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What is Tenant Control?

Updated: Sep 23, 2023

In commercial real estate, "tenant control" refers to the level of authority and decision-making power that a tenant has over the leased property. The extent of tenant control can vary depending on the terms negotiated in the lease agreement and the specific type of lease structure. Generally, tenant control in commercial real estate encompasses several aspects:

1. Use of Premises: The lease agreement outlines the permitted uses of the leased space. The tenant typically has control over how they utilize the premises for their business operations, subject to any restrictions specified in the lease.

2. Property Alterations: In some cases, the tenant may have the ability to make alterations or improvements to the leased space to better suit their business needs. However, such changes are typically subject to the landlord's approval and may be subject to specific conditions.

3. Tenant Improvements (TI): In certain lease agreements, the landlord may offer tenant improvement allowances, which provide financial support to the tenant for customizing or renovating the space. This allows the tenant to have more control over the design and functionality of the premises.

4. Lease Term: The length of the lease term is a crucial aspect of tenant control. Longer lease terms provide tenants with greater stability and control over the space, as they have a longer period of occupancy.

5. Subleasing and Assigning: Depending on the lease terms, the tenant may have the option to sublease or assign the space to another party, giving them some control over who shares the premises.

6. Lease Renewal: If the lease includes an option to renew, the tenant has some control over whether to continue occupying the space beyond the initial lease term.

7. Repairs and Maintenance: The lease agreement typically outlines the responsibilities for repairs and maintenance. In some cases, the tenant may have control over minor repairs, while the landlord handles major structural issues.

It's essential for both landlords and tenants to clearly define the level of tenant control in the lease agreement to avoid misunderstandings and disputes. Commercial leases can be highly negotiable, and both parties should consider their respective needs and objectives when structuring the lease terms. Additionally, consulting with legal and real estate professionals can help ensure that the lease agreement accurately reflects the agreed-upon tenant control rights and responsibilities.

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