tenant improvement allowance

tenant improvement (TI) allowance

A negotiated sum a landlord is willing to spend to customize space for the needs of a particular tenant. For second-generation space—that with walls, doors,ceiling tiles,lighting,and electrical already in place because of a prior tenant—the offered TI allowance will typically be enough to replace worn carpets and wallpaper, paint walls, freshen up some cabinetry, and move a minor number of walls and doors. For first-generation space—brand new space—the TI allowance is often insufficient to complete construction with even the most inexpensive quality of components.Construction expenses in excess of the TI allowance must be paid by the tenant.

The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
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