Commercial Tenant Improvements: What Business Owners Should Know Before Renovating

Commercial Tenant Improvements: What Business Owners Should Know Before Renovating

Whether it is a daycare, butcher shop, salon, office, or restaurant, tenant improvements require planning, permits, and skilled trades. The build itself is rarely what delays a business. What delays a business is discovering, after the lease is signed, that the space cannot support the use it was leased for.

TI Work Includes:

• Demolition
• Framing & drywall
• Plumbing, electrical, HVAC
• Flooring & painting
• Structural modifications
• Washroom building
• Fire safety upgrades

Check the base building before you sign

A lease describes floor area. It does not promise that the electrical service, ventilation, drainage, or washroom count will suit your business. Those are the items that decide whether a fit-out is straightforward or turns into a structural project.

Before committing, get answers on the incoming electrical service and available capacity, whether the unit has its own rooftop unit or shares building HVAC, where the existing plumbing stacks and floor drains run, the number and accessibility of washrooms, and whether the unit is sprinklered. A kitchen or a salon puts demands on ventilation and drainage that a former office unit was never built to carry.

Changing the use changes the requirements

The BC Building Code classifies buildings by occupancy. Turning a retail unit into a restaurant, or an office into a daycare, is a change of occupancy, and it can pull in requirements that had nothing to do with the previous tenant. Fire separations, exiting, accessible washrooms, and sprinkler coverage all get reviewed against the new use rather than the old one.

This is the single most common source of surprise on a tenant improvement. The work you planned is the visible part. The work the code requires because the use changed is the part that was not in the budget.

Permits, and who else has to approve

A municipal building permit is the baseline, usually supported by drawings and often by a registered professional depending on scope. Trade permits for electrical, plumbing, and gas sit alongside it. In Surrey and across Metro Vancouver, each municipality runs its own review process and its own inspection sequence.

Depending on the business, the city is not the only approval in the chain:

• Food service: health authority plan review, commercial exhaust, and grease interception
• Daycares: provincial child care licensing, with its own requirements for space, washrooms, and outdoor area
• Salons and personal services: ventilation and plumbing suited to the equipment being installed
• The landlord: most leases require the landlord to approve drawings, contractor insurance, and work hours before anything starts

Running these in parallel matters. Waiting for a building permit before starting a licensing conversation adds weeks that nobody planned for.

Know what the landlord is contributing

Many commercial leases include a tenant improvement allowance, and the terms vary. Get it in writing: what the allowance covers, what it excludes, when it is paid, and what has to be finished or inspected before it is released. Also confirm what happens at the end of the term, because some leases require the space to be restored to its original condition.

A realistic sequence

• Walk the unit with your contractor before signing, not after
• Drawings prepared for the new use, then landlord approval
• Permit application, with licensing and health review moving at the same time
• Demolition, then rough-in for plumbing, electrical, and HVAC
• Inspections at each stage, then finishes
• Final inspections and occupancy before you plan an opening date

Set your opening date after occupancy is in sight. Announcing one before inspections are booked is how businesses end up paying rent on a space they cannot use yet.

Working in an occupied building

If neighbouring units are trading, the constraints are practical. Noisy work may be restricted to certain hours, deliveries and waste removal have to be coordinated, dust and exit routes have to be controlled, and shutdowns of water or power need notice. None of this is difficult, but it has to be scheduled rather than discovered.

Order the slow items first

Some parts of a fit-out cannot be rushed no matter how well the trades are scheduled. Rooftop HVAC units, electrical distribution gear, commercial exhaust hoods, custom millwork, storefront glazing, and rated doors are all ordered rather than picked up. If they are specified late, they set the completion date regardless of how quickly the rest of the work goes.

The practical move is to identify the long-lead items during design and order them as soon as the drawings are firm enough to commit. Waiting for the permit to arrive before ordering equipment is a common way to lose a month.

Settle these in the contract

A tenant improvement runs across several trades and at least two approving parties, so the paperwork does real work. Before the first day on site, make sure the agreement is clear about:

• Scope in writing: what is included, and what is explicitly excluded
• Who pulls the permits: the building permit and each trade permit, named
• How changes are handled: written change orders, priced and approved before the work happens
• Payment tied to progress: stages that match real milestones rather than dates on a calendar
• Insurance and WorkSafeBC coverage: confirmed, and usually required by the landlord too
• Who books inspections and who is responsible for closing the permit at the end

An open permit left unclosed becomes the next tenant’s problem, or yours again when you try to sell the business or renew the lease.

The mistakes that cost the most

• Signing the lease before anyone has assessed what the unit can actually support
• Budgeting for the visible finishes and not for the code work a change of use triggers
• Treating landlord approval as a formality when it sits on the critical path
• Starting demolition before the permit is issued, which risks a stop-work order
• Leaving no contingency, so the first unforeseen item stalls the whole job
• Hiring trades separately with nobody accountable for sequencing them

Questions we get asked

Do I need drawings for a small fit-out?

Usually yes. Even modest work tends to need a permit once you move walls, alter plumbing or electrical, or change the use of the space, and a permit application needs drawings. The scope decides how detailed they have to be and whether a registered professional needs to be involved.

Can I stay open while the work happens?

Sometimes, if the work can be phased and separated from the area you are trading in. It lengthens the schedule and needs dust control, exit routes, and inspection access planned around your hours, so it is worth pricing both ways before deciding.

Who owns the improvements at the end of the lease?

That depends entirely on your lease. Improvements often become part of the premises, and some leases also require restoration to the original condition when you leave. Read those clauses before you design, because they can change what is worth building.

Elite Contracting handles full TI projects including permit coordination and final inspections, for restaurants, daycares, offices, retail, and industrial spaces across Surrey and Metro Vancouver. If you are weighing up a unit, the useful time to talk is before the lease is signed. See our commercial tenant improvements work, read more on commercial lease improvements, or get in touch for a walkthrough and a written estimate.