When leasing commercial real estate properties such as office space, retail space, or warehouse space, landlords will typically give some sort of allowance (tenant improvement allowance) to build out the space custom to your needs.
The tenant improvement allowance is the amount of money that landlords are willing to spend or give to a tenant to renovate an office space in the landlords office building. It’s typically offered as a total dollar amount or a dollar per square foot and negotiated up front.
For example say you like a space, however it would be even more perfect if you could have 2 more offices and a break area with plumbing. During the negotiation process you would want to ask for an allowance (MONEY) to build out the space. The amount is typically negotiated and contingent on your credit, length of lease term. rental rate, market you are in, etc…
Again the tenant improvement allowance is a negotiated amount that the landlord will spend to customize the space to your particular needs and is typically quoted in dollars per square feet. They won’t always agree to pay for 100% of your ideal layout….especially if you are asking for hardwood floors, granite countertops, and other above standard finishes.
When evaluating spaces make sure to take note of your needs such as the ideal # of offices, break area, conference rooms, etc. If you need a more customized layout make sure you ask for it before signing a commercial lease. You want to compare how much allowance each landlord is willing to give. Ideally you want them to pay for 100% of your build-out costs, however it all depends on your credit, length of lease term, the rental rate, and on whether it’s a tenant or landlord market.