The condition of a leased space before a tenant makes improvements is considered the base building. Many commercial spaces are leased as-is, and the tenant is obligated to perform any specific renovations to accommodate his or her business. A tenant and landlord typically negotiate the cost of the base building rather than the cost of the renovated space after tenant improvements. However, some transactions may consist of the landlord and tenant sharing the cost of a build-out. Most business owners require a customized build-out that is tailored to his or her specific operations. For example, the owner of a sandwich shop may need to reconstruct the base building to accommodate the operations of his business; he or she may need to have a builder install bathrooms, partitions for a dining area, food preparation areas and similar features. The tenant typically incurs the cost of the build-out.
