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Tenant Improvement Allowance Calculator
Tenant improvement (TI) allowance is the landlord-funded build-out budget delivered as part of the lease. It's amortized over the lease term and effectively converts to a rent reduction. This calculator sizes total TI, the per-year amortized cost, the percent it consumes of contract rent, and how many months of base rent it takes to recoup — letting both landlords and tenants pressure-test the deal.
$30-100/SF typical office
Total TI allowance
$520,000
TI amortized / yr
$74,286
TI as % of total rent
29.02%
TI payback (years of rent)
2.03
TI as % of PV rent
39.01%
How the math works
TI (tenant improvement) allowance is the landlord's contribution to building out tenant space — paid as construction progresses. It's amortized over the lease term and effectively becomes a rent reduction. A $65/SF TI on 8,000 SF over 7 years = $520K total, recovered through ~28% of contract rent.
Tenants who need build-out beyond TI pay an 'overstandard' charge. Landlords who give too much TI relative to lease term destroy lease economics.
EveryCalc calculators are designed for fast, practical estimates with transparent inputs and no required account. We use plain formulas, visible assumptions, and related tools so visitors can check the result from more than one angle.
Results are informational only. For financial, tax, legal, medical, construction, or other high-impact decisions, verify the output against primary sources or a qualified professional.
Learn more about our review process on the EveryCalc methodology page.
How this calculator works
What this page estimates
This Tenant Improvement Allowance Calculator is built to give a quick, browser-based estimate for tenant improvement allowance. Tenant improvement (TI) allowance is the landlord-funded build-out budget delivered as part of the lease. It's amortized over the lease term and effectively converts to a rent reduction. This calculator sizes total TI, the per-year amortized cost, the percent it consumes of contract rent, and how many months of base rent it takes to recoup — letting both landlords and tenants pressure-test the deal. The inputs stay on the page during normal use, and the result should be treated as an estimate for planning, comparison, or education rather than professional advice.
Calculation approach
The calculator applies the standard relationship implied by the inputs, then formats the answer so it can be checked and reused. For finance tools, the most important step is using consistent units, rates, time periods, and assumptions before comparing the result with another calculator or outside quote.
Example workflow
For example, start with a realistic value you already know, change one input at a time, and watch how the answer moves. That makes it easier to tell whether the result is being driven by the main amount, the rate, the time period, or a unit conversion.
Practical checks
- Use current, real-world numbers when the result affects money, health, tax, or legal decisions.
- Run a low, base, and high case when the inputs are estimates.
- Check the related calculators below when the next decision depends on a different assumption.
How to interpret the tenant improvement allowance result
Best use
Use the result as a planning number for comparing payments, rates, returns, tax reserves, or cash-flow choices before you request a quote or make a commitment.
Cross-check
Compare the answer with the contract, lender estimate, tax form, brokerage statement, payroll record, or invoice that will control the real-world outcome.
Watch for
Do not rely on a single optimistic rate, return, or fee assumption. Money pages work best when you run low, base, and high cases and keep professional advice separate from the estimate.
This page belongs to the Finance calculator library, so the answer should be read in the context of the decision you are modeling rather than as a universal rule.
Before relying on this tenant improvement allowance estimate
Most calculator mistakes come from the inputs, not the arithmetic. Use this short audit before you reuse the answer in a spreadsheet, quote, application, or important conversation.
Confirm source numbers
Match balances, rates, fees, taxes, income, and payment dates against the lender quote, payroll record, tax form, statement, invoice, or contract.
Separate cash flow from total cost
A lower monthly payment can still cost more over time if fees, interest, taxes, or a longer term are hidden in the structure.
Run conservative cases
Test at least one higher-cost or lower-return case before using the output for a purchase, refinance, investment, loan, or tax decision.
Rerun this page when the rate, price, term, fee, tax rule, income, expense, or expected holding period changes.
How to Use
- Enter rentable SF, TI per SF, lease term, and base rent per SF.
- Enter the landlord's discount rate (8-10% typical).
- Read total TI, amortized annual cost, TI as a percent of rent, and PV impact.
Frequently Asked Questions
Typical TI ranges?
Office second-gen $20-40/SF; first-gen and gut $50-100/SF; medical and lab $100-300/SF; warehouse $5-20/SF; retail $20-60/SF.
Who controls the construction?
Landlord-led ('turnkey') is common for shorter terms; tenant-led ('TI/check') for tech and creative office where tenant designs the space.
Unused TI?
Some leases let unused TI convert to rent abatement; others forfeit it. Negotiate convertibility upfront.
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Tenant Improvement Allowance Amortization Calculator
TI allowance amortization — recovery of tenant improvement allowance over base lease term as rent premium.
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