Full Definition
A Tenant Improvement (TI) allowance is the capital the landlord contributes toward a tenant's buildout of leased space. Typically quoted per square foot (e.g., $40/SF). Higher TI = tenant pays less out of pocket but landlord recoups through higher rent. TI is common in office and multi-tenant retail; less common in NNN single-tenant (tenants fund their own buildouts).
Related Terms
CapEx (Capital Expenditures)
One-time investments to improve, replace, or extend the useful life of a property — roof replacement, HVAC, parking lot.
NNN Lease (Triple Net Lease)
A commercial lease where the tenant pays property taxes, insurance, and maintenance on top of base rent — making the landlord's income almost entirely passive.
Free Rent / Rent Abatement
Period at lease start when tenant doesn't pay rent, used to offset buildout costs or attract tenants.