What is a Tenant Improvement Allowance?

9 Jul 2020 Custom Building

If you are thinking about moving into a new office space in the near future, chances are that you will have a list of renovations that will need to be completed in order to make the space fully functional for your business. Knowing what a tenant improvement allowance is before you sign a lease will help ensure that you have enough money budgeted to complete the necessary renovations. At Twin Maple Construction, they want to ensure that your office space works well for your unique requirements. That is why they offer a range of commercial construction services for tenant improvements.

Tenant Improvement Allowance

A tenant improvement allowance is money provided to the tenant from the landlord in order to help pay for improvements to the space or, in some cases, other expenses associated with moving into a new space. The amount of the tenant improvement allowance will often be negotiated into the lease, along with a detailed outline of what the money can be spent on. In most cases, a tenant improvement allowance does not have to be repaid to the landlord.

What Does a Tenant Improvement Allowance Cover?

Landlords will usually only allow a tenant improvement allowance to pay for improvements that will be left behind once the tenant leaves, as these improvements will directly benefit the landlord. Some other costs that are necessary to the build-out process, such as a construction management fee, can also be covered by a tenant improvement allowance; however, items that will not be directly beneficial to the landlord will need to be defined within the tenant improvement section of the lease to ensure that they will be covered.

Some of the improvements that will be covered by a tenant improvement allowance include:

  • Framing
  • Walls
  • HVAC
  • Electrical
  • Plumbing
  • Doors
  • Windows
  • Paint
  • Flooring

What is Not Covered by a Tenant Improvement Allowance?

Since landlords are unlikely to allow the tenant improvement allowance to be used on miscellaneous expenses, it is important to outline what other expenses will need to be paid for under the tenant improvement section of the lease. Some of the items that can be covered by a tenant improvement allowance, if outlined in the lease, include:

  • Furniture
  • Fixtures
  • Equipment
  • Electronic equipment
  • Data cabling
  • Moving expenses

If you would like to learn more about what a tenant improvement allowance is, or if you are interested in their tenant improvement construction services, please contact Twin Maple Construction at 604-854-6790 or by filling out a contact form on their website.