A landlord’s per-square-foot allowance rarely covers a build-out exactly — the shortfall either comes out of the tenant’s pocket or gets amortized into the rent.
How it works
The landlord’s total allowance is the leased square footage times the per-square-foot rate. Whatever the actual build-out cost exceeds that allowance is the shortfall, which can be amortized into monthly rent over the lease term as an alternative to a lump-sum tenant payment.
What this does not include
An amortized shortfall typically carries interest when a landlord fronts the cost — this calculator’s straight-line monthly figure doesn’t include that financing cost, which a real lease amendment would likely add.
How to use this calculator
- Enter leased square footage and the landlord’s allowance per square foot.
- Enter the actual build-out cost and lease term.
Frequently asked questions
Who typically pays a TI shortfall?
It’s negotiable — the tenant can pay cash upfront, or the landlord can front the amount and recover it through higher rent over the lease term, which is what the amortized figure here estimates.
Is the TI allowance the same for every tenant?
No — it varies by market, building class, lease term length, and tenant creditworthiness; a longer lease commitment often justifies a higher allowance.
What happens to unused TI allowance?
Depends on the lease — some allow the tenant to apply unused allowance toward rent credits, while others simply forfeit anything not spent on qualifying improvements.
