How does TI allowance affect effective rent?

$50/sf TI allowance amortized over a 10-year lease at 7% discount rate = approximately $5.80/sf annual rent equivalent. Effective rent = face rent − TI amortization.

What is a typical TI allowance?

Varies widely by market and asset class: $20–$60/sf for standard office, $80–$150/sf for high-end downtown, $10–$30/sf for industrial, $15–$50/sf for retail.

TI allowance vs free rent — which is better for tenant?

Depends on build-out needs. TI funds actual construction. Free rent provides cash flow benefit if tenant is already fit-out. Tenants needing build-out prefer TI; existing space tenants may prefer free rent.

TI Allowance Amortization Calculator

Calculate effective rent after amortizing tenant improvement allowance over the lease term. TI allowance effectively reduces net rent. Compare deals with different TI and rent combinations on NPV basis.

Principal ($)

Annual Rate (%)

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Compounding / Year

$ Finance Disclaimer: These calculators are for educational and illustrative purposes only. Results do not constitute financial advice. Consult a licensed financial advisor before making investment or borrowing decisions.

How to Use

Enter the values for the scenario you are assessing. Calculate effective rent after amortizing tenant improvement allowance over the lease term. TI allowance effectively reduces net rent. Compare deals with different TI and rent combinations on NPV basis. Use the ti allowance amortization result to inform your calculation.

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TI Allowance Amortization Calculator

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Frequently Asked Questions

How does TI allowance affect effective rent?

What is a typical TI allowance?

TI allowance vs free rent — which is better for tenant?