What Is TI Allowance (Tenant Improvements)?
Tenant improvement allowance, usually shortened to TI, is money the landlord contributes toward customizing a commercial space for a new tenant. It is one of the most negotiated items in Salt Lake City commercial leases, and a well structured TI package can make the difference between a space that works for the business and one that limps along from day one.
The mechanics are simple. A lease specifies a TI allowance, typically quoted as a dollar figure per square foot. A $40 per foot TI on a 3,000 square foot suite is $120,000 the landlord will spend to build out the space. Work that exceeds that amount becomes the tenant’s cost. Work that falls under that amount usually stays with the landlord or, in some leases, converts to free rent or additional services. The quality of the buildout depends heavily on both the allowance amount and what that allowance actually covers.
TI covers different scopes in different leases. A turnkey buildout delivered by the landlord means the tenant walks in with everything complete: walls, flooring, ceilings, lighting, HVAC modifications, millwork, and paint. A cash TI allowance reimbursed to the tenant lets the tenant manage the buildout themselves, which offers more control but more work. A cold shell delivery means the landlord delivers a basic structure with no interior finish at all, and the tenant does everything.
Market TI levels vary across the Salt Lake City commercial market. Silicon Slopes office space targeting tech companies often sees TI packages in the $60 to $100 per foot range for second generation space and even higher for first generation. Downtown Salt Lake City Class B office runs $30 to $50 per foot. Industrial flex along 5600 West or in West Valley tends to see $5 to $15 per foot for second generation space, reflecting the simpler buildout needs. Retail varies widely based on concept and location.
Longer leases earn larger TI packages. A 10 year lease supports more landlord investment than a 3 year lease, because the landlord amortizes the TI cost across more years of rent. Tenants asking for rich TI on short term leases usually get pushed back, either with lower TI or with higher base rent to compensate. The math tends to land where total landlord economics support the overall deal.
What TI covers matters as much as how much it is. Some landlords include permit fees, architect costs, and general contractor overhead inside the TI number. Others carve those out, which can surprise tenants when a $50 per foot TI ends up only covering $42 of actual construction. The lease should be clear on what is inside and outside the allowance, including whether excess TI can be amortized as additional rent over the lease term.
Utah specific factors affect TI in older buildings. Seismic retrofit requirements, ADA upgrades for older spaces, and utility capacity limitations can all drive buildout costs well above what tenants initially expect. Omada Commercial, recognized as top commercial realtors in Salt Lake City, walks tenants through realistic TI modeling before lease signing, so the allowance matches what the space actually needs to serve the business. Negotiating TI well is one of the highest value services a tenant rep provides across the Wasatch Front.
