Calculator Inputs
Example Data Table
| Scenario | Basis | Area | Rate | Cap | Eligible Cost | Landlord Funded | Tenant Overage |
|---|---|---|---|---|---|---|---|
| Office refresh | RSF | 6,000 | $40.00 | $225,000 | $244,560 | $225,000 | $19,560 |
| Medical suite | USF | 3,200 | $75.00 | $250,000 | $286,400 | $240,000 | $46,400 |
| Retail fit-out | RSF | 2,400 | $55.00 | $0 | $118,600 | $118,600 | $0 |
These examples are illustrative. Actual lease reimbursement rules depend on the negotiated TI language and approved cost categories.
Formula Used
1. Base Allowance
Base Allowance = Area Basis × Allowance Rate
2. Allowance After Cap
Final Allowance = lesser of Base Allowance and Allowance Cap
If no cap exists, Final Allowance = Base Allowance
3. Soft Cost Estimate
Soft Cost = Hard Construction Cost × Soft Cost %
4. Contingency Reserve
Contingency = Hard Construction Cost × Contingency %
5. Landlord Admin Fee
Admin Fee = (Hard Cost + Soft Cost + Contingency) × Admin %
6. Eligible Improvement Cost
Eligible Cost = Hard Cost + Soft Cost + Contingency + Admin Fee − Excluded Cost
7. Landlord Funded Amount
Landlord Funded = lesser of Eligible Cost and Final Allowance
8. Tenant Overage
Tenant Overage = Eligible Cost − Final Allowance, but never below zero
9. Monthly Overage Payment
If interest applies, standard amortization is used:
Payment = P × [r(1+r)n] ÷ [(1+r)n − 1]
This structure helps compare a quoted TI package against reimbursement caps, exclusions, and financed overages inside lease negotiations.
How to Use This Calculator
- Enter the rentable area and usable area shown in the lease or space plan.
- Choose the same square-foot basis used in the TI clause.
- Add the allowance rate and any stated cap from the proposal.
- Enter hard cost and estimate soft costs, contingency, and landlord fees.
- Subtract excluded items that the landlord will not reimburse.
- Set lease and amortization terms if the overage may be paid through rent.
- Add monthly base rent if you want a free-rent comparison for unused allowance.
- Click calculate to review funded amount, shortfall, monthly impact, and negotiation pressure points.
FAQs
1. What is a tenant improvement allowance?
It is the landlord’s contribution toward approved buildout costs. The amount may be stated per square foot, as a fixed cap, or both, depending on the lease language.
2. Why does the calculator ask for RSF or USF?
Leases do not always use the same measurement basis. Selecting the correct basis prevents inflated or understated allowances when the quoted rate is tied to a specific square-foot definition.
3. Why include soft costs and contingency?
Real projects rarely consist of labor and materials only. Design, permits, consultants, and change-order reserves can materially change whether the negotiated TI package actually covers the project.
4. What should be entered as excluded cost?
Enter items the landlord will not reimburse, such as furniture, cabling outside scope, branded fixtures, specialty equipment, or costs barred by the reimbursement clause.
5. What does monthly overage payment mean?
It estimates the monthly charge if excess buildout cost is financed over time instead of being paid upfront. This helps compare cash contribution versus rent-loaded repayment structures.
6. Can unused allowance always become free rent?
No. Some landlords permit reallocation, but many TI clauses restrict unused funds. The free-rent comparison is only a negotiation reference, not an automatic lease entitlement.
7. Why calculate allowance per lease month?
It helps normalize improvement support across different deal terms. A large allowance can look less generous when spread over a long lease, especially against higher annual rent obligations.
8. Does this calculator replace legal review?
No. It is a financial planning tool. Final entitlement to reimbursement depends on the signed lease, work letter, approval process, timing rules, and supporting invoices.