A tenant fit-out is the interior fit-out of a leased space carried out by the tenant at its own cost, as opposed to works by the landlord. In retail it is the norm: chains lease space in shell or base-build condition and fit out the store themselves. The installed elements such as furniture, drywall, ceilings, lighting and technical installations are also called tenant improvements.
Responsibilities
Who builds and pays for what is set out in the lease, often through a works specification with a responsibility matrix. The parties involved are usually the tenant, the landlord and specialist consultants, for example for fire safety, building services and structure.
Relevance for permits, fire safety and strip-out
Depending on its scope, a tenant fit-out requires a building permit and must comply with the building’s fire safety concept. At the end of the lease it usually has to be removed; the lease defines the scope and condition of the handover. On the balance sheet, tenant improvements are depreciated over their useful life.
The real lever in a store network
Because the retailer is responsible for design, procurement and strip-out, and the same elements recur in many stores, the tenant fit-out rather than the building envelope is the lever for cost and resources in the store portfolio. This is where reuse and Restwertrückführung come in.