Tenant Improvement Allowance

A tenant improvement allowance (TI allowance) is a landlord-funded contribution toward fit-out costs that a tenant incurs when taking space. It is typically quoted per square foot or per kW. In wholesale data center leasing it can offset the cost of customizing a data hall, for instance extra containment, busway or liquid-cooling distribution, and is usually amortized into the rent over the lease term. Hyperscale tenants often negotiate allowances as part of long leases of 10 to 15 years, while retail colocation rarely uses them because customers deploy within standard cages. Because the landlord recovers the allowance through rent, it affects effective rate comparisons and yield-on-cost calculations, so disclosed headline prices should be read together with any TI terms.