What is Tenant Improvement (TI) Allowance?
A tenant improvement allowance is money a landlord agrees to contribute toward customizing a commercial space for a new tenant — walls, flooring, lighting, and finishes. It is usually expressed as a dollar amount per square foot and negotiated as part of the lease. A strong TI allowance lowers a tenant's upfront build-out cost.
Example: To win a 10-year lease, a landlord offers a $40/sq ft TI allowance so the tenant can build out offices and a reception area without paying the full cost up front.