Skip to content 
Quick Answer
Tenant improvement, or TI, customizes a leased commercial space for a specific business. The lease drives the scope. The existing building systems drive the cost. Both need to be checked before you sign.
How TI Differs From Residential Remodeling
A home remodel answers to the owner. A TI project answers to the lease.
That changes everything. The landlord controls what can be modified. The lease term sets how long you have to recover the investment. The allowance sets how much the landlord contributes.
TI and commercial remodeling overlap, but they are not the same. TI is tied to a tenancy. Commercial remodeling is often owner-driven.
Understand The Tenant Improvement Allowance
The TIA is money the landlord contributes to your construction costs. It is usually expressed as dollars per square foot.
Read the terms carefully.
- Is it paid upfront or reimbursed after completion?
- What does it cover? Some allowances exclude fixtures and equipment.
- Who owns the improvements at lease end?
- What happens to unused allowance?
An allowance that reimburses after completion means you carry the cash flow. That is a financing question, not a construction question.
Check The Existing Systems Before You Sign
This is the single most common and most expensive mistake.
A business owner in Orange County leased a 2,500-square-foot second-generation office. The assumption was that existing electrical and HVAC needed only minor updates. That assumption did not survive the first inspection.
Walk the space with a contractor before signing. Have them assess:
- Electrical service and panel capacity.
- HVAC tonnage and duct layout.
- Plumbing rough-in locations.
- Ceiling height and structure above.
- Existing accessibility compliance.
Whatever is wrong becomes your problem after the lease is executed.
Did You Know? CBRE research found that U.S. prime office vacancy dropped to 12.7 percent by mid-2026, as tenants increasingly compete for well-built-out, top-tier space. That shift is pushing more businesses toward TI investment on second-generation spaces rather than waiting for a move-in-ready lease to open up.
Space Type Changes Everything
Different uses carry very different requirements.
A basic office needs standard electrical and data capacity. That is the low end.
A medical office needs far more. Additional plumbing fixtures. Specialized ventilation. Medical gas lines. Imaging room requirements.
A restaurant needs the most. Grease interceptors, hood systems, makeup air, floor drains, and heavy electrical service.
Never price a medical or restaurant TI from an office benchmark.
Title 24 Applies To Most TI Projects
California’s energy standards are not just for new construction.
Most TI work triggers Title 24 requirements. That means specific HVAC efficiency measures. It also means lighting controls and efficiency levels.
Accessibility requirements often come along with it. Path of travel upgrades can be triggered by the value of the work.
Both add scope. Both should be in the proposal from the start. The California Energy Commission publishes the current Title 24 standards that most TI scopes must meet.
A Realistic TI Timeline
- Space assessment and feasibility. Before lease signature.
- Design and construction documents. Four to eight weeks.
- Plan check and permits. Four to twelve weeks, depending on jurisdiction and use type.
- Construction. Eight to twenty weeks, depending on scope.
Build rent commencement into this math. If rent starts before you can open, that is a real cost.
What A Good TI Proposal Includes
The proposal should separate three things clearly: design, permitting, and construction.
It should also state assumptions. What is the contractor assuming about the existing panel? About the HVAC? About accessibility?
Stated assumptions are how you compare bids fairly. Unstated assumptions are how change orders happen. If your business is also weighing a residential-style buildout, our whole house remodeling page shows how we scope larger projects.
Choosing A TI Contractor
Confirm direct experience with your specific space type. Office experience does not transfer to restaurant work.
Verify an active CSLB license. Then check references from tenants, not just landlords.
Our complete tenant improvement guide covers the vetting process in depth. For broader contractor screening, see our guide to the best remodeling company in Orange County.
Frequently Asked Questions
What Is A Tenant Improvement Allowance?
Money the landlord contributes to construction, usually calculated per square foot.
How Expensive Is TI Work In California?
It varies widely by use type. Office is lowest. Medical and restaurant are substantially higher.
Who Pulls The Permits?
Usually the contractor. The landlord’s approval is typically required first.
Does Title 24 Apply To My Project?
Most TI projects trigger it, particularly HVAC and lighting requirements.
When Should I Involve A Contractor?
Before signing the lease. A pre-lease walkthrough prevents the most expensive surprises.
Why Is Office Vacancy Relevant To My TI Project?
Prime office vacancy has fallen to 12.7 percent, per CBRE, meaning well-located, well-built-out spaces are getting harder to find and more valuable to improve well.
Can I Negotiate A Larger Tenant Improvement Allowance?
Often yes, especially on a longer lease term or in a market with more available space.
What Happens To TI Improvements When My Lease Ends?
This depends on the lease. Some improvements become the landlord’s property, while others may need to be removed.
Does A Restaurant TI Always Cost More Than An Office TI?
Almost always, due to grease interceptors, hood systems, additional plumbing, and heavier electrical service.
Do I Need An Architect For A TI Project?
For simple office buildouts, often not. Medical and restaurant spaces usually require licensed design professionals.
Plan Your Tenant Improvement
ACT Construction has delivered commercial TI projects across Southern California since 1993, under CSLB License #883252. Call (714) 884-8501 or request a consultation.
