6 lessons worth learning about tenant improvements comparison

There are four ways a space gets built for you, and they are not four prices for the same thing. A tenant improvements comparison that runs on mechanism, not on rate, asks who holds the drawings, who carries the overrun, when the money moves, and who owns the walls at the end.

Each route puts the work in different hands. A landlord's in-house project team, or outside managers at CBRE or JLL, can run the build. You can hire an interiors contractor instead: Structure Tone, HITT Contracting and Shawmut Design and Construction all build commercial interiors. Or nobody builds at all.

Rates move by city. The machinery does not, and the sections below run through it.

What to take away

The four routes, and who builds each one

Landlord builds to your design. You produce or approve drawings; the landlord contracts and manages the work and hands you a finished space. The landlord's own project team, or an outside manager such as CBRE or JLL, runs the job. You approve the specification rather than direct it.

Landlord contributes and you build. You hold the contract with the builder, often an interiors contractor such as Structure Tone, HITT Contracting or Shawmut Design and Construction. The landlord pays an agreed contribution against evidence of spend, usually in arrears after each draw.

You take it as it is. The landlord does nothing, and the deal reflects that: no allowance, lower face rent, or a few months free. You build later, or you do not build at all, and you occupy around whatever the shell gives you.

You take space somebody else built. A previous occupier's fit-out is left in place and you adapt it. Ceilings, ductwork, wiring and panel capacity are already there. So is the paperwork, or the lack of it.

The comparison, by mechanism

The two rows people skip are the last two. Whoever manages the work finds out what is actually behind the ceiling, and that knowledge is worth something. Whoever owns the result at the end may be paying to remove it.

Where the money actually goes

A contribution is financed. The landlord puts capital into the building and recovers it from you over the term through rent, so a route that looks generous has priced the generosity.

Public benchmarks exist, and both sides of a negotiation use them. JLL publishes an annual fit-out cost guide with figures by city, and CBRE publishes office fit-out cost data. RSMeans, part of Gordian, publishes the annual construction cost data and city cost indexes that estimators use to move a national average to your market.

For US office space, open-plan fit-outs typically run $60 to $150 per square foot as of 2026. High-finish space in a downtown tower can pass $250, and lab or medical space runs higher. Allowances on a Class A lease commonly sit between $30 and $80 per square foot over a ten-year term, with shorter terms carrying less.

Measurement decides how far the money goes. Landlords quote allowances per rentable square foot, using the BOMA 2017 for Office Buildings standard, while contractors price the area they actually build. A 20 percent load factor turns a $60 per rentable foot allowance into $72 of construction money per usable foot.

The useful comparison is the whole occupancy cost over the whole term, with the contribution spread across it, against the same figure for the other route.

The pillar on tenant improvements sets out how that money reaches you and on what conditions.

Two practical differences follow. Money you spend yourself is spent when you have least revenue in the space. Money the landlord spends arrives inside the rent, later and smoothed. Which suits you is a question about your cash position, not about which route is cheaper.

What each route does to the risk you cannot price

What does not change between the routes

Some obligations attach to the space, not to whoever is building.

Choosing between them

Ask four questions in this order.

If the answers point at the as-it-is route, the sensible follow-up is whether you should be buying rather than leasing at all, which commercial buying takes apart. If they point at second-generation space, the site checks that matter most are in retail space for a trading unit and in office space for a floor.

Common questions

Is a turnkey deal always more expensive?

Not in the price, necessarily. It is usually more expensive in specification: you get a building-standard solution, Armstrong ceiling tile and Interface carpet in landlord colors, and you pay to change it. Whether that matters depends on how unusual your requirements are.

Should I ask for a bigger contribution or a longer rent-free period?

They are different instruments. A contribution buys assets that may have to be removed at the end. A concession is cash that stays yours. Model both across the term before you choose, and ask what each does to the end-of-term obligation.

Is second-generation space worth the risk?

Often, if you can inspect it properly and get the previous approvals in writing. The risk is not the fabric. It is unrecorded work that surfaces when your own application is reviewed under the existing building code.

Can I switch routes during the negotiation?

Yes, and it is worth pricing two of them in parallel while you still have room to move. Once the letter of intent settles on one, the other stops being available at a sensible price.