Lease guide · Updated for 2026
The tenant improvement allowance, in plain language
Who pays for the buildout, how the three deal structures actually work, what the national averages are, and what your landlord will want to see before releasing a dollar. Sources named throughout.
- $94.69/SFAvg office TI, CBRE H1 2024
- 9.0 monthsAvg free rent, same survey
- $15 to $60Typical retail TI /SF
- FreeWritten estimates
Quick answer: a tenant improvement allowance is the landlord's contribution to building out your space, expressed per square foot. CBRE's 12-market survey averaged $94.69 per square foot for offices in the first half of 2024; JLL's broader series ran near $75; retail typically sees $15 to $60. It rarely covers the whole buildout, and the structure (turnkey, stated allowance, or rent abatement) decides who carries the risk.
What the allowance is, and what the averages say
When a landlord offers "$50 TI" on a 2,000 square foot suite, they are offering $100,000 toward your buildout, under conditions the lease will spell out. The national picture, from the institutional surveys:
| Figure | Published number | Source and year |
|---|---|---|
| Average office TI allowance, 12 major markets (~3,900 leases) | $94.69 per sq ft, H1 2024; down from $97.55 in 2023, first decline in 4 years | CBRE, August 2024 |
| Average free rent on the same leases | 9.0 months, down from 9.6 | CBRE, August 2024 |
| National average office TI allowance, broader series | About $75 per sq ft, down 6% year over year | JLL series, 2024 |
| Typical retail TI allowance | $15 to $60 per sq ft; strip centers often $25 to $50 on 5-to-10-year leases | GrowthFactor and BuilderMuse, 2026 (industry-reported) |
| Industrial TI allowance | No published norm; varies with market, term, building and scope | Link Logistics, June 2026 |
Where these numbers come from. CBRE and JLL are institutional surveys; CBRE's panel skews toward Class A leases in gateway markets, which is why it runs higher than JLL's broader number. The retail figures are industry-reported rather than survey-backed, and we label them that way. No source publishes a Sarasota-specific TI average, so treat all of these as context for your negotiation, not a quote.
The three deal structures
- Turnkey. The landlord designs, manages and delivers the finished space to an agreed specification. You get certainty and no construction management burden; the landlord carries overrun risk and prices it into the rent. Your protection is the specification: vague turnkey specs produce cheap turnkey spaces.
- Stated allowance, tenant-managed. The most common structure for tenants who care about the result. You hire the general contractor, control design and spec, and submit draws (invoices, lien waivers, proof of completion) against the negotiated allowance. You carry the overage risk, which is exactly why a written scope and price before lease signature matters.
- Rent abatement in lieu of TI. You fund the construction; the landlord compensates with free or reduced rent for a stated period. It shifts cash-flow timing onto you and suits tenants with capital who want maximum control.
What the work letter will ask of your contractor
The work letter is the lease exhibit that governs construction. Expect it to define who builds what (landlord's work versus tenant's work), the delivery condition of the space (our shell conditions guide translates the jargon), landlord approval rights over plans and contractors, insurance requirements including a certificate naming the landlord, and the draw process for releasing allowance money. Lien waivers matter in Florida: the allowance will not flow without clean paperwork, and the owner side of lien law has real teeth. We produce draw-ready documentation as part of running the job, and our tenant improvements service is built around exactly this structure; the coordination on our 8th Street West buildout ran through a property manager the same way.
What the allowance will not pay for
Furniture, trade fixtures, removable equipment and signage are typically excluded from allowance-eligible costs; Link Logistics, the largest US-only industrial landlord, states that exclusion plainly in its 2026 tenant guidance. Budget them separately from day one so the allowance math stays honest. And compare the allowance to real construction benchmarks, not hopes: our office cost guide shows typical fit-outs running $230 to $375 per square foot against a $75 to $95 average allowance, and that gap is the number your business plan has to carry.
Negotiating with numbers instead of adjectives
- Get the delivery condition in writing before pricing anything. The same allowance means different things against a grey shell versus a second-generation suite.
- Price the scope before signing. A free walkthrough and written estimate converts "we think it needs work" into a line-item number you can negotiate with.
- Match the allowance structure to your appetite for risk. Control and risk travel together; pick deliberately.
- Agree the draw mechanics up front. Monthly draws with defined documentation keep cash flowing; vague draw language starves the job.
TI allowance questions
What is a tenant improvement allowance?
A tenant improvement allowance, usually written as TI or TIA, is money the landlord contributes toward building out your space, normally expressed per square foot and paid either by managing the work directly or by reimbursing you as the work completes. It is negotiated in the lease, alongside rent and term, and it almost never covers the entire buildout.
What is a typical TI allowance in 2026?
For offices, CBRE's survey of about 3,900 leases in 12 major markets averaged $94.69 per square foot in the first half of 2024, the first decline in four years, alongside 9 months of average free rent. JLL's broader national series ran near $75 per square foot. For retail, broadly reported figures run $15 to $60 per square foot. No published Sunbelt-specific average exists, and industrial allowances are negotiated case by case.
What is the difference between turnkey and a stated allowance?
In a turnkey deal the landlord designs, manages and delivers the finished space to an agreed specification and carries the cost-overrun risk, typically priced into higher rent. With a stated allowance, you hire the general contractor, control the design and contractor choice, and submit draws against the negotiated allowance; you carry the overage risk. A third structure, rent abatement, trades free rent for you funding the construction yourself.
What do landlords require before releasing allowance money?
Typically draw documentation: invoices, lien waivers from the contractor and subs, proof of completion, and sometimes inspection sign-offs. The work letter in the lease spells it out. A contractor who produces clean draw paperwork keeps your reimbursements on schedule, and we build that paperwork into how we run the job.
What does a TI allowance usually not cover?
Furniture, trade fixtures, removable equipment and signage are typically excluded from allowance-eligible costs, which industrial landlord Link Logistics states plainly in its 2026 guidance. Plan those as a separate budget from the construction the allowance can reimburse.
How does a contractor help with the allowance negotiation?
We do not negotiate your lease, but we make the construction side concrete: a written scope, line-item pricing and a schedule you can attach to the work letter. When both sides see the real cost of the buildout, the allowance conversation becomes arithmetic instead of guesswork, and the walkthrough and estimate are free.
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