6 min read · Updated 2026
Lease negotiation is usually handled by a broker and an attorney. The construction provisions, meaning who builds what, to what condition, paid by whom and by when, deserve a contractor's read before signature.
The work letter
This exhibit defines the landlord's work and the tenant's work. Ambiguity here is the most common source of unexpected tenant cost. Confirm exactly what condition the space will be delivered in and what systems are included.
Base-building condition
Have a contractor verify what actually exists: HVAC capacity, age and condition, electrical service size, restroom compliance, sprinkler layout, roof condition and ADA path of travel. What the listing describes and what a walkthrough finds are frequently different.
Tenant improvement allowance mechanics
The dollar figure matters less than the terms: what it can be spent on, whether soft costs qualify, the documentation required, when it is disbursed, and whether unused funds convert to rent abatement.
- Is the allowance paid progressively or on completion?
- Are design, permit and IT costs eligible?
- What lien waivers and documentation trigger payment?
Delivery date and rent commencement
Rent commencement should be tied to a realistic construction and permitting duration. Negotiate for the clock to start after permit issuance or a defined build period, and include relief if landlord delivery slips.
Permitting and approval risk
Who is responsible if the municipality requires upgrades to the base building, such as accessibility, life safety or energy code? Assign that risk in writing rather than assuming it.
Rules that affect cost
Contractor approval requirements, insurance limits, working-hour restrictions, freight access, and required building-standard materials all affect the price of your build-out.
Restoration obligations
Check what you must remove or restore at lease end. Specialty installations can create a significant liability years later.