Calculate tenant improvement budgets and total build-out costs. Understand how TI allowances affect your lease economics and landlord investment.
Build-out budget and lease impact analysis
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Explore Ownership →How tenant improvement dollars work in commercial leasing.
A TI (Tenant Improvement) allowance is the dollar amount per square foot a landlord contributes toward customizing a commercial space for a new tenant. The landlord typically amortizes this cost into the rent over the lease term. Higher TI = higher rent, but a better-fitted space.
Office (second generation): $20–$45/SF. Office (new/build-to-suit): $50–$100/SF. Retail: $15–$40/SF. Medical/dental: $60–$120/SF. Industrial: $5–$20/SF. The range depends on existing condition, market competition, and lease length.
TI allowance: landlord gives you a budget, you manage construction. Turn-key: landlord builds to your specs. As-is: no improvements, lowest rent. TI gives the most control over quality and design. Turn-key is simplest but you may not control costs.
Longer lease = more TI leverage. Landlords amortize TI over the lease term, so a 10-year lease may justify 2x the TI of a 5-year lease. Credit-worthy tenants get better TI packages. In soft markets, TI allowances increase as landlords compete for tenants.
Typical landlord contributions across commercial property types.
| Space Type | TI Range ($/SF) | Build-Out Range | Notes |
|---|---|---|---|
| Office (2nd Gen) | $20–$45 | $35–$65 | Existing improvements, cosmetic refresh |
| Office (New/Shell) | $50–$100 | $80–$150 | Build from scratch, HVAC, walls, floors |
| Medical/Dental | $60–$120 | $100–$200 | Plumbing, specialty HVAC, equipment |
| Retail | $15–$40 | $30–$80 | Varies widely by concept |
| Restaurant | $30–$60 | $80–$200+ | Kitchen, exhaust, grease traps |
| Industrial | $5–$20 | $10–$40 | Minimal improvements needed |
Common questions about tenant improvements.
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