What’s the Difference Between Tenant Improvement, Build-Out and Leasehold Improvement?

As a trusted commercial tenant improvement company based in Indianapolis, both potential and existing clients come to us asking about the differences between tenant improvements, build-outs and leasehold improvements. Truth be told, there really isn’t a difference between any of them. All three phrases mean the same thing but are used by different people in different industries. At their hearts, tenant improvement, build-out and leasehold improvement are all construction work completed in a previously occupied commercial building to prepare for a new tenant.

The origin of each name

Industry jargon varies amongst different professions, which is why these three terms are often confused for different jobs even though they are the same.

  • Tenant Improvement — Realtors leasing commercial real estate are most likely to consider any physical building improvements as tenant improvements.
  • Leasehold Improvement — Accountants and financial advisors often refer to commercial space improvements as leasehold improvements.
  • Build-Outs — Commercial construction management companies usually call tenant improvements on a commercial lease as build-outs.

What are tenant improvements, build-outs and leasehold improvements?

All three terms fall under the umbrella of commercial tenant improvements, which are structural changes tenant improvement companies make to a leased space to improve it for the next company’s needs. Common examples of commercial tenant improvements include upgraded lighting fixtures, room or office additions, a new reception area, fresh paint and new flooring or carpet. Sometimes the landlord and tenant will make an agreement where the landlord covers the cost or includes it in monthly rent to help save money upfront.

Commercial tenant improvements vs. building improvements

It’s not uncommon for people to refer tenant improvements, build-outs and leasehold improvements with building improvements. While commercial tenant improvements happen within the walls of a building in a fixed area of space for a specific tenant, improving their individual business without effecting any other company’s building space. Conversely, building improvements are made to common areas that more than one tenant may access. Since any tenant can use that designated space, it is considered a building-wide benefit or improvement.

Ready to get started on commercial tenant improvements?

Whether you refer to your project as a tenant improvement, build-out or leasehold improvement, don’t hire an interior designer or interior remodeling company for the job. Instead, call on our team at White Oak Commercial Group for your next commercial tenant build to create a space that truly wows your customers.

We are proud to be a trusted partner to businesses throughout the Midwest and beyond, and deliver quality results at small company pricing. At White Oak Commercial Group, we work diligently to help eliminate the overhead needed to complete larger commercial tenant improvements at a competitive cost, all while utilizing our nearly 40 years of experience in management to give you the high-quality results you deserve.