How to Budget for Tenant Upfit Costs
Setting up shop at Smith Mountain Lake? Here’s how to plan your tenant upfit budget like a pro.
When you sign a commercial lease, the excitement of moving in and making the space your own is real. But before you start picking out paint colors and lighting fixtures, there’s one piece that every tenant needs to nail down first: the tenant upfit budget.
Upfit costs—sometimes called tenant improvements—cover the changes you’ll need to make to transform a commercial space into one that works for your business. That could be as simple as adding new flooring and paint, or as complex as installing a commercial kitchen or building out offices.
So how do you budget for it without blowing your timeline or your wallet? Let’s break it down.
1. Start with Your Needs vs. Wants
Before crunching numbers, create two lists: must-haves and nice-to-haves. Your must-haves are the non-negotiables to operate (like plumbing for a café or shelving for a retail shop). Nice-to-haves are upgrades that enhance the experience but aren’t mission-critical.
This list will help you prioritize spending and avoid surprises.
2. Understand Who Pays for What
Commercial leases can vary, but typically either the landlord provides a tenant improvement allowance (TIA) or the costs fall directly to the tenant. Be sure to review your lease terms carefully and ask:
How much is included in the TIA?
What exactly can it be applied toward?
Will unused funds roll over or revert to the landlord?
At 2837 Scruggs Rd, for example, we often work with tenants to find practical solutions that make sense for both sides.
3. Get Multiple Estimates
Don’t just rely on one contractor bid. Request multiple estimates to understand the true range of costs. Labor, material availability, and scope can swing prices significantly.
4. Factor in Hidden Costs
It’s not just about drywall and countertops. You’ll also need to consider:
Permits & inspections
Utility upgrades (water, HVAC, electrical)
Furnishings & décor
Contingency funds (set aside at least 10–15%)
5. Think Long-Term Value
Sometimes, a bigger upfront investment pays off in the long run. Durable flooring, energy-efficient lighting, or a smart layout can reduce maintenance costs and boost your business’s image.
Pro tip: The best budgets are realistic, flexible, and forward-thinking. The goal isn’t just to get open—it’s to set your business up for long-term success.
Ready to Explore 2837 Scruggs Rd?
If you’re considering opening your business at Smith Mountain Lake, 2837 Scruggs Rd offers flexible spaces designed with growth in mind. Whether you’re in retail, dining, or professional services, our team can help you find a space that makes sense for your budget.
Contact us today to schedule a tour and talk options.
