modern dentist office with frosted glass walls

TI Allowance and Lease Renewal – Why It’s Worth Engaging a Broker

Clients frequently ask me if they can receive money from their landlord to help them update or refresh their space. The answer is yes, and it’s a lot more than you might imagine.

The money is known as the tenant improvement (TI) allowance and it’s negotiated by a broker on behalf of the tenant in the initial lease to cover some of the construction costs.

It’s negotiated in renewal to cover any upgrades a tenant might want for their original space.

Last fall, for example, a client contacted us since her renewal was approaching; she wanted to know more about the process, such as what to expect, how it looked, and so on. And her lease was set to expire in approximately a year. As we mentioned in this article, it was perfect timing.  

Her practice was thriving, so she wanted to stay in the same location, but the office was outdated. She simply wanted to freshen it up, and I was able to get her a substantial TI – over $75,000 – through the renewal process. She was able to replace the flooring as well as the cabinetry. With the money, she also painted the walls, which turned out beautifully. The renovations breathed new life into the area.

The story is the same in another deal I’m working on. The doctor’s office is in a grocery-anchored building north of Austin, which is a fantastic location. She’s been there for 18 years and wants to extend her contract for another 10.

Her current flooring is outdated, and she wants to replace it. We’re currently at around $33,000 to assist her with updating her space with the support of TI. Although this deal is not quite finished yet, it’s on its way.

In both cases, I have 

  • Drafted a renewal LOI with basic terms 
  • Made some significant TI requests, all within the range of what I thought my client could obtain
  • Negotiated with the landlord – my clients never lifted a finger
  • Assisted my clients in signing renewal agreements on successful spaces that included significant free money from the landlord, allowing them to upgrade and expand the space for their business

Every deal will be different in terms of where to begin discussions and what to keep in mind in terms of the big picture. Having said that if

  • Your practice is succeeding in the space you’re in
  • You have less than two years left on your lease
  • You’re looking to upgrade your space