Commercial build-out and tenant improvement projects are taking significantly longer due to supply chain and labor shortages. On average, these projects, which are typically six months on average, are now taking three months longer to complete, complicating landlord-tenant agreements on the construction project and commencement of the rent.

"Every deal is a rush right now because companies need to order materials as soon as possible," Russ Arouh, co-chair of the industrial and warehouse industry team at Arnall Golden Gregory, tells GlobeSt.com, explaining that the delay is true for both industrial and office properties. He estimates that there is typically three months of additional delay, but can depend largely on the type of project and whether there is a relocation that requires no downtime.

The widespread delays have complicated the negotiation process as tenants look for some relief from potential delays. "Cautious occupants are negotiating a longer build-out period. If a tenant usually needs 120 days to 150 days to build out, now they need 150 to 180 days to build out. Tenants are also trying to negotiate for some form of rent abatement, and they are subjecting the build out to a robust force majeure clause, which includes things like supply chain disruption, lack of materials and labor shortages," says Arouh.