Tenant Improvement Allowance Explained
A tenant improvement allowance (TI allowance) is a landlord-funded contribution used to offset the cost of building out commercial space. While TI allowances reduce upfront construction costs, they also carry important implications for lease negotiations, accounting treatment, cash flow, and taxes. This guide explains how tenant improvement allowances work, what costs they cover, how they are paid, and what tenants and accounting teams should understand before signing a commercial lease.
Brooke Colglazier
Marketing Manager