TI’s
See Tenant Improvements.
Frequently Asked Questions about Tenant Improvements (TIs)
What are Tenant Improvements (TIs)?
Tenant Improvements (TIs) refer to physical modifications made to a leased commercial space to accommodate the specific operational needs of a tenant. These changes may include building or moving walls, installing flooring, adding windows or doors, or upgrading plumbing and electrical systems.
Who pays for Tenant Improvements?
Responsibility for TIs is negotiated between the tenant and landlord. Typically, the landlord offers a tenant improvement allowance (TI allowance) as an inducement for lease signing, quoted on a per square foot basis, while any additional costs may be borne by the tenant.
How are TI allowances typically structured?
TI allowances are generally quoted as a dollar amount per square foot. For example, in the Clark Tower case, the landlord offered a $50 per square foot TI allowance totaling $750,000 for a 15,000 SF lease to help cover customizations requested by a new tenant.
When are Tenant Improvements typically offered?
TIs are most commonly offered at the start of a newly signed lease or during a lease renewal negotiation. They are used as an incentive to attract or retain tenants in competitive commercial markets.
How do Tenant Improvements benefit landlords?
By offering TI allowances, landlords attract high-quality tenants and secure longer lease terms. In the example of Sterling Assets Realty, a $750,000 TI package helped secure a 10-year lease with a promising tech tenant, increasing the building’s value and occupancy.
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