Oakville-Burlington What are Leasehold Improvement

When you lease office space you generally get a concrete floor and a suspended ceiling, complete with ceiling tiles. At least this is the situation when you rent space in a new building. Heating, ventilation and air-conditioning (HVAC) will also be provided and is usually integrated into the ceiling. The landlord is required to provide even heating and throughout your space. Your lease agreement will spell out the hours and quality of operations, because many buildings will only heat and ventilate to business-hours standards on weekdays. Review this with your Landlord (or his agent) when you inspect the site.

Leasehold Improvements are the changes you make to the space and building systems to make the space work for your needs. All the walls, carpeting and doors you add to the space that are permanently attached to the building are referred to as "Leasehold Improvements". These leasehold improvements revert to the landlord when you vacate the space at the end of your lease.

If you are leasing space that has been previously occupied, you may have the benefit of some pre-existing tenant improvements, ranging from walls, flooring and carpets, enhanced lighting, maybe even plumbing (for a coffee area/kitchen). This could reduce the costs of bringing the space to your standards.

If you are considering a specialized use for space (a restaurant, for example) it is helpful from a cost perspective when the prior tenant has already made improvements to bring the space to "code", for example extra washrooms and kitchen electrical, gas, plumbing and ventilation. You should consider, though, that if the prior tenant is out of business, the location might be partly to blame.

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