Tenant Improvement Allowance Calculator
Calculate TI build-out costs, landlord allowance coverage, and out-of-pocket expenses.
About this calculator
The Tenant Improvement Allowance Calculator compares what a landlord has offered per square foot against what your build-out is actually estimated to cost, to show whether you'll come out even, ahead, or with an out-of-pocket gap to cover. Total TI Allowance and Total Build-Out Cost are both simple products of Leasable Area against their respective per-square-foot rates, so Leasable Area scales both figures together — a bigger space raises the allowance and the build-out cost in lockstep, which is why neither Out-of-Pocket Cost nor Unused Allowance moves in a fixed proportion to square footage alone.
TI Allowance is the input that most directly shrinks Out-of-Pocket Cost, since every additional dollar per square foot the landlord contributes offsets the build-out cost dollar for dollar, while Actual Build-Out Cost, Lease Term, and Base Rent each only affect their own downstream outputs — build-out cost feeds Out-of-Pocket and Unused Allowance, while Lease Term and Base Rent only enter Amortized Monthly, Effective Rent Reduction, and TI as % of Lease Value. This calculator treats the TI allowance and build-out cost as flat per-square-foot rates agreed up front — it doesn't account for change orders, landlord approval delays, allowance clawback clauses if you vacate early, or the common real-world case where actual construction bids come in above the original estimate used here.
Inputs
Results
Total TI Allowance
$120,000.00
≈ 8 used cars
Total Build-Out Cost
$165,000.00
≈ 11 used cars
How to Use This Calculator
- Enter Leasable Area in square feet and TI Allowance per SF offered by the landlord.
- Set Actual Build-Out Cost per SF based on contractor estimates for your planned improvements.
- Enter Lease Term in months and Base Rent per SF per year for context.
- Review Total TI Allowance vs. Total Build-Out Cost to see your Out-of-Pocket cost.
- Check Amortized Monthly to understand the effective cost per month of tenant improvements.
- Use Effective Rent Reduction per SF to compare net rent across leases with different TI packages.
How the result changes with Leasable Area
| Leasable Area | Total TI Allowance | Total Build-Out Cost |
|---|---|---|
| 1,500 | $60,000.00 | $82,500.00 |
| 2,250 | $90,000.00 | $123,750.00 |
| 4,500 | $180,000.00 | $247,500.00 |
| 7,500 | $300,000.00 | $412,500.00 |
What each input means
- Leasable Area
- Total leasable square footage of the space.
- TI Allowance
- Landlord-provided tenant improvement allowance per SF.
- Actual Build-Out Cost
- Estimated actual build-out cost per SF.
- Lease Term
- Total lease term in months.
- Base Rent
- Base rent per square foot per year for lease value context.
How this is calculated
Worked example, using the default values
- Identify Input Parameters5 parametersLeasable Area = 3000, TI Allowance = 40, Actual Build-Out Cost = 55, Lease Term = 60, Base Rent = 30 = 5 input(s) provided
- Calculate Total TI AllowanceTotal TI Allowance120000 = $120,000
- Calculate Total Build-Out CostTotal Build-Out Cost165000 = $165,000
- Calculate Out-of-Pocket CostOut-of-Pocket Cost45000 = $45,000
- Calculate Unused AllowanceUnused Allowance0 = $0
Engine last updated . Checked against 2 independently-derived tests — how we verify calculators. Built by Paul Gunder, a software engineer, not a licensed financial, medical, or legal professional.
Frequently Asked Questions
What happens if my build-out costs more than the landlord's TI allowance?
When Actual Build-Out Cost per square foot exceeds the TI Allowance per square foot, the difference shows up as Out-of-Pocket Cost — the amount your business needs to fund directly, whether from cash reserves, a loan, or by negotiating a higher allowance before signing the lease. This gap is common in build-outs with specialized fixtures, higher-end finishes, or unusual layout requirements that exceed a landlord's standard allowance offer for the space type.
What if the landlord's allowance is more than I actually need to spend?
If TI Allowance per square foot exceeds Actual Build-Out Cost per square foot, the calculator reports the difference as Unused Allowance rather than a refund — most commercial leases specify the TI allowance can only be applied to defined categories of build-out work, and typically don't pay out unused amounts as cash to the tenant. Confirm your specific lease's TI allowance terms before assuming any unused portion is available for other purposes.
How does amortized monthly TI cost help me compare lease offers?
Amortized Monthly spreads Total TI Allowance evenly across the Lease Term in months, giving you a rough sense of the allowance's value on a monthly basis comparable to rent, which is useful when a landlord frames a TI offer as 'free' rent-equivalent value. Comparing this figure alongside Effective Rent Reduction per square foot lets you weigh a lease with a smaller TI allowance and lower base rent against one with a larger TI allowance and higher base rent on more equal footing.
Why does lease term affect TI as a percentage of lease value but not the allowance itself?
Total TI Allowance is fixed once Leasable Area and the TI rate per square foot are set — Lease Term doesn't change that dollar amount at all — but TI as % of Lease Value divides that fixed allowance by Total Lease Value, which does grow with a longer term since you're paying rent for more months. A longer lease term therefore makes the same TI allowance look like a smaller percentage of the overall lease value, even though the allowance amount itself hasn't changed.
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