What type of capital expenditure involves updating a property’s appearance?

The choice of renovating an office building lobby as the correct answer reflects the definition of capital expenditures specifically aimed at improving a property’s aesthetic appeal. This type of expenditure focuses on enhancing the visual aspects of the property, making it more attractive to tenants or customers.

When a lobby is renovated, it often involves cosmetic updates like new flooring, lighting, furnishings, and decor, which directly affect how the property is perceived. Such improvements can lead to higher tenant satisfaction, increased property value, and potentially higher rental rates.

In contrast, replacing major mechanical equipment, building offices for a new tenant, or replacing old appliances are considered necessary upgrades or functions that support the property's operation but do not primarily focus on improving visual appeal or updating the property's appearance. These activities, while they may enhance functionality or meet compliance standards, do not fall under the same category of direct aesthetic enhancement as the renovation of a lobby does.