What a Tenant Improvement Allowance Actually Covers

A tenant improvement allowance is money the landlord contributes toward finishing your space. It is one of the most negotiable terms in a commercial lease and one of the least understood, because the headline number rarely equals what you actually receive.

Typical DFW allowance ranges in 2026

• Second-generation retail: $15 to $60 per square foot
• Office: $30 to $90 per square foot
• Restaurant or medical, where the landlord wants the anchor tenant: $40 to $120 per square foot

Those are the ranges we see in 2026 DFW deals. They move with vacancy: a landlord carrying empty space competes harder, and a longer lease term buys a larger allowance because the landlord amortises it over more months of rent.

The allowance rarely covers the whole build

For a light refresh the allowance can cover everything. For a full finish-out it usually does not. If your allowance is $40 per square foot and your scope prices at $135 per square foot, the $95 difference is yours, and it is better to know that before you sign than after demo.

This is the single most common way a business gets surprised. The lease gets negotiated on rent and term, the allowance is accepted as a nice-to-have, and nobody prices the actual build until the space is already committed.

How allowances are actually paid

Most allowances are reimbursed, not advanced. You pay the contractor, submit lien waivers and paid invoices, and the landlord reimburses against them, often only after the certificate of occupancy is issued. That means you finance the build in the interim, which is a cash-flow question your lender or your reserves need to answer up front.

Some landlords pay in draws against progress. Some deduct a construction-management fee for the privilege of administering their own allowance. Both are negotiable, and both are easier to negotiate before signature than after.

What usually falls outside it

• Furniture, fixtures, and equipment, unless the lease says otherwise
• Signage and storefront work, which often needs separate approval
• Anything the landlord classifies as a trade fixture you will remove
• Cost overruns above the allowance cap, which are always yours
• The landlord's own construction-management fee, where one applies

Negotiate against a real number

The strongest position in an allowance negotiation is an itemised scope and budget in hand. It converts the conversation from a guess into arithmetic: here is what the space needs, here is what it costs, here is the gap. Landlords respond to that far better than to a request for more money.

We give you that scope and budget early enough to use it, before you sign, not after. Free site walk, no commitment. If the numbers say the space is wrong for your budget, that is a useful answer too.

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