REoptimizer^® Blog

When negotiating an office lease, one of the important aspects is the financing of tenant improvement. Questions like who is responsible for managing the construction as well as the cost and type of material to be used arises. In commercial real estate, tenant improvement financing is usually provided in one of two ways: the tenant improvement allowance and turnkey. In this article, we are going to discuss the two approaches.

In the commercial real estate market, there are various financial incentives offered by landlords to entice corporate tenants to their properties. One of the commonest enticements offered is the tenant improvement allowance. This is basically the amount of money a landlord provides directly or indirectly to renovate a space so that it meets the needs of a tenant. This allowance is an important part of the commercial lease negotiation, so it’s important that a corporate tenant knows how to get the most out of it. Here are some helpful tips that can help a tenant get a fair deal:

It's always a smart decision to use the tenant improvement allowance on something that has a tangible impact on your company's bottom line. Whether you're retrofitting an existing space or designing a new one from scratch, including energy efficiency upgrades is a wise way to use a portion of your tenant improvement allowance. These upgrades typically have relatively little cost in a new building project but can actually contribute to a lower occupancy cost over time.

A tenant improvement allowance is a significant expenditure for landlords. Even on smaller spaces, it's not at all uncommon for landlords to cut six or even seven-digit checks. With this in mind, there is a lot that gets said about the value of TI allowances. Unfortunately, much of what gets said isn't true. Here are three myths that come up in the industry and why they aren't true:

Will your tenant improvement allowance cover all of the costs of the build-out of your dreams? If not, you have two ways to get there. You can spend money out of your own pocket or you can get creative in how you structure your lease and how you use the money that you have available to you. Here are 5 ways to stretch your tenant improvement allowance: