Tenant Improvement (TI) Allowance

A Tenant Improvement (TI) allowance is a sum of money that the landlord contributes toward the tenant's fit-out costs, typically as a rent-free period, a direct capital contribution, or a combination of both. It is a common commercial negotiation point in long-term office leases, particularly for large or anchor tenants who bring prestige and lease certainty to a building.

In Indian Grade A markets, TI allowances are becoming more common in competitive leasing environments or where a building is newly constructed and the landlord wants to attract a marquee tenant. Common structures include: 3–6 months rent-free at lease commencement, or a direct fit-out contribution of ₹300–₹600 per sq ft of carpet area. TI negotiation is most effective when the tenant has a well-defined fit-out brief and can demonstrate exactly what the contribution will fund. Always get TI terms in the heads of terms before engaging a fit-out contractor.

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