Free Tenant Improvement Allowance Calculator
Calculate the tenant improvement (TI) allowance for a commercial lease, determine the out-of-pocket cost to the tenant, and analyze how the TI amortizes over the lease term.
Total TI Allowance
$225,000
Total TI Allowance vs Lease Term (years)
Tenant Improvement Allowances
A tenant improvement (TI) allowance is money the landlord provides to the tenant for customizing or building out the leased space. It is a standard incentive in commercial leasing.
How TI Allowances Work
1. The landlord offers a dollar-per-square-foot allowance 2. The tenant designs and constructs improvements to suit their needs 3. Costs within the allowance are covered by the landlord 4. Costs exceeding the allowance are paid by the tenant 5. The landlord amortizes the TI cost over the lease term as part of the return calculation
Typical TI Ranges
Negotiation Tips
Example Calculation
5,000 sq ft space with $45/sq ft TI allowance, estimated $65/sq ft buildout cost, 7-year lease, 8% landlord amortization rate.
- 01Total TI allowance: 5,000 x $45 = $225,000
- 02Total buildout cost: 5,000 x $65 = $325,000
- 03Tenant out-of-pocket: $325,000 - $225,000 = $100,000
- 04Allowance coverage: $225,000 / $325,000 = 69.2%
- 05Monthly amortization: approximately $3,493 (at 8% over 84 months)
- 06Total amortized cost: $3,493 x 84 = $293,412