When Renting Office Space Who is Responsible For Upgrades?

creative office space upgradesWhen searching for office space for rent the spaces you look at will typically need some sort of upgrades. You might get lucky and find one that is move in ready and exactly the way you want it, however in most cases they will need new carpet, new paint, walls removed, new walls built, new plumbing, lighting, etc.  

The question that many tenants have is who will be responsible for paying for the upgrades? Well that depends on a number of factors such as:

  • Your current financial situation – the stronger your credit the more leverage you have in negotiations.
  • Lease term length
  • Lease rate 
  • Size of space
  • Current condition of the space
  • Market conditions
  • Level of finishes 
  • Etc.

In most cases if you are an existing strong credit tenant and are signing a 3-5 year lease then you should be able to negotiate to have the landlord pay for a portion of or all of the standard office upgrades. I say “standard” because landlords will invest money into standard building finishes. If you want granite counter tops, hard wood floors, or other expensive upgrades then you may have to come out of pocket for those.

If you are a new business or startup that can only sign a 1-2 year lease then don’t expect the landlord to give you any money for office space upgrades. You will typically have to take the space “as is” unless you want to spend your own money for the office upgrades needed.

If you are dealing with an institutional investment group they are more savvy and you will have a better chance of being able to negotiate office space upgrades as long as you qualify. If the office building owner is a small time single investor then they may not have the money to give or want to take the risk so you will more than likely have to foot the bill. You might be able to get them to give some free rent in lieu of money for upgrades

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