Tenant Improvement Allowance

Tenant Improvement Allowances are one of the most negotiable and valuable components of a commercial lease, especially for healthcare tenants who require specialized buildouts. Medical and dental offices often need plumbing upgrades, electrical capacity increases, lead-lined walls for imaging rooms, operatory installations, and HVAC modifications — costs that can easily exceed $100/sq ft. The TIA is typically expressed as a dollar amount per square foot (e.g., $60/sq ft) and is disbursed by the landlord upon completion of approved improvements or in milestone-based draws. Any buildout costs exceeding the TIA are the tenant's responsibility. In the Chicago suburban market, TIAs for medical office spaces currently range from $40–$100/sq ft depending on the landlord, building class, and lease term.

A well-negotiated TIA can save a healthcare practice hundreds of thousands of dollars in upfront capital. Longer lease terms typically unlock higher TIAs, but tenants must weigh buildout savings against long-term flexibility.

A primary care clinic signs a 10-year lease for 3,000 sq ft and negotiates a $70/sq ft TIA — receiving $210,000 toward its $280,000 buildout. The remaining $70,000 is funded by the practice.