Leasehold Improvement
Learn about leasehold improvements in Canadian real estate — what they include, how they’re negotiated, and their lease implications.
August 01, 2025
What is a Leasehold Improvement?
Leasehold improvements are alterations or additions made by or for a tenant to leased space to customize it for their business operations.
Why Leasehold Improvements Matter in Real Estate
In Canadian commercial real estate, leasehold improvements affect lease negotiations, tenant costs, and asset value.
Examples:
- Installing partitions or display fixtures
- Upgrading lighting or flooring
- Adding specialized equipment
Understanding leasehold improvements helps tenants and landlords structure clear agreements on responsibilities and ownership of improvements.
Example of Leasehold Improvement in Action
The retailer negotiated a tenant improvement allowance to cover leasehold improvements for custom shelving and lighting.
Key Takeaways
- Customizes leased space for tenant needs
- Negotiated in lease agreements
- May be funded by tenant or landlord
- Impacts lease value and obligations
- Ownership reverts to landlord at lease end
National average resale-price growth and housing-starts growth, smoothed over three months. The comparison illustrates the cycle; it does not establish how much a price change causes construction to change.
Trailing 12-month starts in centres of 50,000 or more remove the usual monthly seasonality. Ownership combines the homeowner and condominium categories; rental is shown separately.
Six-month averages of provincial starts, expressed at annual rates. The smoothing reduces the influence of individual apartment projects.
The same August benchmark compared with two different starting points. Three-month changes are not annualized.
Average sale prices show the difference in purchase costs across markets. They do not measure affordability relative to local incomes or construction costs.
Newfoundland and Labrador remains above its pre-pandemic sales pattern, but August activity was below last year. Historical lines retain their original release vintages.
Average and median describe different aspects of the same month’s transactions. Both are affected by the mix of homes sold.
Category averages compare different homes and locations; the gaps are not estimates of the cost to upgrade an otherwise identical property.
The five categories shown account for 5,000 of the board’s 5,057 sales. The remaining 57 transactions were in other housing categories.
Monthly observations are not seasonally adjusted. Active listings count properties available at month-end; they are not construction inventory.
Average and median prices share one dollar axis. These unadjusted transaction measures do not control for changes in the homes sold.
TRREB’s 416/905 categories compare the apartments sold in each area. The difference does not isolate a location premium for equivalent units.
5680 Oak Street in Vancouver and its surrounding context. (MCMP Architects)
Ground-level renderings of the tower proposed for 5680 Oak Street in Vancouver. (MCMP Architects)
