Calculate your net build-out cost after applying the landlord's TI allowance. See how much you need to invest above the allowance for your space.
When negotiating a commercial lease, the landlord typically offers a Tenant Improvement (TI) allowance — a dollar amount per square foot to help cover the cost of building out your space. TI allowances typically range from $15–$80/sq ft for office space and $10–$40/sq ft for retail, depending on the market, lease term, and space condition.
The TI allowance rarely covers the full build-out cost. Your actual construction expenses may run $50–$150/sq ft for office build-outs, meaning you'll need to invest the difference out of pocket. This "net build-out cost" is a critical factor in your total occupancy cost analysis.
This calculator shows your total build-out budget, how much the TI allowance covers, and what you'll need to fund yourself. It also amortizes your out-of-pocket investment over the lease term for cash flow planning.
Homebuyers, investors, and real-estate professionals all benefit from precise tenant improvement allowance figures when evaluating properties, negotiating deals, or planning long-term investment strategies. Save this calculator and revisit it whenever market conditions or your financial situation changes.
TI allowances are one of the most negotiated elements in commercial leases. This calculator quantifies the gap between the allowance and your build-out needs so you can negotiate effectively. Instant recalculation lets you compare scenarios side by side, so every buying, selling, or investment decision is grounded in solid financial analysis.
TI Allowance Total = TI $/sq ft × Square Footage Total Build-Out = Build-Out $/sq ft × Square Footage Net Out-of-Pocket = Total Build-Out − TI Allowance Amortized Monthly = Net Out-of-Pocket / Lease Months
Result: $160,000 net out-of-pocket ($2,667/mo amortized)
TI allowance: $35/sq ft × 4,000 = $140,000. Total build-out: $75/sq ft × 4,000 = $300,000. Net out-of-pocket: $160,000. Amortized over a 60-month lease, that's $2,667/month on top of rent — a significant occupancy cost component.
TI is one of the most flexible negotiation points in commercial leasing. In tenant-favorable markets, push for $10–20 more per square foot above the initial offer. In competitive markets, focus on other concessions (free rent, CAM caps) if TI is firm.
The biggest cost variables are: demolition of existing improvements, HVAC and electrical work, plumbing (especially for kitchens/restrooms), specialty finishes (glass walls, raised floors), and permitting/code compliance. Get detailed contractor bids before committing to a space.
Your monthly occupancy cost is: base rent + NNN charges + amortized build-out + insurance + furniture amortization. A $25/sq ft NNN space with a $160,000 build-out investment (amortized at $2,667/mo) on 4,000 sq ft effectively costs $33/sq ft. Always calculate the all-in number.
For office space: $25–$60/sq ft for 5-year leases, $40–$80+ for 10+ year leases. Retail: $10–$40/sq ft. Industrial: $5–$15/sq ft. Class A buildings in major markets offer the highest allowances. Second-generation space (previously built out) may have lower TI.
It depends on the lease. In "landlord-managed" TI, the landlord hires contractors and manages construction. In "tenant-managed" TI, the tenant controls the process and the landlord reimburses up to the allowance. Tenant-managed gives you more control and often lower costs.
Rarely. Most landlords require TI to be used for permanent improvements to the space. However, some will allow unused TI to be applied to rent, moving costs, or furniture. This is a negotiation point.
Basic office build-out: $50–$80/sq ft. Higher-end finishes: $80–$120/sq ft. Premium/executive spaces: $120–$200+/sq ft. Retail varies enormously by type: basic retail $40–70, restaurants $100–$250+. Get contractor bids for accurate estimates.
Indirectly, yes. Landlords price TI into the lease economics. Higher TI may mean higher base rent or fewer other concessions. The landlord is essentially lending you the TI and recouping it through higher rent over the lease term.
Most leases require that improvements stay with the space (they become the landlord's property). Some leases require you to remove improvements and restore the space to its original condition, which can be expensive. Negotiate this term carefully.