Q4 Real Estate’s Craig Byers and Luke Rogers bring you another informational video featuring a short and simple question and answer session covering TIA (Tenant Improvement Allowance).
(Craig) Hey everybody! This is Craig Byers and Luke Rogers here with Q4 Real Estate and today we are going to talk about TIA.
(Craig) So Luke I have a couple questions regarding TIA to ask you. So first question is, what does TIA stand for?
(Luke) So Craig, TIA stands for tenant improvement allowance. A tenant improvement allowance is money given to the tenant by the landlord to help them build out their space or pay to help them build out their space.
(Craig) What can that money be used for within the tenant’s space?
(Luke) Tenant improvement allowance can be used toward lighting, paint, drywall, flooring, electrical systems, etc.
(Craig) Can it be used for other things such as FF&E and things like that?
(Luke) In certain circumstances the tenant improvement allowance can be used towards fixtures, furniture and equipment such as ovens, furniture such as chairs and tables and any IT work.
(Craig) How is that tenant improvement allowance usually paid back?
(Luke) It is usually amortized over the duration of the lease so a certain amount will be added to the base rent the tenant usually pays for the space. In some circumstances the tenant improvement allowance is given to the tenant, as an incentive from the landlord.
(Craig) Why is a tenant improvement allowance necessary? Why doesn’t the tenant just use their own money to pay for the buildout?
(Luke) So a lot of tenants need the capital up front. They are more focused on running their business rather than building out their space, so it is nice to get that little chunk of change from the landlord right away.
(Craig) Nice, alright, well you are very well versed in tenant improvement allowance Luke.
(Craig) If anyone has any other questions about that, feel free to reach out to Luke. You can reach him at 319-294-3339. Everybody have a great weekend!
You can watch the informational video, Tenant Improvement Allowance below.
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For more helpful information check out our blog post titled: An NNN Lease Versus a Gross Lease: What’s the difference?
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