What to Know Before Starting a Tenant Improvement Project in California

By R. McKinley Construction, Inc. – Faith • Family • Hard Work

When you’re ready to improve, expand, or reimagine your commercial space, a Tenant Improvement (TI) project can transform your vision into reality — but it can also be complex, especially in California. Between permits, budgets, timelines, and code compliance, there’s a lot to navigate before construction even begins.

At R. McKinley Construction, we’ve guided dozens of businesses, property owners, and developers through the TI process — from hospitality and retail spaces to medical and municipal facilities. Whether you’re remodeling an office, building out a new restaurant, or upgrading a healthcare suite, here’s what you should know before starting your tenant improvement project.

1. Understand What Counts as a Tenant Improvement

A tenant improvement is any modification to a leased or owned commercial space that customizes it to meet a tenant’s operational needs. This could mean adding offices or walls, upgrading HVAC or electrical systems, installing new flooring or fixtures, or reconfiguring a space entirely.

TI projects can range from cosmetic upgrades to full structural modifications. Examples include:

• Office buildouts and reconfigurations
• Retail renovations or showroom updates
• Medical office upgrades to meet OSHPD standards
• Restaurant or hospitality remodels
• Industrial warehouse conversions

The key is understanding how your intended use affects the scope of work, permitting requirements, and lease terms.

2. Review Your Lease Carefully Before You Build

Before you draw up plans or hire a contractor, revisit your lease agreement.

Most commercial leases define who is responsible for what — and those details can make or break your project budget. Some leases require the tenant to handle all improvements, while others share costs between the tenant and landlord through what’s called a Tenant Improvement Allowance (TIA).

Look for these key clauses:

• Approval process: Landlord approval may be required for all work, even design choices.
• Restoration clause: Some leases require the tenant to restore the space to its original condition when moving out.
• Cost-sharing: Confirm what portion of the costs the landlord will cover and how reimbursements are handled.
• Permitting: Determine who pulls permits — the tenant, the landlord, or the contractor.

Before you finalize anything, discuss your plans openly with your landlord and your contractor. RMC frequently helps clients review their leases to identify hidden obligations before construction begins.

3. Plan for Permits, Approvals, and Inspections

California’s construction landscape is known for its strict permitting and inspection processes. Even minor improvements can trigger code compliance reviews.

Depending on your scope, your project may require:

• Building permits (for structural, electrical, plumbing, or mechanical changes)
• Fire department approvals (especially for restaurants or high-occupancy spaces)
• Health department permits (for food service or medical facilities)
• ADA accessibility compliance (a frequent oversight that can cause costly delays)

At RMC, we emphasize preconstruction planning — coordinating early with city planning and building departments to ensure every requirement is addressed before construction starts. This proactive approach helps prevent delays, surprise fees, and last-minute design changes.

4. Choose the Right Contractor for Your Project Type

Tenant improvement projects may seem smaller than ground-up builds, but they demand equal attention to detail. You’re often working within existing structures, coordinating around active businesses, and managing tight schedules.

Look for a contractor who:

• Has TI-specific experience in your building type (office, retail, medical, hospitality, etc.)
• Understands California building codes and ADA requirements
• Can coordinate with landlords, property managers, and design teams
• Offers design-build capabilities (to streamline communication and speed up delivery)
• Maintains clean, safe work zones for active facilities

For example, R. McKinley Construction recently completed multiple TI projects in San Luis Obispo and Santa Maria, working evenings and weekends to minimize business disruption. That level of flexibility can make a big difference in meeting your deadlines without halting operations.

5. Budget Realistically — and Build in Contingencies

Tenant improvement costs can vary widely based on location, building age, and project scope.

As of 2025, general TI costs in California typically range from:

• $50–$120 per square foot for standard office upgrades
• $150–$250 per square foot for medical or specialty spaces
• $200–$400 per square foot for restaurant or hospitality remodels

These numbers can shift based on:

• Building condition (older buildings often need electrical or plumbing upgrades)
• Code compliance updates (fire sprinklers, accessibility, etc.)
• Material availability and market fluctuations

Always include a 10–15% contingency for unforeseen conditions. When working within an existing structure, surprises behind the walls or under the floors are common.

A seasoned contractor like RMC can help create a clear, itemized budget early on, reducing uncertainty and keeping your project financially on track.

6. Define Your Timeline — Then Add Buffer Time

Even the best-planned TI projects can run into delays. Building department backlogs, inspection schedules, material lead times, and coordination with other tenants all affect your completion date.

A good rule of thumb:

• Small cosmetic TI: 4–8 weeks
• Medium buildout (office or retail): 8–16 weeks
• Complex buildout (medical or restaurant): 4–8 months

Your contractor should build buffer time into the schedule and communicate milestones clearly — from demolition to inspection to turnover.

At RMC, we use project management systems to track progress daily, ensuring our clients always know what’s happening next.

7. Focus on Function, Flow, and Future Flexibility

Your new space should reflect your brand and function seamlessly for your team or customers. But it should also be adaptable — especially if your business grows or changes.

During design, consider:

• Future capacity (electrical, HVAC, and space planning)
• Energy efficiency upgrades
• Flexible wall systems or modular layouts
• Durability and maintenance of finishes
• Accessibility and flow for staff and visitors

We often remind clients: “Build for the next five years, not just the next five months.” Future-ready design saves time and money down the line.

8. Sustainability and Energy Codes Matter

California leads the nation in green building standards, and most tenant improvements must comply with Title 24 energy requirements.

That means:

• Efficient lighting and HVAC systems
• Low-VOC paints and materials
• Smart controls for lighting and temperature
• Proper insulation and energy-efficient windows

At RMC, we integrate sustainability into every project — whether clients are pursuing LEED certification or simply want to reduce operating costs. Green building practices not only meet code but also improve comfort and efficiency for occupants.

9. Communication Is Everything

The most successful TI projects come down to clear communication between all parties — tenant, landlord, designer, and contractor.

Ask your contractor to establish a communication plan that includes:

• Weekly progress updates
• Regular cost tracking
• Transparent change order procedures
• Single points of contact for decisions

Good communication keeps surprises to a minimum and builds trust throughout the project. RMC prides itself on acting as a bridge between stakeholders, ensuring that every party stays informed and aligned.

10. Partner with a Contractor Who Shares Your Vision

Tenant improvements aren’t just about construction — they’re about creating environments where people work, heal, serve, or connect. Whether it’s an office that boosts productivity or a medical space that enhances patient care, the right partner turns your goals into a built reality.

At R. McKinley Construction, we approach every project with the same principles that define our company:
Faith. Family. Hard Work.

From preconstruction planning to final walkthrough, we bring integrity, technical expertise, and genuine care to every client relationship.

Final Thoughts

Starting a tenant improvement project in California is an exciting opportunity — but it’s also a complex process that demands planning, compliance, and expertise.

By understanding your lease, budgeting realistically, and partnering with an experienced contractor who knows California’s codes and culture, you can ensure a smoother, more successful build.

If you’re planning a TI project on the Central Coast or anywhere in California, let’s start with a conversation.

📞 R. McKinley Construction, Inc.
3220 S. Higuera St, Suite 103B
San Luis Obispo, CA 93401
📧 info@rmckinleyconstructioninc.com
🌐 www.rmckinleyconstructioninc.com