A tenant improvement allowance, or TI, is money a landlord contributes toward building out a leased space, and what it actually covers depends entirely on how the lease defines it. For tenants, the practical questions are which parts of the buildout the allowance applies to, how and when it gets reimbursed, and who manages the work — and the answers should be settled before the lease is signed, not after. PBS builds TI projects across retail, office, medical, and food service spaces, and the same coordination issues come up in all of them.
What TI money typically covers — and what it doesn't
Leases vary, but TI allowances generally apply to permanent improvements to the space: partitions, ceilings, flooring, electrical, HVAC distribution, plumbing, and base finishes. They often exclude furniture, equipment, branding elements, and sometimes design fees, depending on the lease language. The trap for tenants is assuming the allowance covers the whole project. Reading the work letter carefully — and having your GC price the actual scope during pre-construction — tells you the real out-of-pocket number before you're committed.
Landlord's work versus tenant's work
Most leases split responsibility between what the landlord delivers — the "as-is" or "white box" condition — and what the tenant builds. The fights happen at the seam: who upgrades the electrical service if it's undersized, who brings the sprinkler layout to code for the new use, who deals with the surprise above the ceiling. A GC who walks the space before lease execution can flag conditions that should be negotiated into landlord's work, which is some of the cheapest leverage a tenant will ever have.
Why brokers care who the GC is
Brokers live and die by deals closing and tenants opening on time, which is why the good ones keep a short list of contractors they trust. The GC's performance reflects directly on the broker's relationship with both tenant and landlord. Preston F. Cannon, First Vice President at CBRE, has credited PBS for fast turnaround on the Aviator Nation buildout in Brooklyn — the kind of endorsement that only comes from a project where the dates held. If your broker recommends a contractor, ask why; if they recommend against one, definitely ask why.
The reimbursement game: paperwork is money
TI allowances are usually reimbursed, not advanced — the tenant funds the work and the landlord pays out against documentation: invoices, lien waivers, inspection sign-offs, sometimes architect certification. Miss the paperwork and the money waits. A GC who runs an organized billing process protects the tenant's cash flow here. PBS manages billing through Procore, so the documentation the landlord's side needs exists in order, on time, without a scramble at each draw.
Building inside someone else's building
TI work happens under the landlord's rules: insurance requirements, approved building hours, freight elevator schedules, protection standards, sometimes required base-building subcontractors for sprinkler or fire alarm tie-ins. These rules cost time and money when they're discovered late. Part of planning a TI project properly is getting the building's requirements in writing during pre-construction and pricing the job around them — especially in dense markets like New York, where building logistics can shape the schedule as much as the scope does.
Deadlines with teeth
TI projects come with lease-driven dates: rent commencement, delivery deadlines, sometimes opening obligations with penalties. The schedule isn't aspirational — it's contractual. That's why long-lead items get identified early, permits get filed without delay, and the schedule gets built backward from the date that matters. You can see TI and buildout work PBS has delivered across markets on our projects page.
Frequently asked questions
Who hires the general contractor on a TI project?
Usually the tenant, when the tenant controls the buildout — though some leases have the landlord perform turnkey work instead. Tenant-controlled work with a GC the tenant selects generally gives more control over quality, schedule, and cost transparency.
What happens if the buildout costs more than the TI allowance?
The tenant pays the difference, which is why honest pricing during pre-construction matters so much. Knowing the real gap early lets you value engineer deliberately or negotiate, instead of discovering the shortfall mid-construction.
Can unused TI allowance be kept as cash?
Depends entirely on the lease — some allow unused allowance as a rent credit, many simply forfeit it. Read the work letter, and have your attorney and broker confirm before assuming anything.
If you're signing a lease with a TI component and want the construction side scoped honestly before you commit, PBS has been building tenant spaces since 2009 — contact PBS for a consultation.
