Tenant Improvement Rechner — Formel

Tenant Improvement (TI) Budgeting

Tenant improvements are modifications made to commercial space to suit a tenant's specific needs. Understanding costs and the landlord's contribution is critical for lease negotiations.

Typical TI Costs

  • Light cosmetic: $15-$25/sqft (paint, carpet, minor updates)
  • Moderate buildout: $30-$60/sqft (new walls, ceilings, updated MEP)
  • Heavy buildout: $60-$120/sqft (restaurant, medical, lab)

    • Landlord TI Allowance

    The landlord typically provides a per-square-foot allowance toward improvements. This is negotiated in the lease and depends on:

  • Lease term (longer term = higher allowance)
  • Tenant creditworthiness
  • Market conditions
  • How specific the buildout is to the tenant

    • Important: TI vs. Rent Tradeoff

    A higher TI allowance often comes with higher rent. The landlord amortizes the TI cost into the rent over the lease term.

    Lösungsbeispiel

    3,000 sqft office at $45/sqft TI cost, $30/sqft landlord allowance, 8% architecture fee, $3,000 permits, 10% contingency.

    1. Base TI cost: 3,000 x $45 = $135,000
    2. Architecture fee: $135,000 x 8% = $10,800
    3. Permits: $3,000
    4. Subtotal: $135,000 + $10,800 + $3,000 = $148,800
    5. Contingency: $148,800 x 10% = $14,880
    6. Total TI cost: $148,800 + $14,880 = $163,680
    7. Landlord allowance: 3,000 x $30 = $90,000
    8. Tenant out-of-pocket: $163,680 - $90,000 = $73,680
    9. Allowance coverage: $90,000 / $163,680 = 55.0%