Negotiating Tenant Improvement (TI) Allowance

Moving into a new commercial space is expensive. You need paint, flooring, walls, and maybe even plumbing. This is where Tenant Improvement (TI) Allowance comes in.

What is a TI Allowance?

It is cash (or rent credit) the landlord gives you to renovate the space. For example, a "$20 per sqft TI allowance" on a 2,000 sqft space means the landlord contributes $40,000 to your build-out.

Strategies to Get More TI

1. Ask for a "Warm Shell"

Ensure the landlord delivers the space with basic utilities, HVAC, and drywall ready. This drastically reduces your construction costs.

2. Trade Rent for TI

If you're tight on cash, offer to pay slightly higher rent ($1-2/sqft more) in exchange for a larger upfront TI allowance. This acts like a loan from the landlord but keeps your startup capital in your pocket.

3. Request "Turnkey" Build-out

Instead of taking cash (which puts the risk of cost overruns on you), ask the landlord to deliver the space "Turnkey" based on your specs. If construction costs spike, the landlord eats the cost, not you.

What to Watch Out For

• Clawback: Ensure the TI doesn't have to be paid back if you leave the lease early (except for default).
• Management Fees: Don't let the landlord charge a 5-10% "Project Management Fee" on your TI funds.

How We Help

BizLeaseCheck scans your lease to see if the TI language protects you or exposes you to construction risks. Upload your lease today to check your TI clause.