Understanding timelines, responsibilities, and how to avoid costly delays
Commercial Tenant Improvements — often called TIs or leasehold improvements — are one of the most important parts of opening a business in Ontario. Whether you’re building out a retail store, restaurant, office, clinic, or specialty space, the quality of your TI work affects everything: operations, customer experience, lease negotiations, and long-term costs.
Here’s a clear breakdown of what tenants and landlords should know before starting a commercial build-out.
1. What Are Commercial Tenant Improvements?
Tenant improvements are the renovations, build-outs, and modifications made to a leased commercial space so it can suit the needs of the incoming business.
Common examples include:
- Moving or adding walls
- Updating flooring or lighting
- Installing washrooms
- Building reception or waiting areas
- Installing kitchen equipment (restaurants)
- Millwork, display units, and fixtures
- Upgrading electrical or plumbing
- HVAC adjustments
- Accessibility upgrades
TIs can be simple cosmetic changes — or full structural transformations.
2. Who Pays for Tenant Improvements: Landlord or Tenant?
It depends on the lease. In Ontario, there are three common approaches:
A) Tenant-Funded Improvements
The tenant pays for everything.
Most common with small businesses, restaurants, retail, salons, and clinics.
B) Landlord-Funded Improvements (TI Allowance)
The landlord gives a cash allowance (ex: $20–$60 per sq. ft.) to help cover build-out costs.
More common with established businesses or long-term leases.
C) Cost-Sharing
Landlord pays for structural/major building items.
Tenant pays for interior design, finishes, and business-specific needs.
A great contractor helps both sides understand cost breakdowns early — preventing scope disputes later.
3. Permits You May Need for Tenant Improvements in Ontario
TI projects often require multiple approvals depending on the scope:
- Building Permit (most structural or layout changes)
- Plumbing Permit (new fixtures, repositioned washrooms)
- Electrical Permit
- Mechanical Permit (HVAC changes, kitchen exhaust)
- Fire & Safety Approvals
- Accessibility compliance (AODA)
Restaurants and medical spaces often require stricter approvals.
Not getting the right permits is one of the most common causes of delays — and fines.
4. How Long Do Tenant Improvements Take?
Timeline depends on size, scope, and industry.
General Ontario TI timelines:
- Small retail refresh: 3–6 weeks
- Office build-out: 6–10 weeks
- Restaurant construction: 10–16+ weeks
- Medical/clinic construction: 12–20+ weeks
Delays usually come from:
- Permits
- Electrical upgrades (panels, service size)
- Material lead times
- Change orders
- Landlord review/approval processes
The more planning upfront, the smoother the timeline.
5. What Tenants Should Do Before Signing a Lease
Most issues happen because tenants sign before assessing the space properly.
Before finalizing your lease:
- Hire a contractor to walk the space
- Verify electrical capacity (restaurants + clinics need more)
- Inspect HVAC age & performance
- Measure ceiling height, back-of-house space, and washroom locations
- Confirm zoning for your business type
- Review landlord rules for improvements
A one-hour walkthrough can save thousands in surprise costs.
6. What Landlords Should Consider When Approving TIs
Landlords want improvements that increase property value without creating future liability.
Key things landlords evaluate:
- Structural impact
- Fire separations
- Electrical load increases
- Mechanical changes
- Longevity of materials
- Quality of workmanship
- Code compliance
- Reversibility (if needed)
A professional contractor protects both parties and ensures everything is built to code.
7. How Much Do Tenant Improvements Cost in Ontario?
Costs vary widely by industry:
- Retail: $80–$150 per sq. ft.
- Office: $60–$120 per sq. ft.
- Restaurants: $150–$350+ per sq. ft.
- Medical/clinics: $200–$400+ per sq. ft.
Biggest cost drivers:
- Electrical capacity
- Mechanical requirements
- Plumbing (especially washroom relocation)
- Fire separation
- Custom millwork
- Ventilation systems (restaurants)
- High-durability materials
TI allowances rarely cover 100% of a build-out — planning is everything.
8. Why Choosing the Right Contractor Matters
Commercial TIs require a contractor who understands:
- Code compliance
- Industry-specific requirements
- Scheduling under tight timelines
- Working with landlords + designers
- Budget forecasting
- Safety regulations
- Multi-trade coordination
A great contractor protects your budget, timeline, and lease obligations.
Final Thoughts
Tenant improvements are one of the biggest investments you’ll make when opening or expanding a business. Whether you’re a landlord or a tenant, choosing an experienced commercial contractor ensures the project stays on schedule, meets all code requirements, and supports your business long-term.
