For any build-out of Tenant space, leases typically contain a “Work Letter” exhibit that spells out the amount of the Tenant Improvement Allowance and the details of who will hire the architects, engineers and general contractor, who will manage the construction, the process for mutual approval of plans, the consequence of delays…
Landlords sometimes offer Tenants a “Turnkey” build-out of their desired layout. In this arrangement, the Landlord and Tenant mutually agree upon a space plan and the Landlord then hires, supervises and pays the architect, engineer(s) and general contractor to deliver the space to the Tenant. Under this arrangement, the Landlord assumes the management and schedule risk and the Tenant is…
With new office construction, a Landlord often installs the building’s common areas including lobby, restrooms and interior hallways. However, a Landlord may leave future tenant spaces in “Shell Condition,” with no interior build-out. This Shell Condition presents opportunities, challenges and risks for the prospective new Tenant.
Unless a space is specifically offered “As-Is,” Landlords typically provide some sort of “TI Allowance” that is typically a dollar allowance per square foot as part of the lease package offered to Tenants. The amount of TI Allowance that a Landlord is willing to offer a Tenant depends upon several factors including the length of the lease term, the Tenant’s credit strength, the vacancy rate in the building.
Often a “Tenant Improvement Allowance” or “TI Allowance” is provided by a Landlord to be used to reconfigure an office space to better suit a Tenant’s specific needs. This can be as minor as adding new paint and carpet to spruce up a tired space or as extensive as the full build-out of office space from a “Shell Condition.”
