Leasehold Improvements: How to Relocate Tenants for Construction

18.5.3 Leasehold Improvements Strategies for Tenant Relocation.pngLeasehold Improvements are customized alterations to a rental space for a tenant’s specific needs. These include changes to floors, partition walls, ceilings, custom furniture and lighting, among others. Tenants will be required to vacate areas for construction. One of the challenges of leasehold improvements is in tenant relocation. It is important to meet with the tenant and determine how the project can be phased to allow for minimum business down time. The temporary spaces are called swing spaces – an industry term used to describe a temporary occupancy for a business during construction.

SWING SPACE

Swing spaces need to be carefully selected. An ideal swing space is one that is comparable to its daily operations. Typically, tenants will look for temporary furnished swing space offices that allows them to continue their business as usual until the permanent site is completed. It is not unusual for the project team to design and build out the swing space in addition to the permanent space. The temporary location or “swing space” are to be identified early on in the design process so moves can be arranged in a timely manner for construction to start as scheduled. Cost wise, moving cost and associate fit-up required for the swing space may be part of the overall project budget.

PROJECT PHASING

Not all tenants can afford to temporarily put the business on hold or relocate to a swing space for the duration of leasehold improvement. In this case, the contractor will be constrained to work in an existing office space that is fully occupied. It is not an impossible task. The contractor will need to strategically phase the construction project so that the tenant can temporarily move within the rented space during construction. Each phase will involve vacate, renovate, fit-out and move-in tenants in sequential order. This is a costly strategy because each phase will end up being its own project from demolition to finishing, resulting in increased labour and time.

There are strategies to mitigate related issues associated with tenant impacts. Temporary hoarding or barriers surrounding the construction area can be constructed to contain dust and odour. The bulk of the work is most likely going to happen after hours or on weekends to avoid disruptions. If dust or hazardous materials are an issue, the contractor can utilize negative air enclosure with a vacuum to contain the air-borne particles. Projects inside existing rental spaces may require flooring protection inside and outside the work areas for the construction worker to travel through from one space to the other.

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