Are you considering leasing a commercial space for your healthcare practice? A tenant improvement allowance (TIA) may be something that you can negotiate with the landlord. But what is a TIA and how does it benefit you as the tenant? Let’s break it down and understand how this allowance works in commercial real estate.
What Is A Tenant Improvement Allowance?
A tenant improvement allowance is an amount of money landlords will give tenants to help them improve the property they are leasing.
What Can You Do With A Tenant Improvement Allowance?
The most common use for TIAs is completing necessary repairs or renovations before moving into a new space. These repairs include installing new flooring, painting walls, and updating fixtures or electrical outlets. Some landlords may also allow tenants to use their TIAs towards more permanent improvements, such as adding office partitions or purchasing furniture for the space. In some cases, TIAs may even be used to build out additional rooms within an existing structure if approved by the landlord beforehand.
Who Pays For The Remainder Of The Improvement Costs if they Exceed the TIA?
If additional costs are associated with making improvements beyond what was agreed upon in the TIA and lease agreement, then the tenant typically pays those costs. This could include any materials or labor needed to complete the project that exceeds the agreed-upon amount. It’s important to note that this type of cost will vary depending on each situation, so discussing all potential expenses before starting any project is best.
Commercial Real Estate Brokers Can Help You Negotiate Tenant Improvement Allowances
Tenant improvement allowances are becoming increasingly popular in commercial real estate leases as they provide numerous benefits for landlords and tenants alike. By having an agreed-upon sum available for making necessary renovations or repairs during occupancy, landlords can ensure that their properties remain up-to-date while offering tenants more flexibility when customizing their spaces according to their needs.
Don’t travel these roads alone! Working with a commercial real estate broker can be of substantial help when it comes to the negotiation process and ensuring that you get exactly what you need from your tenancy agreement without any unpleasant surprises down the road.
About HBRE
Headquartered in Nashville, Tennessee, HBRE is a full-service commercial real estate firm specializing in healthcare real estate. With over 50 years of combined industry experience serving 28 states across the U.S., we deliver exclusive healthcare solutions so you can provide the best patient care.
