Tenant Improvement Manual 2025

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What are some creative ways to finance tenant improvements? Negotiate a TI allowance. Use a turnkey build-out. Apply for a SBA loan. Leverage a leasehold improvement loan. Be the first to add your personal experience. Explore a sale-leaseback transaction. Heres what else to consider.
Per-Square-Foot Basis: Many leases calculate TIAs based on a per-square-foot basis. This involves multiplying the agreed-upon per-square-foot allowance by the total square footage of the leased space. For example, if the TIA is $10 per square foot, and your space is 2,000 square feet, your TIA would be $20,000.
When the tenant owns the improvements, they should record the TIA as an incentive or tenant inducement, treat it as a capital expenditure, and amortize the amount spent over the rental term. Salvage value is not included in the depreciation calculation, since the landlord will take over any remaining assets.
So what exactly is a tenant improvement? The real estate definition of a TI (tenant improvements) is the customized alterations a building owner makes to rental space as part of a lease agreement, in order to configure the space for the needs of that particular tenant.
The most common examples of tenant improvements include improving and/or changing the following: Flooring or Carpeting (e.g. Tile) Lighting Enhancements and Ceilings.
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Renovation may involve a complete overhaul of both the interior and exterior of the building, possibly including the construction of new additions to the existing structure. By contrast, tenant improvement projects generally focus on the interior of a commercial space and rarely involve expansion.

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