---
title: "Tenant improvement allowances: the working guide"
description: "TI is the largest contractual subsidy in any office lease. Here is how to size, structure, and protect it."
canonical: https://classa.info/guides/us-tenant-improvement-allowances-explained
pageType: guide
lastUpdated: 2026-04-01T00:00:00.000Z
license: "CC BY 4.0 with attribution to Class A Atlas (https://classa.info)."
---

> TI of $130-$200/sqft is current US Class A market on a 10-year deal.

## TL;DR

- TI of $130-$200/sqft is current US Class A market on a 10-year deal.
- Trophy lease-up can push to $250+ in this cycle.
- Over-allowance spend is amortised into rent — model the implicit interest rate.
- TI must be controlled by tenant or contractor on tenant's behalf to protect spend.
- Always include unused TI as a tenant credit in the LOI.

# Tenant improvement allowances: the working guide

By The [Class A](/glossary/class-a) Atlas Editorial Desk · 2025-09-01T00:00:00.000Z · 9 min read

**TI is the largest contractual subsidy in any office lease. Here is how to size, structure, and protect it.**

## TL;DR

- TI of $130-$200/sqft is current US Class A market on a 10-year deal.
- Trophy lease-up can push to $250+ in this cycle.
- Over-allowance spend is amortised into rent — model the implicit interest rate.
- TI must be controlled by tenant or contractor on tenant's behalf to protect spend.
- Always include unused TI as a tenant credit in the LOI.

## Sizing the ask

Start with a real [fit-out](/topics/fit-out-capex)">fit-out budget — not the brokered rule of thumb. A high-spec Class A office with [workplace strategy](/glossary/workplace-strategy), premium millwork, advanced AV, and acoustically tuned meeting rooms costs $200-$340 per square foot in major US markets. The TI ask should cover 60-80% of that.

In this cycle, $130-$200 per sqft is achievable on a 10-year Class A deal. Trophy lease-ups in soft markets (San Francisco, Chicago, parts of Los Angeles) push past $200.

## Over-allowance amortisation

If you spend more than the [TI allowance](/topics/us-tia-strategy), the excess is typically amortised into rent over the term at a stated interest rate. The interest rate is negotiable — landlords ask for 8-10%; the right answer is closer to a market commercial rate (5-7% in 2026). Always negotiate this rate explicitly in the LOI.

## Controlling the spend

The TI dollar moves in two ways: (1) the landlord builds, then bills against the allowance, or (2) the tenant builds, then is reimbursed against the allowance.

Tenant-controlled is materially better. The landlord-controlled approach often produces aggressive markups, slower delivery, and disputes over completion. Insist on a tenant-engaged general contractor with the landlord retaining only base-building approval rights.

## Unused TI

Unused TI should be repayable to the tenant as a free-rent credit at term commencement. Landlords often try to retain unused allowance — this is a negotiable point and should be flagged in the LOI.

## Editorial provenance

Reviewed by [**Class A Atlas Editorial Desk**](/about/authors/class-a-atlas-editorial-desk) — House byline · global editorial team. Last updated 2026-04-01. See our [methodology](/about/methodology) and [editorial standards](/about/editorial-standards).

### Primary sources for this page

- [CBRE Marketview reports](https://www.cbre.com/insights) — CBRE
- [JLL Office Insight](https://www.jll.com/en/trends-and-insights) — JLL
- [Cushman & Wakefield Marketbeat](https://www.cushmanwakefield.com/en/insights) — Cushman & Wakefield
- [Savills World Research](https://www.savills.com/research_articles/) — Savills
- [Colliers Global Office Outlook](https://www.colliers.com/en/research) — Colliers

[Full sources index](/about/sources) · [Submit a correction](/about/corrections)

## Related topics

- [**Class A Lease Negotiation**](/topics/class-a-lease-negotiation) — How to negotiate a Class A office lease — the playbook from LOI to signed deal.
- [**Fit-out Capex**](/topics/fit-out-capex) — How to budget, sequence, and govern Class A office fit-out capex.
- [**US TIA Strategy**](/topics/us-tia-strategy) — How to negotiate, draw down, and account for US tenant improvement allowances (TIA).

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Citation: Source: Class A Atlas (https://classa.info/guides/us-tenant-improvement-allowances-explained), updated 2026-04-01T00:00:00.000Z.