A tenant improvement allowance is a landlord’s agreed contribution toward preparing or altering a leased space for a tenant’s use.
How it works in retail
The lease determines eligible work, approval requirements, payment timing and any conditions. An allowance may reimburse costs rather than provide money before construction.
A retail example
A landlord agrees to contribute a specified amount toward a shop’s approved flooring, lighting and fitting-room work.
What to keep in mind
The allowance may not cover the full fit-out, and unused funds may not be payable to the tenant. Review the actual scope and reimbursement conditions.
Sources & further reading
ICSC: Tenant improvement allowance discussion
Examples are illustrative. Terminology and measurement conventions can vary by business and market.