Am I ready to negotiate a tenant allowance?

In terms of leasing a commercial property, negotiating a tenant allowance is a vital part of the equation. Here are some tips to consider when working with a landlord on a tenant improvement allowance:

  • Learn the current local market norms

Before you discuss or negotiate with your landlord, take time to familiarize yourself with the current market norms in terms of tenant improvement allowances in your area. By doing so, you will get an idea of the typical amount and terms that landlords are willing to offer. You will be able to negotiate more effectively.

  • Determine your needs

Know your specific needs and requirements for the space you are leasing in terms of layout, design, and functionality. Determine the estimated cost of the upgrades and modifications required.

  • Present a plan

Prepare a well-documented plan which includes the benefits of the improvements in line with your business needs. Be ready to present this to the landlord. During the negotiation process, make sure to discuss the allowance amount, payment terms, restrictions imposed by the landlord, and the scheduling of the renovation.

  • Put in writing all agreement terms

It’s important that everything you and the landlord have agreed upon, is properly written and documented in detail. The agreement should outline any specific requirements or conditions, the amount of the allowance, the scope of improvement, the payment schedule, and all the other important terms. Don’t allow the landlord to make promises by mouth. Everything has to be put in writing to prevent any confusion or misunderstanding from happening.

  • Take control of the construction process

As much as possible, exercise a greater degree of control over the construction process. You need to be the one to coordinate with contractors and other professionals who will do the renovation. This means more work, but it allows you to direct the improvement process to meet your requirements.

  • Negotiate firmly

Don’t think of the tenant improvement allowance as a gift or favor from your landlord. Think of it as something you’re entitled to. Don’t hesitate to express your thoughts based on your needs and requirements. Negotiate firmly but politely. Always do your homework so you can negotiate effectively.


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