If you are in the market for new Commercial Space for your business, a tenant allowance is the amount the landlord is willing to spend so that a new tenant (you) can retrofit or renovate the commercial space. We usually express this as a Dollar amount per square foot.
This can help assist with the capital costs when opening a new business or changing locations.
Often the Tenant Allowance will be offset in your lease rate per square foot, and the amount of the allowance will tie into the duration of your lease term. The longer the term, the more willing a landlord is going to be in providing a larger Tenant improvement Allowance.
If you do not negotiate a Tenant Improvement Allowance, you may be able to negotiate a more advantageous lease rate for the term of your lease. If you are provided a Tenant Improvement Allowance, we often see a higher $/Square foot.