What Business Owners Should Know Before Signing a Construction Lease
Leasing a commercial space is a big commitment—and one that often comes with unexpected construction obligations. Before you sign on the dotted line, it’s critical to understand how your lease impacts the cost, schedule, and scope of your build-out. Missing the fine print can cost you time and money.
Whether you’re opening a fitness studio, restaurant, clinic, or retail space, here’s what every business owner should know about construction leases.
1. The “As-Is” Condition Isn’t Always What You Think
Many commercial spaces are leased in “as-is” or “shell” condition—but those terms can mean very different things. You might walk the space and assume HVAC, electrical, or plumbing is already in place. But unless the lease explicitly states that those systems are included and operational, you could be on the hook to install or upgrade them yourself.
Before signing, have a contractor walk the space with you and clarify what’s in place versus what’s required for your intended use.
2. Who’s Responsible for the Build-Out?
Your lease should clearly outline who pays for tenant improvements (TIs). In some cases, landlords offer a Tenant Improvement Allowance (TIA) to offset construction costs. But even then, you’ll want to know:
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How much is the allowance?
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What does it cover (and not cover)?
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Is it paid upfront or reimbursed?
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Does it include design fees or permitting?
A great GC can help you structure your build-out in a way that maximizes your allowance—and minimizes your out-of-pocket exposure.
3. Permitting Can Eat into Your Timeline
If you assume you’ll get keys on June 1 and open for business by July, think again. Commercial permits can take weeks—or months—depending on your city, the type of work, and the complexity of your use.
Before signing your lease, work with your contractor to estimate the true project timeline, including permitting and inspections. Make sure your lease allows adequate time for design, review, and construction—or negotiate a rent abatement period during your build-out.
4. Verify Your Use Is Allowed
Just because a landlord says your business is a good fit doesn’t mean the city agrees. Zoning codes can be tricky. What’s allowed in one shopping center might not be allowed across the street.
If you’re planning a special use like a daycare, gym, medical office, or anything requiring high parking ratios or health inspections, verify that your use is permitted in that space. Your contractor and architect can help with this due diligence.
5. Shell Work Can Affect Your Budget
Many times, the landlord is still completing shell work when you sign the lease—like adding fire sprinklers, HVAC, or exterior work. If their timeline slips, yours might too. And if something isn’t done right, it could impact your build-out.
Make sure your lease clearly outlines the landlord’s responsibilities, completion dates, and remedies if they miss their targets.
6. Get a GC’s Input Before You Commit
The best advice we can give: bring your general contractor into the process before you sign. At Texas Built Construction, we regularly assist clients by reviewing lease language, walking shell spaces, and providing preliminary budgets to inform negotiations.
That little bit of upfront guidance can save you tens of thousands—and avoid headaches during construction.
Email us today @ projects@txbuiltconstruction.com or call us @ (972) 219-0729.