August 24, 2017
What is meant by a commercial fixturing period?
If you are in the market for Commercial Real Estate, you will be looking at a variety of locations and spaces, all with different levels of condition and layouts on the interior.
When it comes to Commercial Real Estate, one size does not fit all. Your business will require a specific exterior and interior design in order to conform with your business and industry you operate within.
Examples of this would be a doctors office, which would need more office space along with a reception and seating area. A fitness facility will require more open space, alog with substantial plumbing work for the shower and washroom/change areas. A restaurant will require more seating space along with a kitchen area.
Once a location is identified for your business, you will then need to take the time to complete the above changes to the space you choose. This can take weeks, sometimes it can take months! During this time you don’t want to be paying thousands of dollars in lease payments when you are not yet open for business, do you?
Luckily, a common occurrence is the negotiation of a Fixturing Period, which allows the new tenant (you and your business) the opportunity to complete your improvements and renovations while not paying the full amount, or possible any of your base lease.
An example would be a possession date of January 1, with a 60day fixturing period where the landlord will not charge you the base lease rate.
The duration of your fixturing period will depend on a variety of factors, which includes but is not limited to the term of your lease, lease rate and/or the scope of work that is being completed to your lease space.
The higher amount of money being spent on Tenant improvements, the longer it will take to complete them before you open for business, and in turn the longer the lease term will be.
If you have tenant/leasehold improvements to complete in your new lease space, make sure not to overlook negotiating a Fixturing Period into the beginning of your lease.