TI Allowance

How the allowance is delivered

The headline number is only half the deal; the mechanics decide what it is worth. In a reimbursement structure the tenant builds the space and draws down the allowance by submitting invoices, lien waivers, and completion evidence — often in stages, with a holdback until final completion. In a turnkey deal the landlord performs the work itself to an agreed scope, and there may be no stated dollar figure at all. Between the two sit landlord-managed buildouts where the allowance is applied directly to construction costs.

What varies in the wild

• Eligible costs — hard construction costs are standard; architectural and engineering fees, permits, and moving costs may or may not qualify, and furniture or equipment usually does not.
• Unused allowance — some leases make it use-it-or-lose-it; others let the tenant apply a portion against rent.
• Amortized allowances — landlords sometimes fund above-standard improvements as additional allowance repaid through higher rent over the term.
• Conditions to disbursement — no default outstanding, lien-free work, insurance in place, and an outside date after which the landlord's funding obligation lapses.

Watch the interaction with default remedies: many leases let the landlord recover the unamortized allowance if the lease terminates early, which quietly raises the cost of an early exit. Watch the calendar too — allowances frequently expire if not drawn within a stated period after commencement, and the draw conditions take time to satisfy.

In your documents

TI terms live in work letters and exhibits as often as in the lease body, and amendments for renewals or expansions routinely add new allowances with their own conditions. When someone asks what allowance a tenant still has, or which leases carry unamortized TI, the answer is spread across those documents — lease analysis with source-linked answers lets you pull the operative work-letter language rather than relying on an abstract.