How to Make the Most of Your Tenant Improvement Allowance

When you sign a lease on a commercial office — either for a new space or a renewal — the lease often includes a tenant improvement allowance. This is money that the landlord agrees to invest in the space to make sure it works well for you. It typically covers space design and construction but is rarely generous enough to get you much more than building standards. So how can you get the most bang for your buck? With years of tenant improvement design work experience, we’ve found the best ways to maximize your TI dollars — while still getting a design you love.

Focus Your Impact

Spend your tenant improvement (TI) money on big impact elements or spaces. For example, focus on spaces that clients see or will help with employee engagement and retention. These include reception areas, conference rooms, or other client-facing spaces. To make a splash for your employees, create a great café or lounge space for your team. Remember that you don’t have to spend lots of money everywhere. Choose your moments.

The corollary to this is to use building standards whenever possible. For example, use the doors and light fixtures provided by your landlord. That way, they won’t come out of your budget. Likewise, if the previous tenant left lights that work with your design, use those. You can often re-lamp existing lighting fixtures or retrofit them for a lower cost than buying something new.

You also want to consider your finish-level closely. For example, do all spaces need quartz countertops? Or can you put those in higher-traffic spaces (see above) and utilize laminate countertops for less-used spaces? Put your energy — and money — where it will have the most impact.

Minimize Cabinetry

How much storage space does your kitchen really need? Instead of upper cabinets, consider using shelves, so the space still creates impact. Under the island, consider keeping the space open — especially if you really just need the counter space.

In general, utilize furniture instead of millwork wherever you can. This includes the reception desk, kitchen island, etc. Furniture is typically less expensive (unless you’re ordering the really ritzy stuff). This is because it’s manufactured and doesn’t have to be made custom, just for you. Furniture is also generally more cost-effective, because it can be deducted from your taxes. And while most TI allowances don’t cover furniture, purchasing furniture instead of building cabinetry frees up your budget for more buildout and better finishes.

Think Multi-Purpose

The shape of offices promises to change in unexpected ways over the next couple of years. How many of your employees will be returning to work post-COVID? How many will want to stay working from home? As you look at your office, think about how the space design can be flexible and serve multiple purposes. Do you really need as much space as you used to? (Hint: use our online space calculator to help figure out the spaces you really need.)

One great way to maximize your tenant improvement allowance is to shift from closed offices to a more open plan. The fewer walls you have to build, the more money you have available for furniture, better finishes, and other points of drama. Obviously, open plans don’t work for all businesses, and many have been moving away from them in recent years. The point is to think creatively about how to get the most value out of your space design. As you do this, be sure to also allow for growth over time. Build out only what you need now, and identify where within the space to plan for future growth.

Maximizing Your Tenant Improvement Allowance

Using your TI dollars effectively is critical to making your space work for your business and employees. Whether or not you’re planning to move when your lease ends, it’s a good time to reevaluate your workspace goals. Not sure where to start? Contact us to begin planning your next steps.