Tenant Improvements

What is a tenant improvement, and what does it involve?

A tenant improvement (TI) is construction inside an existing leased space to adapt it for a tenant's use — partitions, ceilings, flooring, lighting, power and data, HVAC distribution, millwork and finishes — carried out under the lease between the landlord and the tenant. It involves three parties rather than two: the tenant who needs the space, the landlord or property manager who controls what may be changed, and the municipality that permits the work. Managing all three is most of the job.

TI scope ranges from a paint-and-carpet refresh to a full strip-out back to base building with new demising walls, new mechanical distribution, upgraded electrical and a new washroom. The scope split matters: leases usually divide the work into landlord's work (base building items) and tenant's work (everything else), and any ambiguity in that split turns into a dispute at the worst possible moment.

What does the tenant improvement process look like, start to finish?

1. Site assessment. Confirm the base building reality: available electrical capacity, HVAC zoning and tonnage, sprinkler layout, ceiling heights, structural floor loading, existing accessibility and washroom provision, and the actual condition behind the drywall.
2. Scope and budget. Write the scope, price it, and separate landlord's work from tenant's work explicitly. Confirm how the tenant improvement allowance is drawn and what it can be spent on.
3. Drawings and consultants. Architectural layout plus mechanical and electrical design; structural where openings or loading change; code review for occupant load, exiting and accessibility.
4. Landlord approval. Submit drawings to the landlord or property manager for written approval before permitting. Strata-owned space adds a strata approval step with its own meeting schedule.
5. Permits. A building permit for the interior alterations plus trade permits for electrical, plumbing, gas and sprinkler modifications.
6. Construction. Demolition, framing, rough-in, inspections, close-in, finishes, millwork, furniture coordination and data cabling.
7. Inspections. Municipal framing, electrical, plumbing, sprinkler and fire alarm inspections, then final building inspection.
8. Deficiency walkthrough and handover. Joint walk, written deficiency list, correction, then close-out with warranties, as-builts and any documentation the landlord requires for sign-off.

What drives the cost of a tenant improvement?

The single largest cost driver is how much of the base building has to change, not the quality of the finishes. Specifically:

• Base building condition. A space that already has adequate power, HVAC distribution and an accessible washroom costs a fraction of one that needs all three added.
• Mechanical and electrical. New ductwork and diffusers, added cooling for a server or meeting room, panel upgrades, sprinkler head relocation and fire alarm device changes are consistently the biggest line items.
• Demising walls and exiting. Splitting a floor plate introduces rated construction, separate services and often a second exit path.
• Occupied versus vacant. Building around working staff or neighbouring tenants slows production and adds protection and phasing costs.
• After-hours work. Landlords in downtown Vancouver towers frequently restrict noisy work, core drilling and freight elevator access to outside business hours, which carries a labour premium.
• Long-lead items. Custom millwork, specialty glazing, lighting and mechanical equipment can control the finish date.
• Permit timelines. Rent may start before the space is usable, so permit review time is a real cost. Confirm current municipal processing times before committing to a move-in date.

What permits and approvals are involved in Vancouver?

Interior alteration work in a commercial space normally requires a building permit from the municipality plus the relevant trade permits. The City of Vancouver runs its own permit streams for interior alterations to commercial and industrial spaces, with submission requirements and a review queue that differ from those in Burnaby, Richmond, Surrey, Coquitlam, New Westminster or the North Shore. The BC Building Code sets the technical baseline in all of them, and the City of Vancouver additionally administers its own building by-law.

Beyond the municipality, two approvals catch tenants out. First, landlord approval of the drawings is almost always a lease requirement and takes real calendar time. Second, in a strata-titled building the strata council may also need to approve alterations, and councils meet on their own schedule. Both should be on the critical path in your schedule, not treated as formalities. Where the use changes — a food premises, a clinic, a childcare space — additional agency approvals apply.

How long does a tenant improvement take?

Construction is usually the shortest phase. Design and landlord approval, permit review and any re-submission after comments dominate the calendar. A project moves faster when the drawings are complete and coordinated at submission, when the landlord's approval is obtained early, when the space is vacant, and when long-lead items are ordered at buyout rather than after permit issuance. It moves slower when as-built drawings turn out to be wrong, when demolition uncovers undocumented conditions, when the base building needs upgrading to support the new use, or when the scope changes after trades are booked.

Working in an occupied building — what changes?

Nearly every TI in Metro Vancouver happens in a building where someone else is still working. That means hoarding and dust barriers, negative air pressure in the work zone, protected corridors and elevator pads, waste removal timed outside business hours, and pre-arranged shutdowns for sprinkler drain-downs, fire alarm isolation and power switchovers with building operations. Noise-generating work — core drilling, demolition, anchoring — is commonly pushed to evenings or weekends by landlord rules and by municipal noise bylaws. If a bid does not mention protection, phasing and after-hours allowances, it is not pricing the same job.

Common mistakes, and what to check before signing

• Signing a lease with a fixturing period shorter than the realistic permit plus construction timeline.
• Assuming the tenant improvement allowance covers the scope before the scope is priced.
• An unclear division between landlord's work and tenant's work.
• Skipping the base building assessment and discovering an electrical or HVAC shortfall after demolition.
• Forgetting that landlord and strata approvals are on the critical path.
• Ordering furniture and data cabling on a schedule that assumes no permit delay.

Before signing a construction contract, confirm the written scope, the exclusions and allowances, who is responsible for permit application and fees, the after-hours assumptions, the change order process, the progress draw schedule, and the close-out deliverables including the deficiency list and warranty documentation.

Frequently asked questions

Who pays for a tenant improvement?

It depends entirely on the lease. Costs are commonly shared through a tenant improvement allowance, with the tenant funding anything above it, but the split and the draw conditions are negotiated per lease.

Do I need a permit to repaint or replace flooring?

Purely cosmetic work often does not require a building permit, while anything touching walls, exiting, plumbing, electrical, sprinklers or occupancy generally does. Confirm with the municipality for the specific scope.

Can we stay in the space during construction?

Often yes, with phasing. The work is divided into zones with hoarding between them, and the noisiest activities are scheduled outside working hours.

What is base building work?

The systems and structure the landlord provides — the shell, core, main mechanical and electrical service, common areas and life safety infrastructure — as distinct from the tenant's fit-out.

What happens at the end of the lease?

Many leases contain a restoration or make-good clause requiring the space to be returned to a defined condition. Read that clause before you build, because it prices future work.

Which municipalities do you work in?

Vancouver, Burnaby, Richmond, Surrey, North Vancouver, West Vancouver, Coquitlam and New Westminster.

Related reading

• Tenant improvement guide: Vancouver permits and renovations
• Tenant improvement permit in Vancouver
• Leasehold improvements in Vancouver: permits, tax and execution
• Case study: 100 Park Royal lobby renovation, West Vancouver

How do I get a project priced?

Send the scope, the address and any drawings you already have to info@multigroup.ca, call 778-819-5933, or use the quote request form. Multigroup Contracting has operated as a general contractor out of Suite 700 - 838 West Hastings Street in Vancouver since 2016, and works across Metro Vancouver including Vancouver, Burnaby, Richmond, Surrey, North Vancouver, West Vancouver, Coquitlam and New Westminster.