TI Drawdown

Getting a tenant improvement allowance in your lease is one thing. Actually getting the money out of the landlord is another, and that is what the drawdown governs. Most leases pay the allowance in stages tied to progress, or as a single reimbursement after the work is done, lien waivers are in, and the space passes final inspection.

The details decide how much cash you float. A landlord who reimburses only at the end means you or your contractor carry the full cost for months. Required paperwork, like signed lien waivers, paid invoices, and a certificate of occupancy, can also hold up a payment if you are not organized.

A generous allowance on paper is worth less if the drawdown terms make you wait. The timing of these payments decides how much of your own money is tied up during construction, which is exactly when a new practice is stretched thin. Negotiate progress payments rather than a single end reimbursement, and know the paperwork required for each draw before you start.

A practice negotiates a 150,000 dollar allowance on a Schaumburg office. The lease releases it in three draws: 50 percent at rough-in, 40 percent at substantial completion, and the final 10 percent once the certificate of occupancy and all lien waivers are delivered. The owner plans cash flow around each draw instead of fronting the whole amount.