TI Allowance (Tenant Improvement Allowance)

TI allowances are a core negotiation lever in office, retail, and industrial leasing, particularly for new tenants requiring significant buildout — landlords fund some or all of construction costs (often via a landlord's construction draw process) in exchange for the tenant's committed lease term, effectively financing the buildout and recovering the cost through rent over the lease.

The amount varies enormously by market, asset class, and lease term — a longer lease term or stronger tenant credit typically justifies a larger TI allowance, since the landlord is amortizing that cost over a longer, more certain income stream. Unused TI dollars, treatment of costs above the allowance, and whether the tenant or landlord controls the construction contract are the recurring points of negotiation.

Cannabis tenant buildouts (vault construction, security systems, C1D1 extraction rooms, specialized HVAC) are typically more expensive per square foot than conventional retail or office buildout, and because conventional TI financing assumptions don't map cleanly onto cannabis-specific construction costs, TI negotiations on cannabis leases often run alongside a broader conversation about who bears specialized buildout risk if the tenant's license is delayed or denied.