Temporary Certificate of Occupancy
An official document issued by a local building authority or other designated agency that authorizes the temporary use or occupancy of a building or structure before the completion of all construction. This certificate confirms that the premises are safe for occupancy in compliance with relevant codes, although certain sections or aspects of the project may still be under construction. Typically, a Temporary Certificate of Occupancy (TCO) is valid for a specified period, generally not exceeding 90 days, unless an extension is granted by the appropriate regulatory body.
Putting ‘Temporary Certificate of Occupancy’ in Context
Come and Take It Development, a Texas-based real estate developer known for its dynamic and opportunistic projects, recently embarked on a build-to-suit development for a new Star Coffee outlet. The project, named Star Coffee at Highland Commons, is located in a flourishing suburb of Dallas, TX, and designed to serve as a flagship location for the coffee chain.
In the fast-paced and competitive retail market, timing is critical. To align with a major marketing campaign planned by Star Coffee, it was essential that the store be operational ahead of the peak holiday season. However, construction was slightly behind schedule due to unexpected delays in material supply.
Recognizing the importance of meeting Star Coffee’s timeline, Come and Take It Development applied for a Temporary Certificate of Occupancy (TCO). This certificate allowed Star Coffee to start outfitting the interior and training staff while final exterior work and landscaping were completed. The TCO was crucial in ensuring that although the building was not fully completed, the operational parts essential for the business could be utilized, thereby aligning with Star Coffee’s strategic launch timeline.
The TCO issued by the local building department was valid for 90 days, providing a buffer for Come and Take It Development to complete all remaining construction tasks and obtain the final Certificate of Occupancy. This strategic use of the TCO not only facilitated a timely opening for the new Star Coffee outlet but also avoided potential revenue loss during the crucial holiday period.
This scenario is hypothetical and illustrates how a Temporary Certificate of Occupancy can be strategically utilized in commercial real estate development to align project timelines with business goals.
Click here to get this CRE Glossary in an eBook (PDF) format.