If you’re signing a commercial lease in Richmond or Henrico and your landlord is offering a “TI allowance,” it helps to understand exactly what you’re agreeing to before you sign. Tenant improvement projects have their own terminology, timeline pressures, and decision points that differ from other construction work.
Here’s what you need to know.
Shell Space vs. Tenant-Ready Space
Commercial spaces are generally handed over in one of a few conditions:
- Warm vanilla shell: Basic MEP rough-ins done, HVAC units present, interior walls unfinished drywall, no flooring, no ceilings. Most common starting point for office and retail.
- Cold dark shell: A structural box — no MEP infrastructure. Requires full buildout from zero.
- Second-generation space: A previous tenant improved the space. You’re working with what they left behind, which may need partial demo or reconfiguration.
Each condition changes the TI scope and cost significantly.
What a Typical Tenant Improvement Covers
TI scope varies by business type, but the most common elements include:
- Demising walls: Framing and drywalling the partitions that define your space — offices, restrooms, storage rooms, break rooms.
- MEP systems: Running the mechanical (HVAC diffusers, ductwork), electrical (panels, lighting, outlets), and plumbing (bathrooms, break room sink, floor drains) to suit your layout.
- Ceilings: Drop grid ceiling tile, drywall ceiling, or exposed — whatever fits your use and your lease.
- Flooring: Carpet, LVP, polished concrete, tile — negotiated between tenant and landlord or specified in your lease.
- ADA compliance: Any commercial space open to the public has ADA obligations. Restroom dimensions, door widths, ramp requirements, parking — these are code requirements, not optional.
- Certificate of Occupancy (CO): The finished space needs a CO from the local building department before you can legally operate. This requires a final inspection and sign-off.
Who Pays: The TI Allowance
The TI allowance is the landlord’s contribution toward the buildout — expressed as dollars per square foot. A “$49/SF TI” on 3,000 SF means $147,000 toward construction. Whether that covers your actual scope depends on the space condition and what your business needs.
If your buildout costs exceed the allowance, you cover the difference. Landlords sometimes offer higher TI in exchange for longer lease terms. Some control the GC selection; others let you hire your own.
Understanding your true buildout cost before you sign — not after — is one of the most valuable things a contractor can help you with during lease negotiation.
Permitting and the Certificate of Occupancy
Any TI project involving structural changes, new electrical, HVAC modifications, or plumbing requires permits from the local building department. In Henrico County and the City of Richmond, commercial permits require a licensed contractor of record on the application. The contractor pulls permits, coordinates inspections at framing, rough-in, and final stages, and is responsible for the work passing inspection.
The CO is the final step. You can’t legally occupy or open for business without it. Plan for it — not around it.
Timeline: Protecting Your Lease-Start Date
This is where TI projects create the most friction. Leases often have a “rent commencement date” tied to a fixed calendar date or a number of days after lease execution. If your buildout runs long, you may start paying rent on unfinished space.
Realistic commercial TI timelines (permit approval through final CO) in the Richmond area:
- Simple office or retail buildout in second-gen space: 6–12 weeks
- Mid-complexity warm vanilla buildout with full MEP layout: 10–18 weeks
- Cold dark shell buildout: 16–26+ weeks depending on scope and permit timing
These ranges assume permits are submitted promptly and design decisions are made before construction starts. Delays in design, material lead times, and permit review all eat into your schedule.
Getting Started
Starting the contractor conversation early — ideally before you finalize lease terms — gives you the best chance of aligning the buildout timeline with your opening date. A design-build contractor is useful here because layout and pricing develop together, so you know whether the TI allowance covers your needs before you sign.
RCBC holds a Virginia Class A contractor’s license (#2705188410) and handles commercial TI permitting and construction in Richmond and Henrico County. See our commercial services or learn more about commercial work in Henrico.
If you’re evaluating a commercial space and want to understand what the buildout would cost, we’re happy to walk through scope with you. Call (804) 525-9656 or reach out here.