How to Read a Tenant Improvement Allowance
TI allowances are negotiable — and they almost never cover what you think they cover.
What a TI allowance actually is
A tenant improvement allowance is a dollar amount the landlord agrees to contribute toward the cost of building out your space. It is paid back to you, almost always after substantial completion, against documented hard costs.
What it usually does NOT cover
- Fixtures, furniture, and equipment (FF&E)
- POS, security, low-voltage cabling, AV
- Signage and exterior branding
- Permit fees and architect/engineer fees, in many leases
- Anything classified as "tenant's trade fixtures"
How to negotiate
Bring a real number. A pre-construction estimate from a qualified GC will get you more dollars than any spreadsheet from the landlord's broker. Ask for the allowance to cover soft costs explicitly. Push for a rent-credit alternative if the allowance is low — sometimes 6 months of free rent is worth more than $40/sf.