Tenant Improvement Rent Bump Calculator

When a tenant wants extra TI beyond what the landlord will fund outright, the common solution is an amortized rent bump — treated like a loan priced at the landlord's required return. This calculator sizes that bump per SF per year so both sides agree on the economics upfront.

Additional TI funded by landlord / SF

Leased SF

Lease term (years)

Recovery rate

Rent bump / SF / year to recover TI

$2.90

Annual rent bump

$28,960

Monthly TI amortization

$2,413

Total paid back over term

$202,722

Interest / return component

$52,722

Total TI funded

$150,000

How the math works

When a landlord funds TI above the standard allowance, the cost is typically recovered by adding a rent bump — TI amortization + return — that carries through the lease term. This calculator sizes the rent bump per SF per year for a requested recovery rate.

Recovery rate should be above the landlord's cost of capital — typically prime + 3-4% or the construction loan rate. Keeping it at a blended cost keeps the arrangement fair to both sides.

How to Use

Enter additional TI funded by landlord per SF.
Enter leased SF and lease term.
Enter the recovery rate (landlord's return on capital).
Read the rent bump per SF per year.

Frequently Asked Questions

When is this used?

Tenant needs $80/SF buildout but landlord will only fund $45/SF standard. The extra $35/SF gets amortized into rent — tenant effectively borrows from landlord at the recovery rate.

Typical recovery rates?

Institutional landlords: 8-10%. Development-focused owners: 10-12%. It should exceed the landlord's cost of capital — below that, the landlord is subsidizing the deal.

Can the tenant pre-pay?

Usually not — the rent bump is embedded in base rent and runs the full term. If the tenant exits early, remaining amortization is typically recovered as a termination fee.