Tenant Improvement Allowance 101

Get the most value out of the office space you’re leasing and qualify your business for a tenant improvement allowance (TIA)

Tenant Improvement Allowances 101

If you’re in the process of negotiating a commercial office lease, you have the opportunity to reach an agreement with the landlord to customize the space for your organization’s needs. When you can negotiate for upgrades, the amount of money the landlord offers to cover these expenses is known as a tenant improvement allowance (TIA). Generally, the amount is defined in terms of a per-square-foot amount or as a total sum. If any upgrades end up going over budget, your organization has to absorb that cost.

In this post, we’ll clarify the fundamentals of negotiating a tenant improvement allowance so your new office space is in the best possible position for success.

Estimating a TIA

If you’re looking to negotiate a TIA for your commercial office space, we always recommend that you work with a space planner and office design consultant as soon as possible. Otherwise, you’re just guessing at how much you should be asking for to meet your organization’s needs. In addition, as already mentioned, you’re stuck absorbing the additional costs of upgrades that go beyond your TIA. Working with a team of experts from the beginning can ensure you get the budget you need, so you can minimize the risk of going over budget while still getting the space you need.

A space planner can work with you not only to help you determine whether a space will fit your team’s needs—but they can also help explore ways to use that space more efficiently with TIA upgrades. At the same time, an interior designer can help ensure your TIA accommodates any of the design upgrades you’re interested in making. A team of experts can also help you negotiate for a higher TIA by backing requests with numbers.

Overseeing TIA Upgrades

Once you and your landlord have settled on a TIA amount, it’s time to decide who is responsible for supervising the necessary upgrades. Either you or the landlord will be responsible for managing any improvements. Ultimately, it comes down to whether you want to handle any updates or if you trust your landlord to make the necessary improvements. If you’d prefer for your landlord to handle the job, make sure your lease explicitly specifies that they are expected to bid out jobs to the most competitive contractors so that you can maximize your TIA.

Leveraging a TIA

When renting a commercial office space, your landlord should be prepared to accommodate your organization’s needs. For example, if you’re interested in making capital improvements to the landlord’s building that may also benefit future tenants, the landlord should be expected to cover those expenses. The ideal landlord is adaptable and willing to oblige your needs even when making upgrades specific to your business operations.

When you’re negotiating the terms of a TIA, make sure you have the flexibility to spend the budget as you see fit. For example, a TIA should cover a range of expenses from permit fees and moving costs to design and construction expenses. If you don’t spend all of your TIA, ensure your lease stipulates that any leftover money will be credited toward your rent.

Schedule a TIA Workplace Audit Today

If you’re in the process of negotiating for a TIA, contact the experts at DESIGN+BUILD today. We’ll audit any of the spaces you’re interested in leasing, estimate TIA requirements, and then help you turn the vision for your organization’s office space into a reality.