Howie’s addendum: as I’ve mentioned, I found a psychologist’s office where the rooms were the exact correct size. This saved me the hassles of time and money for the buildout. I got a initial $17,000 tenant improvement allowance. One property I looked at was formerly a primary MDs office and irritatingly enough the rooms were just a little too small, so I would’ve had to move around walls. They were gonna give me a $50,000 TI allowance, but thankfully the property that became my office finally became available (the neurosurgeons that had signed a LOI backed out).
Your TI allowance is “baked into” (amortized) into your rent, but you don’t have to front the money which is good for a startup. The longer the lease, the more you’ll get. I’ve heard estimates that they cost about $80-85/sq ft for a buildout from a shell. Moving the walls on the property described above isn’t a full buildout so my TIs would’ve covered it, but a property I looked at recently offered $60, meaning that I would’ve been on the hook for the remaining $20-25/ sq ft (about $40,000).
TIs always take longer than expected and cost more, so constantly check up on what is going on and communicate the urgency with the project manager and contractor. Sometimes it’s the city and their inspectors and permits that are the holdup. Try to have a clause in your contract that imposes financial penalties on the landlord if your suite isn’t available by a certain date.
This is also a reminder to pick the right space- location is key, but you want to get a place that’s big enough and you won’t grow out of in several years, while at the same time balancing not getting something too big.
