of work:
Updating the interior of a new 22,500 square foot youth building to create a modern and inviting atmosphere with unique functional-use spaces.
In our client’s words:
“Chriscan’s construction of the work was marked by their attention to detail, and a shared interest in the final outcome. Jim was always available and provided great knowledge and expertise when we needed to make any changes.
In the end we received a high quality finished product that was well-suited to our needs, delivered on time and on budget. We would recommend them without reservation.”
– Andrew Gibbs, Secretary, Elder Board
Type of work:
Building out a unique and custom clinic that specializes in veterinary ophthalmology services in Kelowna.
Type of work:
Building out a state of the art Yoga studio complete with lots of natural light and an inviting atmosphere to create a peaceful and inviting space for clients.
In our client’s words:
“Chriscan can be depended upon not only to care for your business, but to provide outstanding support at every step along the way. It has been such a pleasure to work with Lee and the process met and exceeded our expectations in every way. It is clear that it’s the people and their amazing customer service that contributes to Chriscan’s success as a business. We were so grateful to have had the opportunity to work with Chriscan and would work with them again in a heartbeat.”
– Hannah MacLennan, Manager, Operations, Solstice Yoga
To invest or not to invest
Investing in leasehold improvements and custom commercial spaces is a strategic decision that can benefit both tenants and landlords. It allows tenants to create spaces that meet their specific needs and enhance their businesses’ functionality and brand identity. For landlords, it can lead to higher rental rates, tenant retention, and increased property value.
At Chriscan, we know considering such investments is a big decision. It’s essential to work closely with professionals, including architects, contractors, and real estate advisors to ensure that the customization aligns with your long-term goals and budget. By making informed decisions about leasehold improvements and custom spaces, you can set yourself up for success in the competitive world of commercial real estate. Let us work with you to create your space the way you want it.
